Tailoring Trade and Development Policy to Work for the Development of Countries Most in Need
Last week the European Commission presented an agenda to tailor trade and investment policies in favour of countries most in need, while providing new and different support to emerging economies.
Responding to the present-day realities of world trade, the European Commission Communication “Trade, growth and development” analyses the role of trade in supporting development, stimulating growth and lifting people out of poverty.
The Communication addresses the concern that the notion of addressing ‘developing countries’ as a single group is losing relevance, and calls for greater support of countries most in need and more differentiated trade and development policies that go beyond tariff reduction.
“Regarding how our Communication may help lifting people out of poverty, we don’t think trade is the magic bullet,” said Monika Hencsey, Head of Unit, DG Trade DI, at Headquarters. “But we do think that no country today or in the past has managed to maintain sustained growth and develop without trade.”
“A good example is emerging economies that have moved millions of people out of poverty based on trade-led growth. What we can do is more and different cooperation with some of these partners while helping the Least Developed Countries (LDCs) - those left behind,” continued Ms Hencsey, speaking on the sidelines of a recent public presentation of the Communication in Brussels. “I think the problem is that some of them are further marginalized in an increasingly competitive world and in order for them to catch up and then turn to growth and into poverty alleviation, they need support with both trade and aid.”
In addition to reforming current EU preferential trade schemes to help countries most in need, the Communication proposes measures to help developing countries to improve their business environment. Trade talks with these countries should include services, investment and trade facilitation as well as Aid for Trade, which helps those countries, particularly LDCs, to develop trade-related capacities. The objective is to help them reap the benefits from world markets by improving their productive capacity, quality of their products or infrastructure to be able to cut transport costs. It offers emerging economies a more mature partnership that includes regulatory cooperation and engagement on global issues that are essential for development such as food security, sustainable use of natural resources, green growth and climate change.
At the same time, the Communication underlines that developing countries leadership and sense of ownership for their own development is crucial for growth. It also calls upon other developed countries and emerging economies to match the EU’s initiatives to open markets to LDCs.
Giorgio Cocchi, Deputy Head of Unit, DEVCO C4 , was part of the team that developed the Communication. For him, much of its value lies in that it was drawn from experiences over the past ten years. “It was a good time to remind what was said ten years ago - to draw the lessons of these ten years because at the time there was a high level of optimism about Doha, about EPA, about other negotiations, " he said. "We are still optimistic, but in a different way because we have learned some lessons; we have discovered some difficulties, we have discovered some elements that need to be taken into account … and so it was time to clarify all this, to take stock and to confirm what remain to be good guidelines and adapt them.”
Ms Hencsey agreed, “We have achieved a lot, and we should focus more on improving the current instruments and focus on making them work better for the people we aim them at. For instance, the small operators - how can we use all the instruments we already have to actually benefit the small farmer, to actually benefit the small trader - who are a big part of developing countries’ economies.”
This Communication will now be discussed in the Council of Ministers and European Parliament. Their conclusions and resolutions will provide the EU political guidelines for this policy area over the next years.
Contributors to this collaborative piece: Giorgio Cocchi, Monika Hencsey, Stacey Vickers and Fabio Fabbi. The views, opinions and the content herein do not represent the official view of the European Commission. Multimedia and collaboration facilitated by EuropeAid's capacity4dev.eu team