Trade and Development

Trade and investment offer great opportunities for sustainable development, both can foster growth and poverty reduction in developing countries. Development is at the centre of the current WTO round of trade negotiations, the Doha Development Agenda. Moreover, the integration of developing countries in the multilateral trading system is part of the EU trade strategy.

The world’s poorest countries have not always been able to benefit fully from developing trade opportunities. With a view to making trade profitable to all, WTO Members have agreed to put the issue of development at the core of the multilateral trading system, by launching the Doha Development Agenda. This Round must establish rules that can foster development and enable developing countries to benefit from further trade liberalisation. For this reason development is the one single theme that runs throughout the trade Round.

The market access negotiations must particularly encompass sectors and products of particular interest to developing countries, to boost their export and growth opportunities. Moreover, access to the markets of other developing countries to developing country exporters is another objective of the negotiations.

The EU has led the way by eliminating all duties and quotas for all products originating from least developed countries (LDCs), under the Everything But Arms (EBA) initiative. Moreover, the EU has tabled important pro-development proposals in Geneva, including the following:

The EU proposes advancing meaningful liberalisation across all non-agricultural products, which represent over 70% of developing country exports, notably by eliminating tariff peaks and high tariffs, and significantly reducing tariff escalation. This also includes proposals to eliminate all export restrictions on raw materials and make deeper cuts for tariffs on products of interest to DCs, in particular textiles, clothing and footwear, bringing them within a narrow common range as close to zero as possible

The Commission presented a proposal calling for improved market opening and reduction of trade-distorting support in this domain, together with specific actions to give developing countries a better deal:

The EU took into account the level of development of individual Members by requesting commitments in fewer sectors and modes of supply from developing countries. The offer of the EU responds in particular to requests and interests of developing countries, notably by a significant offer on temporary entry of foreigners to provide services (mode 4), but also for sectors of particular export interest to developing countries, such as business and professional services. On mode 4, the EU offers to widen the scope of sectors covered and the duration of stay.

WTO rules protect developing countries against discriminatory practices and ensure that beneficial reforms and policies are kept in place and not reversed.

Nevertheless developing countries' interests should be even better reflected, not only in the current WTO rule-book but also in the rules established in the new areas of competition, investment, trade facilitation, and transparency in public procurement All four areas can bring direct benefits to developing countries' traders and governments. Without functioning competition rules, it is all too easy for developing countries to be victimised by hard core cartels or succumb to domestic or foreign pressures to discriminate. Rules giving greater transparency and predictability for investment - without of course reducing the right of countries to regulate investments - will obviously help to attract increased levels of investment, thus creating jobs and growth.

The WTO Agreements contain provisions, which give developing countries special rights. The “special and differential treatment” principle states that any new rule must take account of the prevailing circumstances of developing countries. The EU approach is to increase flexibility vis-à-vis the developing countries, without creating a two-tier WTO. We should ensure that developing countries are better able to apply any new rule we negotiate in the Round, and integrate better into the global economy as a result.

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. Trade-related technical assistance is a key element in building capacity in developing countries, so that they can take advantage of the opportunities available.

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 in the first year around 63% of the total funds (€19 million). The EU trade related assistance also includes the Integrated Framework for the Least Developed Countries, the United Nations Conference on Trade and Development (UNCTAD), the International Trade Centre (ITC) and the WTO Law Advisory Centre.