Verbatim report of proceedings

Tuesday, 22 May 2007 - Strasbourg

7. The EU's Aid for trade (debate)

  President. The next item is the report (A6-0088/2007) by Mr Martin, on behalf of the Committee on International Trade, on the motion for a European Parliament resolution on the EU’s Aid for Trade (2006/2236(INI).

  David Martin (PSE), rapporteur. – Mr President, before turning to the substance of this report, I should like to thank my shadow rapporteurs for their cooperation in the preparation of the report and in particular to thank the Commission’s Trade DG and Development DG, which, I am pleased to say, have been very keen to engage with Parliament on this particular issue. Finally, I should like to thank Pelayo Castro Zuzuarregui, the Parliament official I worked with on this report. He is leaving us for a year – we hope it is only for a year! – to work for the Spanish Prime Minister. I have worked with him on this report and a number of other reports; I have found it intellectually stimulating to be in his company and I wish him well.

On the substance, Aid for Trade is a vital tool for linking developing countries to the global economy. However, I want to stress at the outset that it is not a substitute for the Doha Development Round, but a complement to it. It is clear that liberalising markets is not sufficient in itself to link developing countries into the global economy. You just have to look at the experience of the last 40 years: LDCs have seen their share of world trade almost halved from 1.9% to 1%, and this is despite tariff reductions following the Uruguay Round and other tariff reductions and recent efforts such as the European Everything but Arms scheme, which gives duty-free and quota-free access to developing countries. Therefore, liberalisation, which I would argue is important, clearly of itself has not been enough to engage the developing countries fully in the global economy.

I also do not argue – and I want to make this clear – that Aid for Trade is of itself a panacea. However, it is quite clear that there is now a growing consensus on the benefits that Aid for Trade might bring. The WTO ministerial meeting in Hong Kong in December 2005 set out an ambitious work programme for Aid for Trade and called for more assistance to help developing countries into the global economy. This followed Mr Barroso’s commitment at the G8 Summit in Gleneagles of GBP 1 billion of European Union money and GBP 1 billion of Member States’ money to assist in the Aid for Trade budget line.

While this is all most welcome and sounded quite dramatic at the time of the announcement, we have to realise that the increases are quite modest in substance: the European Union’s contribution will increase from a base of around EUR 850 million at the moment to EUR 1 billion, while the Member States – if they deliver – will go from EUR 300 million to a EUR 1 billion.

Last October the General Affairs Council called for a trade strategy to map out how we fulfil these pledges. My report indicates some of the key points I hope we will see in that strategy. Firstly, in relation to the scope of Aid for Trade, I want the measurement of the Barroso billion to be against the existing base, which has two categories: one being trade policy and regulation, the other trade development. However, I welcome the fact that the WTO task force has added three further categories: trade-related adjustment, trade-related infrastructure and productive capacity. These are vital aspects of the Aid for Trade agenda and I hope additional resources can be found to assist developing countries to deal with such matters as the phasing-out of preferences, reductions in government revenue as a result of tariffs being lowered, or help in adjusting to new competitive pressures due to regionalisation, such as EPAs.

My report argues that Aid for Trade should be demand-led and country-owned. In this context, the WTO’s enhanced integrated framework should become the key diagnostic tool for developing countries, assisting them to identify where Aid for Trade can bring maximum benefits. Within developing countries we must also ensure that the private sector and civil society are engaged with the process. While Aid for Trade undoubtedly represents a different approach to general development aid, it should, in my opinion, be based on the same fundamental principles of poverty reduction and sustainable development, and our main point of reference should continue to be the Millennium Development Goals.

I am pleased that much of what we called for in this report was reflected in the Commission’s communication published in April, and, perhaps naively, I like to believe that was part of the intense interaction between the Commission’s DGs and the European Parliament. I hope that, when the final joint EU trade strategy is adopted over the summer, it will also be reflected in that strategy document.

I have called in my report today for biannual reporting back to Parliament so that we can check that the Member States and the Commission have delivered on both the quality and quantity of the aid that they are promising. All institutions so far have shown a willingness to deliver collectively on what I believe is an important strategy that can make an important, if modest, contribution to linking the poorest countries of the world into the global trading system.

  Peter Mandelson, Member of the Commission. Mr President, I would like to thank the rapporteur, David Martin, for what I regard as a very rich report on aid for trade. I am very glad that he has referred to the Millennium Development Goals, because they represent our guiding idea and targets. I agree with him that free trade, whilst a necessary condition for development, is not a magic wand, just as I agree with him that aid for trade, whilst a necessary component of any development strategy, is not a panacea.

I believe that this report expresses a very strong commitment to the aid for trade agenda which I fully share. I have also read the very useful suggestions and guidance regarding the content of the EU joint aid for trade strategy, for which I am very grateful. Furthermore, I welcome Parliament’s engagement in this process.

Since 2005, the European Parliament, the Council and the Commission have developed a clear common vision on the main principles of aid for trade. We all agree that trade can be an important catalyst for growth and poverty reduction in developing countries, but the successful integration of developing countries into the world trading system requires more than better market access and strengthening of international rules. In this respect the General Affairs Council conclusions of 14 and 15 May this year recall the crucial role of aid for trade.

The challenge we are now facing is to put these principles into practice in the context of the EU aid for trade strategy on which the Commission and Member States are jointly working. This strategy should set out a roadmap to meet our financial pledges, give guidance to improve the effectiveness of our aid, provide a framework on monitoring and reporting of aid for trade, and address the capacity of the Commission and Member States to deliver aid for trade. The strategy will be ready in October of this year and will then be presented at the WTO aid for trade review, so this Parliament’s report is extremely timely.

I would like to address some specific concerns raised in the report, and first of all the issue of the broadening of the scope of aid for trade in relation to the EU financial pledges. Let me emphasise that the credibility of our pledges is of great importance and make it crystal clear that there will be no changes to the scope of our pledge. The EUR 2 billion target remains related to the categories of trade policy and trade development.

I attach great importance to the wider aid for trade agenda, which includes building productive capacities beyond trade development, infrastructure and adjustment aid. For these areas, which are very capital-intensive, we need clear political commitment to do more, but let me stress once again that these efforts will not be counted in relation to our financial pledges.

Regarding the lack of additional resources for EDF funding to ACP countries, we would be happy to do more, but the Commission does not decide on the budget for the EDF. EU Member States do that. There are limited exceptions only and these are also approved by Member States and dedicated to very specific purposes such as adjustment arising from the sugar reform.

Regarding the integrated framework, I am glad to confirm what I announced in Hong Kong. The Commission is ready to commit EUR 10 million over the first two years to the multilateral part of the enhanced integrated framework. In addition to this, the Commission will complement the multilateral window with substantial bilateral and regional funding to implement activities identified through the integrated framework and prioritised by the respective partner governments. We will also provide human resources and capacity in the field to contribute to a better functioning of the integrated framework.

The issue of adjustment aid is rightly highlighted in the report. However, I do not agree that the EPA negotiations deserve a special mention in this context. Adjustment aid is relevant in relation to all external trade shocks. They may result from trade negotiations but could also be a consequence of unilateral reform as in the case of sugar. In any outcome of the EPA negotiations, the implementation of obligations of ACP partners will be phased in over a very long period and this will facilitate adjustment and identify requirements that we need to help meet.

Finally, we noted your request to look into the IMF’s trade integration mechanism as part of the EU aid for trade strategy. We think that this is more appropriately addressed in cooperation with other international donors, for example as part of the global aid for trade review at WTO level.

Let me once again express my deep appreciation for this Parliament’s political support for aid for trade, as well as our willingness to cooperate with the European Parliament to make further progress, and I look forward to doing so.

  Margrietus van den Berg (PSE), draftsman of the opinion of the Committee on Development. – (NL) Mr President, the Commissioner was right to point out how trade and development cooperation are very much intertwined. If we want to achieve the Millennium Goals in 2015, aid and trade must – as they indeed can – complement one another.

The developing countries need our help in order to further develop their regional markets, and the rules of origin must be improved as a matter of priority if they are to do that. Europe and developing partners must join forces in a bid to locate a task force for development, one that can flesh out this construction of local markets.

This task force should be made up of experts in the area of trade and development policy, and could help develop and implement specific trade-enhancing measures. We should, in this context, think along the lines of alternative tax revenue, the reinforcement of the production capacity and the standardisation and creation of joint external border control. Human resources, in particular, should be developed further. Practical support of this kind would be a real help in getting the local markets and mutual trade off the ground. With regard to the large infrastructure, we thought the EIB was a better bet.

This trade-specific aid should not, however, come out of our own pocket; it should not, then, be funded from the existing development budget. The Socialist Group in the European Parliament wants to see new funds made available for this, because otherwise, fewer funds would be available for achieving the Millennium Goals which are, after all, the chief goal to which the Commissioner, a moment ago, pledged 100% commitment, and in that respect we would like to wish him success.

  Maria Martens, on behalf of the PPE-DE Group. – (NL) Mr President, Commissioner, for a long time, we supported developing countries in all kinds of areas, except for that of trade. Partly as a result of that, countries and their economies have largely remained subsidy-dependent.

Economic growth proves indispensable to fight poverty effectively. The tremendous progress which countries in Asia have made proves this point, Korea being a prime example. Little by little, we are finding out that trade offers immense opportunities for the economic growth of poor countries.

Invariably, developing countries still lack the right infrastructure to be able to operate within the global market. This is why these countries need our support, and this is where aid for trade comes in, whose goal is to enable developing countries to function within the international market. Thanks to aid for trade, countries can, for example, improve the rules in areas that are related to trade, such as taxes and customs, and seeking to improve the road network and waterways, to fight fraud and corruption, and both enhance production capacity and also diversify. After all, many countries depend on one agricultural product only. The diversification of products makes for a more stable economy.

It is also necessary to increase capacity in order to train good negotiators. I welcome this aid for trade initiative, because it offers poor countries aid in order to strengthen their economies and increase their independence.

As has already been mentioned, aid for trade is not a panacea for development, but a necessary tool to allow developing countries to tap into the international market. I compliment Mr Martin, the rapporteur, on the report and also thank him for his good cooperation, as a result of which the report that is before us is not only sound in terms of content, but will also enjoy widespread support.

Mr President, Commissioner, in order to render this instrument effective, I would ask the Commission for a sound work programme – one that is both feasible and realistic – and for good cooperation with the Member States.

  Sajjad Karim, on behalf of the ALDE Group. – Mr President, I would like to start by thanking the rapporteur for the way he has dealt with this report. As ever, Mr Martin has been open and willing to engage in compromise with colleagues, producing a report which demonstrates a real consensus in the Committee on International Trade. That said, having asked the shadow rapporteurs not to bring forward amendments at the plenary stage in order to preserve the spirit of that consensus, it would have been respectful had the PSE Group kept to that agreement. Nevertheless, I think we have done enough to ensure that the consensus will hold through the plenary.

I was unsurprised by the depth of common ground between us on the crucial issue of the EU’s Aid for Trade. The G8 summit in Gleneagles where the Commission and EU governments both pledged EUR 1 billion in aid to the world’s poorest people was preceded by a hugely popular campaign. Through the Make Poverty History marches, the Live Aid concerts and other efforts, millions of people have made their voices heard. They are angry, and right to be, about unfair trade rules and highly protected markets that work against those living in poverty and they are passionate about the need for change. If we are to build on the phenomenal mobilisation of public opinion, the pressure must continue at every level, domestic and international.

The key question is whether there is the political will to drive that change. Aid for Trade must ensure that the poorest nations have the capacity to benefit from increased trade liberalisation, efficient customs agencies, better infrastructure, tax regimes which do not rely on import and export duties and anti-corruption measures to ensure that the money gets to the people who have earned it.

Ultimately we will be judged not by how much is promised but by how much is delivered. Pledges on aid are always more easily made than kept. We are all too familiar with the double counting and relabelling tricks that recycle all pledges as new money.

The EU’s Aid for Trade package has a unique role to play to ensure sustainable development, growth and prosperity in the developing world. As such it must be new money over and above existing commitments and trends and it must not come at the cost of monies already earmarked for other crucial development projects such as health and education.

Whilst Aid for Trade is a long-term driver of development, meeting short-term targets, such as the Millennium Development Goals, must remain central to the EU’s international development policy. There too we must do better: some USD 50 billion more a year rather than the current commitment over a five-year period. If sustained political will is required to deliver Aid for Trade, then political courage is needed to ensure we deliver the MDGs in sub-Saharan Africa.

Aid works best when it is delivering a common set of objectives agreed between donor and recipient. We have to concentrate on finding solutions which best fit a country’s needs. That means responding to the demands of civil society and the private sector. As a Parliament, we have already thrown our weight behind the fair trade movement.

If we are to help reduce the poverty in which they live, we need mechanisms to ensure the aid reaches the people who need it most. This report provides the Commission with some clear and reasonable guidelines to that end. It is up to you, Commissioner, to deliver on them.

  Frithjof Schmidt, on behalf of the Verts/ALE Group. – (DE) Mr President, we, too, wish to thank Mr Martin for the good work he has done, and I would like to begin with a positive political development. It is good that the ‘General Affairs and Foreign Relations’ Council, which is responsible, acknowledged on 15 May that reductions in tariffs made enormous inroads into the state revenues of many developing countries, and it is good that it stressed the need for, and necessity of, compensation payments to address this. Had it not done so, we would run the risk of our trade policy possibly bringing about the rapid collapse of any development policy whatever in the countries affected.

It is absolutely vital that we do something about this, but for that we need additional funding that cannot be set against the development aid funds if we want to achieve the millennium development goals. What has to be avoided is the occurrence of a sort of ‘displacement effect’, with a move away from the combating of poverty and from the millennium goals campaign towards promoting an orientation towards exports.

That would be a misconceived tendency, one that could be triggered by the injection of these two billion in the absence of deliberate political action on our part to counteract it. In terms of development strategy, the stabilisation of local markets takes, as a rule, precedence over the preparation of the most vulnerable and poorest countries to become exporters; what matters is that our policy be consistent. ‘Aid for Trade’ must not be allowed to relativise the fight against poverty, and so it follows that additional funds are needed in order to finance it. It is in this regard that I would be really interested to know from which Budget lines the money is being taken. Moreover, ‘aid for trade’ must not be allowed to play a part in undermining the stabilisation of local markets, which must be at the heart of any development strategy.

That is the Commission’s task in putting into practice the wide-ranging concept of ‘aid for trade’ and I appeal to you, Commissioner, to pay particular attention to these aspects.

  Zbigniew Zaleski (PPE-DE). – (PL) Mr President, Commissioner, rapporteur, allow me to pose the following question. Why should there be Aid for Trade? The answer is because trade has an important role to play. I should now like to make a few observations.

For centuries, sound trade has brought people together without detriment to their identity, values or social and political life. Europe needs to find equal partners amongst the major players on this stage and most especially amongst the lesser ones. Trade must be governed by clear rules that allow both sides to benefit. ‘Free and Fair Trade’ is a slogan worth adopting.

Fair trade cannot take place without the relevant infrastructure, and without agreements such as those reached in the framework of the WTO for example. Relevant guidelines applicable to the entire producer-consumer chain must be developed.

It must be borne in mind that aiding trade also involves supporting our own threatened sectors such as sugar and soft fruit.

In addition, support should be provided for cross-border exchanges between the Union and its neighbours, for example Ukraine.

At the global level, the situation concerning exchanges is so diverse that standardisation is required. All citizens must be informed about these standards too. An aid programme should therefore be developed drawing on Europe’s historical experience and the wealth of Europe’s supply of goods, services and know-how. Funding for this programme should also be made available. Funding need not be on a large scale, but it is essential.

By way of analogy I should like to point out that sound trade can do more than simply raise the standard of living, especially in poor countries, which is the focus of this. Sound trade can also lead to more peaceful solutions to global conflicts.

As I conclude, I would like to mention an anecdotal assessment, namely that Ryanair does more towards bringing about a common Europe than certain European institutions, because it brings people closer together. Similarly, ‘Fair and Free Trade’ does more towards bringing about integration and well being for the people of this Earth than dubious political decisions, especially in poor countries.

Trade is what makes the world go round. Europe should promote the kind of trade described, and it is the Commissioner’s duty to ensure that it does so.

  Gianluca Susta (ALDE). – (IT) Mr President, ladies and gentlemen, it will not have escaped anyone in this Chamber and in the economic and productive world of the European Union that an increase in Aid for Trade may help develop the market in a freer and at the same time fairer and better controlled way.

If the EU wishes to remain the world’s top economic power and the area of greatest freedom and least social inequality, while also benefiting from the boost it has always received and continues to receive from Parliament, it must not only help to develop the ability of developing countries to promote foreign trade despite their unfortunately considerable loss of competitiveness on world markets, but it must also increase Aid for Trade in the knowledge that liberalisation and aid are not mutually exclusive initiatives.

In this context, the not insignificant sum of EUR 2 billion is still not enough. We have to clarify the Aid for Trade concept itself by taking on board the conclusions of the WTO Aid for Trade Task Force on fundable projects and by integrating development policies and actual trade policies as much as possible, as envisaged in the integrated framework, not least with a view to reducing poverty.

  Zdzisław Zbigniew Podkański (UEN). – (PL) Mr President, ladies and gentlemen, much has been said within the European Union about a balanced multilateral system of trade and about enabling developing countries to become involved in trade and benefit as a result.

This concern has not, however, been accompanied by an improvement in the situation of the least developed countries. The opposite is the case. Over the last 40 years the participation of these countries in world trade has almost halved, falling from 1.9% to 1%. It is also the case that powerful large chain stores have caused the demise of small traders and that income has been transferred away from less developed countries. That much is abundantly obvious. These facts indicate clearly that globalisation and liberalisation of trade serves to concentrate capital in stronger countries and to increase poverty in less developed ones.

We have noted a new approach to trade by the European Union in recent years. This approach is characterised by a desire to export industrial products at the expense of agricultural ones. It is gradually leading to a loss of food security for the Union in general and for the new Member States in particular. It is therefore essential for the European Union to adopt a new approach to international trade and for work on the implementation of national strategies for trade development to be undertaken.

  Georgios Papastamkos (PPE-DE). – (EL) Mr President, no one doubts that aid for trade is a particularly important initiative. It helps to bring about the more complete and effective integration of developing countries, especially the less developed countries, into the multilateral trade system.

As we have heard, trade is not a panacea for development. However, it can strengthen the economic and general development of recipient states.

The special and differentiated treatment of developing countries within the framework of the WTO is necessary to a degree, especially as regards the less developed countries. It should, nonetheless, be pointed out that their assumption of multilateral commitments and their compliance with WTO rules are an incentive for reform which will turn out to be to the benefit of the developing countries themselves.

The gradual opening up of their markets and an outward-looking economic and trade policy help to strengthen their competitiveness, allowing the transfer of technology and know-how.

The developing countries do, however, appear to be extremely reticent at multilateral negotiations to heed calls for them to open up their markets. For this reason, aid for trade is of decisive importance in encouraging these countries to respond to new obligations and to apply multilateral trade rules, to mitigate the cost of their adapting to reforms and to integrate trade into their development policies more effectively.

It goes without saying that aid for trade must be accompanied by appropriate internal policies in developing countries, so that they maximise the result. The European Union is being called upon to play a leading role in this endeavour, in order to formulate an effective, cohesive and targeted aid for trade agenda.

To close, I should like to congratulate Commissioner Mandelson for supporting this initiative and for linking the external aspects of competitiveness with internal initiatives for the benefit of the competitiveness of the European economy, which was the subject of our previous debate.

  Arūnas Degutis (ALDE). – (LT) First I would like to congratulate the Member States and the Commission for making a commitment to increase the funds allocated for assistance to business to two billion euros by the year 2010. This is a serious commitment, and in implementing it a great deal of coordination will be required.

In order to achieve this goal, a common European Union strategy is essential, which will have to set out the ways in which the stated goal is going to be achieved. I also congratulate the Committee on International Trade for its timely report in which the committee presented Parliament's views regarding the complex issue of assistance to business. I support the proposal that the Commission present reports to Parliament twice every year. These reports should assess progress in the EU's granting of assistance to business.

Although the commitments I mentioned were made by various countries according to the traditional definition of assistance to business handed down by the Organisation for Economic Cooperation and Development, in future there is a need to look more closely at the WTO's conclusions and the suggested widening of this definition to include 'business infrastructure' and 'creative productivity possibilities'; in other words, to do everything possible to ensure that assistance to business is all-encompassing, more flexible and more effective.

  Tokia Saïfi (PPE-DE). – (FR) Mr President, Commissioner, the European Union is today displaying ambitious commitments where development is concerned.

I welcome this because there is an urgent need to help developing countries to reduce poverty, to achieve the Millennium Development Goals and to benefit from sustainable economic growth. Let us therefore hope and pray that these objectives are translated into concrete and effective action.

In this connection, we can only welcome the commitments made to increase aid for trade. I should like to highlight some points that justify the essential nature of this instrument. This instrument meets, firstly, the requirement for consistency, which must guide the EU’s external actions: by interlinking the various areas of its external action, the European Union corresponds to two principles, those of producing better legislation and of increasing the effectiveness of its aid. This instrument also deals with the reality of the multilateral trade system by helping developing countries and the least advanced countries to benefit from the advantages resulting from market access.

Finally, this instrument helps implement trade agreements. One might mention at this point the WTO agreements or the economic partnership agreements. Aid for trade thus helps to make international trade an instrument for reducing poverty through economic development.

Finally, if it is to be effective, aid for trade must meet several urgent needs: it must be accompanied by practical commitments, not least those promoting technical assistance; its implementation must be controlled and monitored and it must strengthen local ownership and results-focused management. This is crucial if aid for trade is to enable developing countries to benefit from the advantages resulting from the multilateral trade system and to provide themselves with the means actually to increase their capacities in the trade arena. Let us therefore call on all the parties involved not to relax their efforts, so that aid for trade is able to keep its promises.

  Peter Mandelson, Member of the Commission. Mr President, I would like to welcome and commend all those who have spoken on this subject this morning. I do not find myself in disagreement with anyone who has contributed. I agree, for example, with Mr Papastamkos, who said it is very important that, when we are pursuing trade and reform policies of our own, we are able to put in place flanking measures properly supported with adequate funds which enable developing countries to adjust to those reforms too. I agree with Mrs Saïfi that this has to be a results-driven process, which is why I attach importance to proper reporting as part of an effective aid-for-trade monitoring and reporting pillar, both in respect of what we do in the EU and in relation to the WTO.

If I might, though, just make two responses: first of all, to those who have questioned whether there is any question of double counting, recycling of money, robbing Peter to pay Paul or robbing Paul to pay Peter (which might be preferable!) – in fact neither is happening. Aid for trade, in our view, should never imply less aid for other sectors. The increases in aid for trade for both the Commission and the Member States are less than the overall ODA budget increases. Therefore, there is no need to reallocate resources from other sectors to meet the aid-for-trade pledges.

Secondly, one or two Members raised the issue of fair trade. In my view, our strategy should confirm full support for any activity which involves the private sector – especially SMEs – and civil society to ensure that aid for trade facilitates the creation and growth of enterprises to compete in international markets, for example, voluntary initiatives such as fair trade, eco-labels and comparable corporate scheme standards. The strategy should also address related issues of labour market and social adjustment and the ILO’s core labour standards.

Last of all, I think that Max van den Berg’s point about rules of origin, their improvement and simplification is very important. It is something on which I have focused and not made, along with my colleagues in the Commission, as much progress to date as I would like to have done, and we need to add speed.

Lastly, I think Mr Schmidt made some important points about aid for trade and its possible impact on local markets, and I shall certainly reflect on those. But I would like to thank David Martin once again for what has been an excellent and welcome report.

IN THE CHAIR: MR MARTÍNEZ MARTÍNEZ
Vice-President

  President. Commissioner Mandelson’s speech ends the debate.

The vote will take place tomorrow at 12.00 noon.