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Brussels, 8 July 2013
Aid for trade
EU Development Commissioner, Andris Piebalgs, and EU Trade Commissioner Karel De Gucht will today represent the European Commission at the World Trade Organisation's Fourth Global Review of Aid for Trade: “Connecting to value chains” in Geneva. The meeting will be a key opportunity for donors and developing countries to come together to look at how Aid for Trade (AfT) is helping people across the world to trade and what has been achieved so far. The EU collectively with its Member States is the world's largest provider of Aid for Trade.
This year's joint report ‘Aid for Trade at a Glance: Connecting to Value Chains’ (from the World Trade Organisation, or WTO, and the Organisation for Economic Cooperation and Development, or OECD) confirms the importance of AfT in improving trade. In fact, this report provides evidence that Aid for trade indeed increases trade performance and calculates that every dollar invested in AfT produces between 8 and 20 USD in additional exports from developing countries.
The EU is also a strong proponent of trade facilitation, within the wider AfT initiative. In 2011, the share of EU and member in the global Trade Facilitation accounted for 59%, being the biggest providers of trade facilitation since 2008. The impact of trade facilitation can be very visible and tangible; it can lower transport costs, shorter queues at the borders, simplified controls and formalities, increase trade opportunities and create new market openings.
The EU and Aid for Trade
Aid for Trade
Aid for Trade by Region
What is Aid for Trade?
One in six people in the world today live on less than a dollar a day. Poor people need decent jobs, in order to make a living and provide for their families. Governments need tax revenue to invest in social services and encourage economic growth. Increasing trade and investment is one important way of achieving this and is part of the strategy for achieving the Millennium Development Goals.
The EU already grants the poorest countries in the world complete duty and quota free access to its markets, and recently, the Rules of Origin that determine whether a product is eligible to that free access were also relaxed, thus ensuring that developing countries really benefit from the trade preferences on offer to them.
But market access alone is not sufficient to generate trade, especially in the poorest countries. Many countries also face internal "behind the border" constraints such as a lack of productive capacity and ability to meet standards in high value export markets, excessive red tape, or poor infrastructure; all of which make it difficult for developing countries to exports their products and undermine the potential benefits of increased imports. Targeting these constraints is what Aid for Trade (AfT) is all about, along with strengthening countries’ capacity to negotiate and implement trade agreements to their benefit.
How does the European Union implement Aid for Trade?
The joint EU AfT strategy
On 15 October 2007, the EU adopted a joint Aid for Trade Strategy, designed to help all developing countries, particularly Least Developed Countries (LDCs), to better integrate into the rules-based world trading system and to use trade more effectively in promoting the overarching objective of eradicating poverty. It provides for a focus on more resources to AfT and better impact on development.
EU AfT is delivered as other EU aid, following agreed aid effectiveness principles: ownership, coherence, harmonisation, accountability and results. This means going through policy dialogue, needs assessments, lining up with partner country and regional development strategies, coordination with other donors, and formulation of response strategies on this basis.
AfT is delivered like all other EU aid, following agreed Aid Effectiveness principles, which means it has to go through policy dialogue, needs assessments, inclusion of priorities into national and regional development strategies (such as Poverty Reduction Strategy Papers), and formulation of response strategies. This is the only way to ensure ownership, coherent programmes and sustainability.
Aid for Trade is also subject to the same accountability measures as the rest of our aid. Rigorous systems of control are in place in each recipient country to make sure money is properly spent, and this money is carefully scrutinised by the Court of Auditors and the European Parliament.
In order to make sure that the results of Aid for Trade are measured as effectively and transparently as possible, the EU has funded the Organisation for Economic Cooperation and Development (OECD) study "Managing aid for trade and development results" which is expected to provide the AfT community with guidelines on good practice in developing and introducing results for aid for trade projects and indicators.
Stories from the field - how the EU is making a difference through its work on Aid for Trade
a) Pesticides Initiative Programme in ACP countries (PIP): Helping farmers to trade fruit and vegetables safely
The €38.5m PIP was set up to prevent any negative effects on horticultural exports from the African, Caribbean and Pacific (ACP) region (resulting from ongoing changes of the EU food safety regulations), and to ensure the long-term sustainability of the sector. Businesses were supported in adjusting their practices and in establishing food safety and traceability systems.
b) Bangladesh Trade Support Programme: reducing barriers to trade
The €7.8m Bangladesh Trade Support Programme (BTSP) was set up to strengthen human resources and capacity of relevant Government Agencies and private sector parties in order to introduce trade reforms and remove barriers to trade.
c) Private Sector Support Programme in Benin: Supporting industry and boosting trade across Benin
The €5m Private Sector Support Programme was put into place to boost growth and sustainable development, help Benin’s integration into the regional and global economy and help to fight against poverty in the country as a result.
Private-public dialogue improved:
To find out more:
On the EU’s work on Aid for Trade:
On the Fourth Global Review of Aid for Trade: