EU-UN trade and development

The developing world must benefit fully from trade

Successful work in the GATT, and latterly in the World Trade Organisation, has brought huge benefits to international trade, spurring major economic growth throughout the world over the last 50 years.

Nevertheless, while the benefits generated by the multilateral trading system have been global, not all countries have equally benefited from them. For instance, the 49 least-developed countries (LDCs) account for less than 1 % of world trade.

Furthermore, other concerns related to international trade and 'globalisation' have emerged in recent years, such as employment, the environment, development and wealth distribution.

Paving the way…

Since committing itself to offering tariff-free treatment for almost all imports from LDCs in October 1997, the EU has frequently called on other developed countries in the WTO to match the EU's openness to imports from the LDCs.

In 1998, the EU was already by far the leading destination for LDC exports, taking in 56 % (EUR 8.71 billion) of the world total.

One main objective of the Cotonou Agreement signed between the EU and African, Caribbean and Pacific (ACP) countries is the smooth and gradual integration of ACP countries - 40 of them being LDCs - into the world economy. Forthcoming negotiations of WTO-compatible trading arrangements will help consolidate economic and legal reforms and will create more opportunities for local and foreign investors.

In February 2001, the EU adopted a new initiative entitled 'Everything but arms', to provide full market access for products originating in LDCs to EU markets, covering all goods except the arms trade, with (in most cases) immediate effect. It is hoped that other developed countries will quickly follow the lead of the European Union in this regard.

UN Secretary General Kofi Annan has praised the EU's 'Everything but arms' initiative, saying it has proven that 'Europe really does want a fair international trade system in which poor countries have a real chance to export their way out of poverty' (13). Total imports from all beneficiary countries have increased by 8.9 % since the initiative's entry into force (from EUR 12.9 billion to EUR 14.1 billion).

…and completing it

Integrating developing countries into the multilateral trading system is a crucial element of the new WTO round that was launched in Doha at the end of 2001, as it will increase the potential for poverty eradication and sustainable development in these countries - a top EU priority. The scope of the new round is clearly stated in its name: the Doha Development Agenda.

The comprehensive approach of the round, involving a broad range of issues in which all participants can gain (and which the EU fully supports), remains the best way to achieve that result.

To that end, it is essential that developing countries - which are the large majority of the WTO membership - participate fully, ensuring that the multilateral trading system works to the advantage of all of its members.

European Commissioner for Trade Pascal Lamy frequently visits developing countries in his quest to make the Doha Development Round a success. Photo: European Commission.

EU objectives for the Doha Development Agenda

Key EU aims include the following.

• Special and differential treatment for developing countries: the EU pursues an approach that increases flexibility vis-ŕ-vis the developing countries. This will not carve out a two-tier WTO, but rather ensure that developing countries are better able to apply any new rules agreed in the round, and better able to integrate into the global economy as a result.
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• Substantially improved market access and trading opportunities: the EC's proposals on industrial market access in the Doha round envisage removal of peak and high tariffs, notably in areas of export interest to developing countries, which will also stimulate trade between developing countries. In agriculture, the EU has proposed an ambitious reduction of tariffs. Moreover, it agreed a fundamental reform of its common agricultural policy in June 2003, which will largely decouple subsidies and production, making EU farm policies more market-oriented and less distortive of international trade. It also includes measures that will sustain agricultural communities in Europe and worldwide. This strengthens the EU's negotiating hand in the ongoing Doha talks. In services, the EC has made the most ambitious offer of any WTO member, including in the key area of movement of natural persons, a developing country priority.
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• Promoting new WTO disciplines in the areas of competition, investment, transparency of government procurement, and trade facilitation: in drafting these new rules, which are inherently beneficial for trade and development, developing countries' constraints will be taken into account.
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• Helping WTO members having genuine difficulties in implementing WTO agreements.
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• Enhanced assistance to build human and institutional capacity and to address supply-side constraints.

Help developing countries to take advantage of the world trading system

Improved export opportunities are not in themselves sufficient. Many developing countries also need assistance to enhance their capacity to make use of the trading opportunities offered by improved market access and multilateral trade liberalisation in general. Traderelated technical assistance is a key element in building capacity in developing countries, so that they can take advantage of the opportunities available. Country development programmes must have trade and integration in the world economy built into them.

Loading cocoa in Takoradi Harbour, Ghana. Photo: Thomas Dorn/European Commission.

Developing country members of the WTO should also have the capacity to participate fully in and benefit from the ongoing negotiations. The WTO membership set up a Global Trust Fund to deliver on this objective, and the EU has demonstrated its commitment by pledging around 60 % of the total funds, a sum of EUR 19 million.

A political agenda for trade and sustainable development

Two major international meetings that took place in 2002 have acknowledged the importance of trade for economic growth and sustainable development.

The International Conference on Financing for Development, which was held in Monterrey, Mexico in March 2002, found international agreement on the mobilisation of resources for development. The Monterrey consensus built a partnership for development financing, which recognises external and domestic resources, private and public, as well as the importance of the domestic policy environments for development. The Monterrey consensus recognised the importance of trade for development, and in this context stressed the importance of support to remove supply-side constraints to trade and of effective, secure and predictable financing of trade-related assistance and capacity building.

In September 2002, at the Johannesburg World Summit on Sustainable Development, world leaders recognised the importance of trade for sustainable development by underlining the need for further efforts in support of sustainable trade, beyond those already made in Doha and Monterrey, and by stressing the need for mutually supportive trade, development and environment policies.

Cooperation in UNCTAD and the United Nations

An overall WTO objective is to contribute to sustainable development. Yet the WTO is and will remain a trade institution. Many of the concrete policy measures required to help developing countries benefit from increased trading opportunities fall within the primary responsibility of national governments or within the fields of activity of other international organisations. The United Nations Conference on Trade and Development has an important role to play in this respect, as it is the focal point within the UN for the integrated treatment of trade and development and the interrelated issues in the areas of finance, technology, investment and sustainable development.

Although it only has observer status, the European Community has played a major role in the UNCTAD's evolution and policymaking, from its very beginning in 1964. And EU support of and influence in UNCTAD policymaking continues to be substantial. Not only is this due to the Union's major share of world trade, but also because its member countries have been consistently successful in coordinating their policy positions.

The EU intends to play the same constructive role in the process leading to the UNCTAD XI conference, which will take place in Săo Paulo in June 2004.

The EC representative participates actively in the debates on trade and development at each autumn session of the UN General Assembly Second Committee.

The Economic Commission for Europe (UN/ECE)

Based in Geneva, the UN Economic Commission for Europe is actively involved in the elaboration of conventions, norms and standards in the fields of trade, transport and the environment. This assists the process of convergence of central European and CIS countries' practices with those of the EU. Other UN regional commissions model or copy them in such fields as trade facilitation standards (UN/Edifact - UN electronic data interchange for administration, commerce and transport), agricultural standards, transport facilitation (international truck transportation, cross-border operations, infrastructure) and environment (air pollution, accidents, impact assessment and access to information). Recently, the UN/ECE organised the regional preparatory meeting for the World Summit on Sustainable Development, where the European Commission played an active role in promoting the EU agenda for the Johannesburg meeting.

(13) UN Secretary General Annan's article in the Financial Times, 5 March 2001.

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