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Development

The aim of the EU’s trade and development policy is to put trade at the service of development and poverty reduction.

Karel De Gucht

"The rise of emerging economies like India, China and Brazil shows that trade-driven development is possible and that open markets can play a major role in generating growth. Yet those trailing behind need help. World tariffs have never been this low and the EU already offers very favourable market access to poor countries. What will make a difference are non-tariff issues - such as standards, services, intellectual property rights, public procurement, infrastructure and packaging facilities. None of this can work without political governance." said EU Trade Commissioner Karel De Gucht.

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 capacity of trade-driven development for lifting 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 revised 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 development.

EU trade and development policy

The EU’s aim is to improve the effectiveness of its trade and development tools and focus them on countries most in need in the following way:

  • Implement the EU's new GSP preferential trade scheme, reformed in the wake of the Trade, Growth and Development Communication, which increases the focus of EU unilateral preferences on developing countries most in need, in sectors where they need them.
  • Step up negotiations on Free Trade Agreements and Economic Partnership Agreements, notably with a view to addressing behind-the-border issues (e.g. trade facilitation, technical, social and environmental rules, services, intellectual property rights, public procurement) which play an increasingly important role in making trade work for development.
  • Promote foreign direct investment though favourable local conditions, including through relevant provisions in Free Trade Agreements.
  • 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 Aid for Trade, notably Trade-Related Assistance, but in a more focussed manner.
  • Implement measures targeting small traders in developing countries, to help them enter the EU market, including support from the Export Helpdesk.
  • Put more emphasis is needed on sustainable development, including through the GSP+ scheme under the EU's GSP as well as through specific provisions for labour and environment in Free Trade Agreements.

At the same time, the Communication underlines that developing countries' leadership and ownership of their own development is crucial for success. Developing countries need to undertake domestic reforms to stimulate trade and investment and ensure that the poor benefit from trade-led growth.

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