Summary: May 2, 2001: Third Preparatory Committee for the International Conference on Financing for Development: EU Comments on the Facilitator's Working Paper - Chapter III, Trade. Intervention by the European Commission on behalf of the European Union (New York)
General approach:
The EU agrees with the facilitator that trade is an important lever of economic growth, which is necessary for development and poverty eradication. The FfD process should consider how trade can lead to resource mobilisation and contribute to growth and development as well as the role of trade in poverty reduction strategies. In this context, creating a synergy between trade and other policies is necessary to help countries reap the benefits of liberalisation and to make trade supportive of
sustainable development. It is therefore particularly important to focus on the necessary coherence between trade and other policies, including in such areas as finance, the environment and competition. We are pleased to discuss these issues in the FfD context and indeed we believe it is essential to do so.
However, it is necessary to recall that the task of conducting multilateral trade negotiations is and should be entrusted to the World Trade Organization where parties to trade agreements enter into legally binding commitments. The FfD process cannot substitute itself for multilateral trade negotiations. We welcome the finalization by the WTO membership on the first of May of its written contribution to the FfD process and look forward to the further active participation of the WTO in the
process.
Specific comment on text
All forms of support in export markets - be it subsidies, credits, incentives - may impact the trade opportunities of developing countries. This should be reflected in the text.
Comments on Facilitator's questions
The EU is of the view that enhanced market access for developing countries is essential. Preferential market access is central to our trade and development policies, e.g. in our Partnership Agreement with the ACP-countries signed in Cotonou last summer. The EU decision to grant duty-free and quota-free access to all exports (except arms) originating in LDCs is another prime example, which we hope will help create a move toward further improved market access for these countries. This decision,
which was taken on 26 February and took effect on 6 March makes the EU the world's first major trading group to commit itself to a full market opening to the Least Developed Countries. At the end of the day, Least Developed Countries will have 100% access, with no exclusions, except of course arms. Even for the three products for which transition periods were decided there will be rapid improvement in the conditions of access to the EU market from now on. Clinching the "Everything but Arms"
initiative proves that the EU heard the message developing countries delivered in Seattle and we hope that other developed countries will follow our example as a few are already doing. We also hope that developing countries will move to improve access to their markets for the Least Developed Countries.
In parallel, improvements to preferential schemes for all beneficiaries should be considered in order to enhance the utilisation rates.
Experience shows that multilateral trade liberalisation has a significant impact on the trade based growth and export performance of countries. Further liberalisation, including of products of particular interest to developing countries, therefore remains a priority. The EU firmly believes that a new round of multilateral trade negotiations would be the best way to bring further significant market opening in sectors of interest to all trading partners in a balanced manner, and to address
adequately the interests of developing countries. The Fourth Ministerial Conference of the WTO, to be held in November 2001 in Doha, should therefore seek an agreement on a new round of multilateral trade negotiations and address the importance of the development dimension in future multilateral trade agreements.
However, the objective of further integration into the world economy can only be achieved through an integrated approach, including trade and macroeconomic policy, private-sector development, finance, infrastructure, education and other supply-side measures. Coherent trade policy reforms remain therefore an essential element of internal reforms and of international support for such reform, including through technical assistance and capacity building.
The EU believes that regional integration can constitute a major step toward integration in the global economy. Regional Trade agreements can help make liberalisation work by enhancing the credibility and transparency of the policy reforms. Membership of regional trade blocks can generate benefits for developing countries, including securing markets for exports, encouraging infrastructure development and exchanging expertise. Regional integration can help attract investment for development, by
increasing export opportunities and the stability of the market. Moreover, trade relations can also have a stabilising effect politically. Further steps to regional integration are therefore important for developing countries.
In the context of the implementation of its development policies and its Partnership Agreement with the ACP-countries the European Community provides and will continue to provide substantial financial support to ACP as well as other developing countries in order to promote their efforts in strengthening export capacities, improving trade infrastructure and removing supply-side constraints.
The EU believes that capacity building is important in helping developing countries make use of the opportunities granted by enhanced market access and investment liberalisation. This should address supply-side restraints in areas of human resources, infrastructure and technical capacities, including helping countries meet standards and requirements in export markets. The EU would welcome increased contributions from other donors and institutions in support of a diversified export capacity of
developing countries.
Through its Partnership Agreement with the ACP-countries the EU provides support to its partners in order to cope with adverse effects of commodity price instability. A system of additional support in order to mitigate adverse effects of any instability in export earnings was therefore set up within the financial envelope for support to long-term development. Continued efforts are necessary to provide contingency and short-term emergency financial assistance, including balance-of-payments
support through appropriate institutions, with a view to assisting developing countries to cope with the consequences of serious external shocks.
The IMF also has available instruments to provide developing countries with compensatory balance-of-payments support. Developing countries' access to risk management instruments should be facilitated. The European Union therefore underlines the need to continue to work on a wide range of reforms for a strengthened and more stable international financial system enabling it to deal more effectively and in a timely manner with new challenges of development.
The issue of insurance against natural catastrophes is important to a number of developing countries, in particular the SIDS, and deserves attention by the international community in the appropriate fora. It is a question that would benefit from public-private partnerships and cooperation with the insurance industry. The question of risk management, including instruments to minimise the potential effect of natural catastrophes, should also be considered.
The European Community and its Member States are among the largest contributors to international trade related assistance programmes. Thus,
the European Community and Member States' contributions represent € 1.8 million or more than one third of the total contributions to the Trust Fund of the Integrated Framework for LDCs;
EU Member States contributions represent more than half of total contributions (€ 6.8 million out of total pledges of € 12.2 million) to the WTO Global Trust Fund; and
European Community and Member States' contributions to UNCTAD trade related technical assistance represent more than half of the total UNCTAD budget for technical assistance.
In addition to contributions to multilateral programmes, bilateral trade related technical assistance and capacity building is a core element of European Community development assistance. The European Community contributed € 710 million in this context over the period of 1996-2000.
The EU underlines its intention to pursue its efforts in the field of trade related technical assistance and capacity building and encourages other partners to join the EU in this endeavour. Furthermore, the EU believes that the Integrated Framework for LDCs should be further strengthened and we welcome the recent steps already taken in this direction. We also hope that the experience gained from the Integrated Framework will provide approaches useful for other developing countries.
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