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Video guest: Josephine Mwangi

July 2019
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Tuesday, 23 July 2019
- What is Aid for Trade?
Multilateral trade liberalization has the potential to generate significant economic opportunities that could lift many people out of poverty. But developing countries need to build their institutional capacity so they can translate market access into an ability to seize new trade opportunities.
In general terms, trade related assistance can cover: infrastructure improvements for roads and waterways; schemes to enable traders to meet international trading standards, like sanitary and health standards; assistance with WTO negotiations, (from funding think tanks to providing IT training for trade analysis); projects to modernise customs and border procedures, like outdated port handling facilities which can waste large amounts of time and money in transition economies hampering business and holding back economic development; support for fair trade projects, including support for developing micro businesses with business planning, market analysis and marketing , projects to fight fraud and corruption, providing technical and practical assistance to customs and tax authorities .; There are many more examples, but all the projects have one thing in common, they aim at helping developing countries to benefit from trade.
- The Current Situation
The EU is already the largest donor of trade related assistance. The actual average EU commitment for trade related assistance in the strict sense since 2001 (trade policy and trade development, not infrastructure) has been above €700 million per year. This fluctuates, as the priorities for the type of aid provided each year are set in agreement with development partners, countries, regions, institutions.
- The proposals
Today’s pledge refocuses more EU development funds to significantly increase the funding for aid for trade to €1 billion per year. This is another significant step in the drive to increase overall EU development aid and make it more coherent and effective.
With the commitments on development spending agreed at the European Council last month, today’s announcement should guarantee the increased the €1 billion figure for aid for trade spending for 2007-2013. This is in addition to EU Member States who have committed on average around €250 mlllion per year of trade assistance. At the European summit last month, European leaders reached a groundbreaking agreement which will put the European Union on track to double its aid by 2015. The European Union’s Overseas Development Aid for 2005 will be €46 billion - making the European Union the biggest donor of overseas aid in the world. The summit agreement sets a new intermediate target for development aid of 0.56 per cent of gross national income by 2010 - which would put Europe on course to reach, by 2015, the UN’s 0.7 per cent target. In practical terms the new proposals would increase EU development aid to €66 billion in 2010, rising to more than 90 billion Europe in 2015. The plans will also improve the coherence and quality of EU development policies, and make Africa a priority for all EU aid actions. The EU agreement on aid is the single biggest commitment in the run up to the G8 summit.
- How significant is the announcement today?
Many of the smaller vulnerable least developed African countries, like Mozambique, Ghana, Uganda have access to markets but are still effectively bi-passed by globalisation, because they cannot compete. For those countries, aid for trade is indispensable and it must be provided in a coordinated and sustainable manner. For those least developed African countries, today’s decision to boost aid for trade is very significant. It will make them stronger, more able to seize the opportunities of the global market, it is critical in terms of unlocking their trade potential.
- Key facts on EU trade
Since 1980 trade between the EU and developing countries has more than tripled and one fifth of all developing country exports now go to the EU.
The EU absorbed 63% of Least Developed Countries (LDC) exports to the “Quad” of Japan, the US Canada and the EU in 2003 and nearly 70% of their agricultural exports. 79% of all developing country exports to the EU enter either duty free or at reduced rates of duty – an increase of 8 % since 1999. 97% of Africa, Caribbean and Pacific countries exports to the EU enter duty free and tariff escalation is virtually non existent.
All goods imported from the world’s poorest economies (Least Developed Countries, LDCs) can enter the European Union completely free from tariffs and quotas.
Speaking today at a press conference in Gleneagles in Scotland before the opening of the G8 Summit, José Manuel Barroso, the President of the European Commission, pledged 1 billion Euro per year to support the trading capacity of developing countries. EU aid for trade helps poor countries make use of the export opportunities provided by market opening. President Barroso is representing the EU at the G8 summit along with the UK presidency. Multilateral trade liberalization has the potential to generate significant economic opportunities that could lift many people out of poverty. But many developing countries are ill-equipped to take advantage of new export opportunities. President Barroso, who attends the G8 summit as the “9th man at the G8 table”, announced details of the aid for trade deal and set out his key demands for the G8 summit. He has just returned from visiting South Africa, Mozambique and the Democratic Republic of Congo, and Libya where he and Kofi Annan addressed the African Union Summit.
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EU Trade Commissioner Peter Mandelson calls on the G8 to turn “personal conscience into real political commitment” by backing a successful Doha Round and following the European Commission in prioritising ‘aid for trade’ to help build Africa’s capacity to benefit from free trade and market access. He calls on the G8 to “match the partial advances on debt relief and the additional aid pledged, with a fresh act of political will to build Africa’s opportunities and capacities to benefit from free and fair trade.”
- The Trade Commissioner notes that if Africa could gain an additional 1% of global trade would deliver seven times more income every year than the continent currently receives in aid. Pointing to the huge structural obstacles that block African entrepreneurialism he argues: “Free trade is not a magic wand: it is only when it is combined with policies that improve poor countries capacities to trade that it works to deliver higher living standards.”
Better market access for and between developing countries. He calls for the Everything but Arms initiative to be adopted by the United States, Japan and Canada, matching Europe’s tariff and quota free access to all exports from LDC exports. More effective development assistance. He argues that Africa needs much more aid building the capacity to take advantage of market access in the developed world.Development friendly trade rules. He calls for the G8 to commit to reform of rules of origin to make it easier for developing countries to trade. He calls on the G8 push for greater international regulatory convergence of health and consumer standards for key developing country exports such as food and flowers, and for further aid to help developing countries meet our export standards.
More flexibility for some developing countries in terms of WTO rules. He backs the principle of temporary waivers from WTO rules for vulnerable countries. A 1% increase in Africa’s share of global trade would deliver seven times more income every year than the continent currently receives in aid.
Europe gets a bad press on its trade barriers and the CAP. Some of the criticism is justified; some not. But it is not for want of EU effort to help Africa trade.
The EU accounts for 31% of the exports of the 46 countries of sub Saharan Africa (excluding South Africa) – in all about 7% of their GDP. 33 of the 46 sub-Saharan African countries enjoy full quota and tariff free access to European markets, including for all agricultural goods, under the EU’s “Everything But Arms” initiative for Less Developed Countries. Of all LDC exports to the Quad of the United States, Canada, Japan and the EU, Europe alone takes 63% of the total and 70% of their agricultural exports.Already EBA has had positive results. Exports to Europe of the range of products that benefit have risen by 100% in 3 years, whereas they had fallen by 11% in the previous ten years. African countries like Malawi, Zambia, Tanzania, Ethiopia, and Burkina Faso have seen significant benefits. Thirteen sub Saharan countries are not classed as LDCs and do not enjoy that full and free access, including Ghana, Kenya and Nigeria. They do however enjoy a privileged trading relationship with Europe as ACP countries. 88% of their agricultural exports to Europe enter tariff and quota free. Yet, for all of Europe’s trade commitment to Africa, the 46 ACP countries’ overall share in trade has fallen over the last twenty years. In part because commodity prices have fallen sharply in real terms. But African countries also suffer severe competitiveness problems and supply constraints. Free trade is not a magic wand: it is only when it is combined with policies that improve poor countries capacities to trade that it works to deliver higher living standards. From landlocked Zambia it costs more to ship a ton of maize to neighbouring Tanzania than it costs to send the same ton of maize from Tanzania to Europe or the United States. In most European and American ports it takes a day to clear a container through port: in Ethiopia it takes thirty days. Europe recognises this and has been no slouch on aid. Half of all the aid flowing to Africa comes from the European Union and its Member States. At more than 3.5 billion euros since 2001, Europe already provides more “aid for trade” – that is aid to improve trade infrastructure and capacities -than the rest of the world combined. he “Everything but Arms” initiative should be adopted by the United States, Japan and Canada, matching Europe’s commitment to tariff and quota free access to all G8 markets for LDC exports.
70% of developing country tariff payments are made to other developing countries. Average tariffs for manufactured exports are three times higher between developing countries than they are in the developed world. The main beneficiaries of CAP reform are likely to be outside Africa, in more advanced developing countries such as Brazil whose beef and sugar industries are extremely competitive. This is not an argument against reform, which is essential to the Doha overall package – but let us not fall into the simplistic trap of believing that abolition of all or part of the CAP is the solution to the problems of Africa. It is not. disincentive to trade and thus a greater drag on fiscal revenue.
EU’s revised Economic Partnership Agreements (EPAs) in future will have a clearer development focus. They are not conventional trade agreements where both sides seek mutual advantage. The purpose of EPAs is to promote regional integration and African economic development. The Commission is introducing a new monitoring mechanism for the capacity building efforts we are making as part of these agreements.
Africa needs more aid, better co-ordinated and with a significant amount of it devoted to “aid for trade”, progressive liberalisation: development friendly trade rules. We need simplification and harmonisation of the Rules of Origin that will improve poor countries’ abilities to make better use of their existing preferences.
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Thursday, 07 July 2005
The ACP Sugar Group are the eighteen African, Caribbean and Pacific states signatories to the ACP/EU Sugar Protocol. These countries have enjoyed a long standing, traditional place in European sugar markets, and they have become an integral part of the EU sugar regime. The recent European Commission proposal to reform the sugar regime is expected to have a devastating effect on the vulnerable economies of the ACP sugar supplying countries. The sugar industry puts all the information relevant in the ACP context to the impact of this reform as well as the history of the Sugar protocol to have an holistic approach to the problem.
The Coalition for Fair Fisheries Arrangements (CFFA), a platform of non-governmental organizations based in Brussels, has launched its new website, which is now online. CFFA, which was formed in 1992, has the stated aim "to supply detailed information to coastal fishing communities with a view to promoting their active and informed participation in the decision-making processes affecting their livelihoods, with a special focus on fisheries relations between the European Union (EU) and ACP (African, Caribbean and Pacific) countries." CFFA documents the development and environmental impacts of EU-ACP fisheries relations on small-scale fishing communities. It campaigns for fundamental changes in EU fisheries policies, with the aim of supporting a multi-functional fisheries model that works for everyone involved, both inside Europe and outside European boundaries.
Apart from detailing the background, history and aims of the organization, the new website offers several resources, including newsletters and press releases, and details of existing and pending ACP-EU Agreements, the EU's Common Fisheries Policy (CFP), the Cotonou Agreement and other relevant issues.
The CFFA website also provides links to related sites on fisheries and fishworkers, as well as an Events page that features a calendar of conferences and meetings like the recent UNEP Workshop on EU-ACP Access Agreements.
The CFFA Secretariat is run by a Co-ordinator and draws on the human and financial support of participating organizations from EU and ACP countries.