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Brussels, 21 September 2004

Trade and development- some facts and figures

The trade and development link

Trade can make a positive contribution to poverty reduction through its impact on economic growth and income. The World Bank has estimated that a pro-poor outcome of the current Doha Development Agenda (DDA) could increase global income by up to $291bn – with $159bn of this accruing to developing countries.

Such a result could lift as many as 61 million people out of absolute poverty of $1 a day and 144 million people above the $2 a day poverty threshold. Over 70% of these gains would come from the developing countries’ own reforms. This is why the EU is working hard towards a positive and balanced outcome of the current Round.

EU trade flows with developing countries

The EU absorbs one fifth of developing country exports. 40% of EU imports originate in developing countries. The EU is also the world largest importer of agricultural products from developing countries, absorbing more than the US, Canada and Japan taken together.

As the main trading partner of the developing world, with a preferential trade volume more than three times higher than the US in 2002, the EU is implementing a series of preferential trade regimes with a view to enhancing developing countries’ exports to the EU.

  • GSP (Generalised System of Preferences): under its GSP the EU is currently granting unilateral tariff preferences to 178 developing countries. From the preferential imports under this regime in 2002, half were duty free and half at a reduced duty. In 2002 EU imports under GSP amounted to € 53,2 billion.
  • EBA (Everything But Arms initiative): under this unilateral preferential regime, the worlds 48 poorest countries – out of which 34 are Sub-Saharan – export to the EU duty-fee and quota-free. In 2002 EU imports under this scheme amounted to € 2,2 billion.
  • Cotonou Agreement with Africa Caribbean and Pacific: as a result of deeply rooted historic and economic links between Europe and ACP countries, the EU grants preferential treatment to imports from these countries. In 2002 a total of € 39 billion entered the EU duty free, whereas another € 1.9 billion entered at a reduced duty level.

The EU’s commitment to trade-related assistance

Under the WTO Doha Development Agenda, developed countries have made renewed commitments to strengthen the ability of developing countries to benefit from trade. Trade-related assistance (TRA) is the funding provided to support these capacity-building efforts.

Before the launch of the Doha Round, the EU allocated around €700 million of TRA over five years (1996-2000). Since the Doha meeting in 2001, these figures have increased considerably, with a global allocation of around €3 billion for 2001-2004[1] and an average of some €700 million annually.

This makes the EU the single largest donor worldwide for TRA, providing for more than a third of global TRA commitments. And if Member States’ assistance is also included, the European Union is the greatest provider of total TRA worldwide, representing 50% of all commitments.

Types of assistance available- two main categories

  1. Assistance for trade policy and regulatory issues, including support for the effective participation of developing countries in multilateral trade negotiations, trade-related legislation and regulatory reforms, trade facilitation and support to regional trade arrangements.
  2. Support for trade development, including business development and activities aimed at improving the business climate, access to trade finance, trade promotion and market development.

Global coverage of trade-related assistance

In absolute budgetary terms, the ACP (Africa, Caribbean and Pacific) group is the largest beneficiary region of European TRA, followed by the Mediterranean region, Asia and the Latin America region. The chart below shows the geographical allocation of TRA in € between 2001 and 2004.

[ Figures and graphics available in PDF and WORD PROCESSED]

[1] 2004 figures represent commitments up to June and an estimate of planned commitments until the end of the year - the total figure for 2004 is therefore likely to change.

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