EU aid for trade: Taking stock and looking forward

17-04-2018

Representing a third of global official development aid flows annually, aid for trade (AfT) has been on the rise. AfT has a very broad scope that includes projects ranging from building roads and modernising ports, to developing the banking sector, helping local food producers to comply with phytosanitary standards and providing more specific trade-related assistance, such as technical support in trade negotiations. Today, more than a decade after the launch in 2006 of the World Trade Organization's AfT initiative, which established a common framework for action, most commentators agree that AfT investments have helped developing – especially Asian – countries, to improve and diversify their export and trade performance. However, its impact on poverty reduction has been much less clear. The evaluation of AfT is done in a fragmented manner, which makes the exercise quite tricky, leaving space for very divergent opinions. The EU is a world leader in AfT, both in terms of volume and in policy formulation. Adopted in 2007, the EU Aid for trade strategy helped to link the Union's development and trade agendas, often perceived as incompatible, and complemented the EU's preferential trade schemes for developing countries. The 2017 strategy update, after the introduction of the new UN Sustainable Development Goals and the new European consensus on development, was an opportunity to consider the future direction of AfT and reflect on its effectiveness. The EU reaffirmed its commitments to AfT, while putting more emphasis on bridging the digital gap, empowering women and improving the situation of the least developed countries in global trade systems.

Representing a third of global official development aid flows annually, aid for trade (AfT) has been on the rise. AfT has a very broad scope that includes projects ranging from building roads and modernising ports, to developing the banking sector, helping local food producers to comply with phytosanitary standards and providing more specific trade-related assistance, such as technical support in trade negotiations. Today, more than a decade after the launch in 2006 of the World Trade Organization's AfT initiative, which established a common framework for action, most commentators agree that AfT investments have helped developing – especially Asian – countries, to improve and diversify their export and trade performance. However, its impact on poverty reduction has been much less clear. The evaluation of AfT is done in a fragmented manner, which makes the exercise quite tricky, leaving space for very divergent opinions. The EU is a world leader in AfT, both in terms of volume and in policy formulation. Adopted in 2007, the EU Aid for trade strategy helped to link the Union's development and trade agendas, often perceived as incompatible, and complemented the EU's preferential trade schemes for developing countries. The 2017 strategy update, after the introduction of the new UN Sustainable Development Goals and the new European consensus on development, was an opportunity to consider the future direction of AfT and reflect on its effectiveness. The EU reaffirmed its commitments to AfT, while putting more emphasis on bridging the digital gap, empowering women and improving the situation of the least developed countries in global trade systems.