Assisting developing countries to benefit from trade

The European Union defines practical steps to improve the integration of trade into development strategies so that it contributes to the fundamental objectives of poverty reduction and sustainable development.

ACT

Communication from the Commission to the Council and the European Parliament, "Trade and development: assisting developing countries to benefit from trade" [COM(2002) 513 final - Not published in the Official Journal].

SUMMARY

STEPPING UP DIALOGUE WITH PARTNER COUNTRIES

Trade reform in poverty reduction strategies

The European Union is committed to placing greater emphasis on trade issues in its political dialogue with the developing countries to improve the integration of trade policies into poverty reduction strategies. Trade policy must be integrated in such a way that it contributes to the fundamental objectives of poverty reduction and sustainable development. It should foster equitable growth, promote human development, and ensure the proper management of natural resources and the protection of the environment.

Adapting trade-related assistance to each country's specific conditions

To that end, the Commission must ensure that the financing of trade-related assistance, which is one of the six priority areas for development policy laid down in 2000, is adapted to needs, particularly for least developed countries. Assistance should ideally be adapted in the light of a national dialogue involving government, the private sector and representatives from labour and civil society.

ENHANCED EFFECTIVENESS OF EU SUPPORT

Political dialogue is translated into practical assistance by country and regional strategy papers. Trade issues and their linkages with other policies important for sustainable development need to be addressed at each stage of the preparation of strategy papers.

The Commission also proposes reinforcing, where appropriate and in consultation with the partner country/region, the trade component when programming EU development assistance. This will be done by including:

Support for macroeconomic and fiscal reforms: Support to enhance trade capacity should also aim for sound macro-economic and tax policies, to achieve a policy mix that is conducive to improved trading conditions and economic and financial stability.

Support for the restructuring and competitiveness of production: In order to support the repositioning process and increase the competitiveness of the private sector in developing countries, a variety of private-sector facilities have been set up at both national and regional levels. Strengthening support services and improving infrastructure has been another core area of EU support.

Support for the restructuring and competitiveness of production: Regional integration is supported in the framework of the development strategy. This is the South-South-North approach. Under this approach, the EU is negotiating agreements with regional groupings. It is doing so in South America, with the Mercosur countries, in the Mediterranean, and in South-East Asia. But this approach applies in particular to the economic partnership agreements between the African, Caribbean and Pacific states (ACP) and the EU, for which negotiations started in September 2002.

Support for genuine participation in the multilateral trading system: EU assistance in this area is mainly oriented towards assistance for accession to the World Trade Organisation (WTO) and multilateral trade negotiations, support for the implementation of existing and future WTO agreements requiring major financial input, and support for the policy reforms and investment necessary to enhance economic efficiency and ensure greater participation in the world economy. This last area notably includes reform of customs administrations, standards and conformity assessment, services, investment, intellectual property rights, competition policy, the adoption of legislation for appropriate labour standards, and environmental standards.

The Commission is also examining the scope for funding trade-related assistance initiatives that benefit all developing countries, especially in collaboration with multilateral agencies. At present, practically all EU development assistance is provided on a country/region basis. Yet this is an area in which it is very important to support multilateral initiatives in collaboration with international organisations, without confining them to specific countries or regions.

CONTRIBUTION TO THE EFFECTIVENESS OF INTERNATIONAL ACTION

It is important to make the most of the linkages between trade and all other areas important for sustainable development, and to ensure the consistency between the various EU policies with an external dimension.

There is a need to review existing mechanisms to improve coordination with Member States and to promote a greater exchange of "best practices" between the Commission and Member States and between Member States themselves.

Closer cooperation with international organisations with specific expertise in trade and trade-related matters is also encouraged.

The EU should also encourage regional development banks (such as the African Development Bank, the Asian Development Bank and the Interamerican Development Bank) to devote additional resources to capacity-building programmes in the sphere of trade.

The communication encourages the EU to support the WTO Secretariat in matters of technical assistance, and to continue contributing to the Trust Fund for the Doha Development Agenda.