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Development

The aim of the EU’s trade and development policy is to put trade at the service of inclusive growth and sustainable development

Trade and Development in a nutshell

  • Trade openness is a necessary condition to lasting economic development. The rise of emerging economies like India, China and Brazil demonstrates the potential of trade-driven growth to lift millions out of poverty.
  • Developing countries have become new drivers of trade, accounting for over half of world exports. South-South trade has outstripped North-South trade since 2007 – and this despite the fact that barriers to trade between developing countries are still much higher than between developed and developing countries.
  • While all developing countries are trading more, most of the gains in the last decade have been realised by emerging economies. Least-Developed Countries (LDCs) and other countries most in need have remained marginalised, as they are often held back by lack of productive capacity, economic diversification and infrastructure, but also poor governance.
  • The aim of the EU trade and development policy, as outlined in the January 2012 Communication on "Trade, growth and development" is to help LDCs and other countries most in need draw the benefits of trade for inclusive growth and sustainable development.

EU trade and development policy

The EU’s aim is to effectively use the following trade and development instruments to the benefit of developing countries, with particular attention paid to LDCs and other countries most in need:

  • The EU's new GSP preferential trade schemeentered into force on 1 January 2014. It increases the focus of EU unilateral preferences on developing countries most in need, in sectors where they need them. The number of beneficiaries has been reduced, thus creating more space for the exports of poorer countries. The new GSP further promotes sustainable development and good governance by allowing more countries to become eligible for GSP+, which provides additional preferences to vulnerable countries that ratify and effectively implement core international conventions on environment, labour and human rights. The new GSP also maintains the Everything But Arms (EBA) scheme, which provides duty-free and quota-free access to all products from all LDCs with the exception of arms and ammunition.
  • The EU has boosted its bilateral and regional relations with developing countries. Negotiations with African, Caribbean and Pacific (ACP) countries started in 2002 to conclude Economic Partnership Agreements. In parallel, the EU has launched a series of Free Trade Agreements with other developing countries in Asia, Latin America, Europe’s Eastern neighbourhood and the Southern Mediterranean. The EU pursues a comprehensive approach which looks beyond tariffs at a wide range of 'behind-the-border issues' such as trade facilitation, technical, social and environmental rules, services, intellectual property rights and public procurement, all of which can play an increasingly important role in making trade work for development.
  • The EU promotes foreign direct investment though favourable local conditions, including through relevant provisions in Free Trade Agreements.
  • The EU encourage developing countries, particularly LDCs, to mainstream trade in their development strategies and prioritise their trade-related needs in their cooperation with the EU in order to maintain a steady flow of EU Aid for Trade, including Trade-Related Assistance.
  • The EU supports small traders in developing countries, to help them access the EU market, providing information and capacity building via the Export Helpdesk and a series of projects carried out by the International Trade Center (ITC), Standards Map and Small Traders Capacity Building.
  • The EU has been at the vanguard of creating relationships between the issues of trade and sustainable development, including through the GSP+ scheme and through the inclusion of a 'Trade and Sustainable Development Chapter' covering specific provisions on labour and environment in its trade agreements.

At the same time, the EU's trade and development policy emphasises the importance of developing countries' good governance and ownership of their own development strategies, which is a key to their success. Developing countries therefore need to implement sound domestic policies and undertake necessary domestic reforms to stimulate trade and investment, ensure that the poor benefit from trade-led growth and secure the sustainability of their development.