Europaudvalget 2010-11 (1. samling)
EUU Alm.del Bilag 539
Offentligt
15 August, 2011Danish position on the Commission’s Public Consultation on a new Trade andDevelopment Communication 2011Trade, inclusive growth and developmentThe 2010 Trade, Growth and World Affairs communication points out that Trade is an engine for globalgrowth. It contributes to long-term jobs in the EU and around the world. It has a real impact on the day to daylives of people and businesses in Europe, and offers a path to development to those in most need, wherever theylive.1. How could the EU support developing countries better integration into the worldeconomy?Supporting the developing countries’ integration into the world economy with the objective ofcreating sustainable economic growth and poverty reduction requires a multifaceted coherentapproach both at global, regional and national level. The EU must support structuraltransformation through enhancement of productivity and value added and patterns of growththat enable the bulk of a country’s productive units and economic agents to contribute to andbenefit from growth. This presupposes a deliberate targeting of trade policies, Aid for Trade,development assistance and internal EU policies.EU must continue to strive for a successful development friendly conclusion of the DohaRound, including a possible “early harvest” in the form of a “LDC package”. Furthermore inits bilateral/regional trade relations with developing countries and its GSP scheme, EU’sapproach should be guided by the objective of maximizing the development impact of its tradepolicies.
However, simply promoting trade liberalization will not be sufficient. Emphasis should be onbuilding capacity to produce and overcome technical barriers to trade in developing countriesand improving their national framework conditions in order to be able to compete in the globaltrading system.2. What policies and reforms in developing countries are needed to ensure that tradeliberalization improve those countries' prospects for inclusive growth? In this context, howcould EU policies contribute to improving domestic resource mobilization in developingcountries?The EU should support accelerated growth and policies and interventions that expand the basisof growth. The aim is to make it possible and worthwhile for a rapidly growing number ofpotential entrepreneurs, farmers and laborers to engage in productive activity. Making marketswork through reforms designed to improve the business environment for entrepreneurs andfarmers of all categories, accompanied by appropriate flanking policies, investment in humanresources and dismantling of gender related barriers are key ingredients. Economic integration,including regional integration, can help create larger domestic markets. This implies alsoaddressing market failures such as lack of financing and affordable transport as well as buildinginfrastructure to dismantle physical bottlenecks, overcoming technical trade barriers andavoiding inappropriate policies promoting economic development out of line with a country’sendowments.Advocate for a more broad-based industrial policy based on competition, market discipline andpublic-private dialogue.3. Which aspects of sound economic governance are important for sustainable social andeconomic development?The design and effective implementation of sound macro-economic policies are fundamental topromoting sustainable social and economic development. So is a transparent and predictableand un-bureaucratic institutional and regulatory environment, including in relation to importand export, as well as easily accessible financial services for businesses of all sizes and kinds.4. What can be done to ensure that the gains from greater trade and investment are moreevenly distributed, especially to the worst-off groups in developing countries?The gains from trade integration to the poor should be maximized through policies andinterventions that enable small-scale operators of both sex to enter mainstream economicactivity and competition on reasonable and generally accepted terms. The regulatory and fiscalframework should facilitate their full contribution as economic agents while reflecting the
realities of informal and formal operators and providing for a manageable transition from theformer to the latter. In addition, the ability of the poor to participate as economic agentsshould be enhanced through investments in their education, health, access to infrastructure andtransport as well as safety nets and insurance facilities providing protection from economicshocks. Complementary policies also need to be in place, including suitable macroeconomicpolicies, efficient labour markets, a supportive system of education and training and a soundregulatory environment. Moreover, products that target the population at the “base of thepyramid” can make daily life easier for these consumers and free up resources for othereconomic activity.5. The EU pursues a comprehensive approach to trade negotiations with developing countriesencompassing services, investment and trade-related issues (e.g. competition policy,innovation and intellectual property rights, public procurement, good governance in the taxarea, environmental and social aspects). Should this approach be maintained or adjusted?The EU’s present comprehensive and ambitious approach to trade negotiations should ingeneral be maintained. However, when negotiating with low income countries (LICs)/leastdeveloped countries (LDCs) for example within the framework of the Economic PartnershipAgreements (EPAs), the EU should carefully consider the countries’ level of development,country specific defensive interests and capacity to benefit from trade liberalization, as well asinterests related to ongoing regional economic integration. In order to reach a developmentfriendly outcome, the EU’s approach in the EPA negotiations should be guided by flexibilityand readiness to adapt to the situation in any specific region.Economic and demographic growth will increasingly take place outside Europe and the industrialized world, butwill not be evenly distributed. EU action has to adapt to this changing reality in order to have an appropriaterelation with the emerging economies and while assisting the efforts of less performing and more vulnerable ones.In the Public Consultation related to the Future Trade Policy, many respondents agreed on the importance ofdifferent approaches in EU trade relations according to the level of development of our partners, in order to focusthe attention on the countries most in need or for a better consideration of the position of emerging countries.6. What approach to the increasingly differentiated developing world would be the mostsuccessful to reduce poverty worldwide?The approach should first of all be based on policy coherence between trade and developmentpolicies, but also with EU’s internal policies. Moreover, there is no “one size fits all” whencombating poverty in developing countries. To be successful, interventions need to be tailor-made to each country’s challenges and opportunities and national priorities.7. How could agreements with more advanced developing countries (such as China, India andBrazil) better reflect their increasing role in the global economy?
The increasing role of emerging economies such as China, India and Brazil should be reflectedin terms of an increased level of ambition in trade negotiations both with respect to the pace ofliberalization, product coverage, reciprocity and flexibility on number of areas to be included inthe negotiations. However, notwithstanding their high growth rates, increasing competitivenessetc., a large number of the world’s poor people continue to live in middle income countries – afact that should not be forgotten and needs to be taken into account when EU negotiates withthese countries. The EU should also encourage emerging economies to provide duty-free-quota-free (DFQF) market access to their markets for products from LDCs and to providedevelopment assistance, bilaterally and multilaterally that help LDCs effectively use theirmarket access.InvestmentThe current phase of globalisation has seen a dramatic increase in foreign direct investment. The EU remainsthe largest source of FDI in the global economy. FDI is a key driver of development, a major source ofproductivity gains, business, development and jobs abroad. It also assists in building up the global supply chainsthat modern economies need.8. Should EU trade policy and negotiations aim to establish open and stable conditions forinvesting in partner countries, including developing countries? And should the EUdifferentiate to take account of trade partners' development level and if so, what criteriashould it use?The EU should use all policies available to it to support the development of an enablingenvironment for domestic and foreign investments. The EU’s development instruments are,however, seen as more relevant to this end than trade policy.9. How else can the EU tailor its investment policy to promote and sustain inclusive growth inthe developing world?According to UNCTAD, FDI has played an increasingly important role in LDCs in the lastdecade as a major contributor to the countries capital formation. Although the trend is towardsa more diversified FDI regime, investments are still overly concentrated in export-orientedprimary production with limited employment, technological and productivity linkages. It isimportant to create conditions that attract investment into areas with more potential linkages –up-stream and downstream – to the rest of the real economy. The EU can best pursue this goalthrough its role in development cooperation in-country.Moreover, the EU may promote awareness of the UN-backed Principles for ResponsibleInvestments (PRI) among investors in order to increase integration of social and environmentalconsiderations in investments in companies operating in the developing world.10. And how can it best encourage Corporate Social Responsibilities practices by investingenterprises and their suppliers, while adapting to different national and regional contexts?
In selecting the appropriate types of interventions and methods to encourage CSR, the localcontexts must be taken into consideration. EU should promote and support a strategic andproactive approach to Corporate Social Responsibility (CSR) by promoting partnerships withstakeholders in developing countries incl. responsible supply chain management, respect forhuman rights, labour rights and protection of the environment. The EU may do so byincreasing awareness among businesses of international initiatives such as UN Global Compact,the UN Guiding Principles for the implementation of the UN “Protect, Respect and Remedy”Framework and by promoting the use of the international ISO26.000 Guidelines on SocialResponsibility. To further this aim, EU could politically and financially support and engage inthe continuous development of these international initiatives. Many European countries alreadyhave facilities aimed at supporting broad partnerships, not least when it comes to developmentassistance.Without jeopardizing the voluntarism of CSR, EU should establish a flexible EU-regulation oncompanies' disclosure of non-financial information, encompassing both listed and non-listedlarge companies and investors. An EU-regulation on reporting on CSR should refer tointernationally recognized initiatives on CSR, such as UN Global Compact and PRI, and notdevelop any new European standard.ServicesServices are important for developed as well as for developing country economies.The rapidly expanding services sector is contributing more to worldwide growth and job creation than any othersector. It accounts for 75% of EU GDP and 50% on average in developing countries. Efficient servicesinfrastructures boost the competitiveness of other economic sectors. An effective global manufacturing supply chaincannot exist without the vital support of transport, telecom, financial, business and professional services.11. What conditions are needed for the service sector improvement in developing countries?And what conditions are required for that improvement to enhance growth prospects,boost employment and reduce poverty? What specific conditions, if any, are necessary forthe LDCs?There is no “one-size-fits-all” approach to service sector improvements. Each country has itsown characteristics which need to be carefully assessed in order to develop the right policyinterventions. Having said that, developing countries often face a number of structuralweaknesses that are common to all services sectors, including inadequate regulatoryframeworks, poor infrastructure and energy supply, poor access to capital and technology,numerous and fragile SMEs and lack of institutional capacity to put in place the rightsequencing of policy reforms and liberalization initiatives. Moreover, an area of key importanceto the development of the service sectors is the improvement of the supply of highly skilledworkers who can fulfill the increasing technical requirements in various service sectors. Women
are often playing a significant role in services and would benefit from growth in the sector,particularly if they are given opportunities to overcome gender related obstacles todevelopment and diversification of their enterprise.Besides domestic constrains, export in services are often hampered by various trade barriers,for example with respect to commercial presence and the movement of natural persons. Interms of the LDCs, the agreement of an LDC Services Waiver as part of an early harvest ofDoha Round would enhance the growth prospects of the services industries in LDCs ifimplemented in a coherent manner with development assistance/Aid for Trade aimed atovercoming domestic constrains.Public ProcurementPublic procurement is the process by which government buys the goods and services the public sector needs tooperate from papers clips to computer systems, waste water plants, ship building or consulting services. Publicprocurement is considered an anchor for regional integration and development (e.g. fight against corruption, levelplaying field, enhanced accountability). Untransparent, discriminatory procurement procedures and practicessignificantly distort trade and curb growth potential. While the EU asks its industrialised trade partners for asubstantial liberalisation of public procurement, in negotiations with LDCs, the main emphasis is onencouraging transparency and the creation/strengthening of regional procurement markets.12. What conditions are needed to ensure that, when developing countries open their publicprocurement markets, this enhances their growth prospects, boosts employment, andreduces poverty? Are these conditions the same for all types of developing country?A precondition for using local public procurement systems must be transparency and reliabilityfor all parties involved including donors and companies. In its “Joint Guide for Strengtheningand Using Reliable Country Procurement Systems” of September 2009,(http://www.unpcdc.org/media/142160/jppguidefinal090909.pdf)the “Nordic+Procurement Group” emphasize that the best way to develop country systems is to use them.Where the procurement capacity is not entirely satisfactory, donors should consider providingprocurement capacity development support, taking into consideration local Audit Authoritiesand Anti-Corruption Agencies. To ensure the most extensive use of local procurement systemsthe donor approach has a significant role.Trade and sustainable developmentThe impact of increased international trade flows on overall economic development and on jobs, labour standards,human rights, environment and climate depends to a large extent on policies other than trade policy. However, iftrade is to deliver the expected benefits, those policies, together with other relevant factors, need to be taken intoaccount as an integral part of the trade policy-making process. In accordance with the European Council'sconclusions on the renewed sustainable development strategy, as well as the Lisbon Treaty, EU trade andinvestment policy will have to contribute to sustainable development, including by improving environmental,labour and social standards and respect for human rights.
13. How can EU trade policy (continue to) support sustainable development in developingcountries?The dismantling of remaining subsidies and other impediments to trade that hamper thedistribution of production based on absolute advantages would be one of the most effectivemeans to address sustainability.Also, the EU should continue to use its incentive based approach to support sustainabledevelopment and environmentally friendly products in developing countries, for example viathe inclusion of chapters on sustainable development in free trade agreements or via the specialarrangement for sustainable development and good governance (GSP+). The main trust is thattrade preferences coupled with cooperation and dialogue is a better way of promotingsustainable development than via trade sanctions and isolation.Finally, the EU’s trade-related efforts to promote sustainable development should not beviewed in isolation, but in close cooperation with EU’s other policies in support of sustainabledevelopment.14. Should EU trade policy specifically promote the respect of human rights in developingcountries? If so, how?It is important to pursue a targeted and consistent human rights policy making use of allrelevant instruments, including trade instruments, and not only towards developing countries.The EU must ensure that human rights are not being compromised in the name of economicand trade interests and that trade policy will not directly or indirectly have a negative influenceon human rights, but a more proactive policy is obviously also called for.The EU already has a range of instruments at its disposal to this end such as GSP+, humanrights clauses in bilateral cooperation and trade agreements and the adoption of (trade andother) sanctions and/or withdrawal of preferential trade in severe cases.It is also important to strengthen the cooperation and understanding between the trade andhuman rights communities, which still to a large extend are acting in isolation from each other.The EU should explore how to institutionalize relations between the trade and human rightscommunities.The increased CSR efforts present another opportunity to strengthen the promotion of humanand labour rights.
The EU is one of the biggest importers of natural resources (fossil fuels, minerals, timber etc.) from developingcountries. The environmental impact of resource use by the EU and other major economies is felt globally.15. How can EU trade and development policy further promote sustainable management andefficient use of natural resources in developing and emerging economies, and whatmeasures should be implemented in order to avoid environmental negative consequences inthe exporting countries ensuring long-term benefits for local people?EU should continue to support initiatives such as Extractive Industries Transparency Initiative(EITI) as described below in the introduction to question 20.Moreover, to avoid environmental negative consequences, it is important to promote a policyframework and regulation that can further trade-/market-driven growth in a sustainablemanner and not e.g. allow lower requirements or standards for manufacturing enterprisesbecome a competitive parameter due to pressure from strong private interests. Hence, itdemands a public sector, which clearly defines the necessary actions including administration ofnatural resources – often the most important national asset – in the best interest of the country,including the poor and the environment. This includes support to capacity building at variouslevels and simultaneous investments in infrastructure, education, health and other social sectorsthat are necessary for ensuring long-term sustainable development.Trade-related sustainability assurance schemes such as natural resource-based product certification or fair andethical trade schemes can make an important contribution to sustainable growth in developing countries.16. How can EU trade policy (continue to) maximise the potential of such schemes fordeveloping and emerging economies while addressing risks of confusion related to amultiplicity of such standards? What should be the role of the private sector here?EU can support stronger coordination and development of international/universal principles toreduce the multiplicity of national schemes and standards covering specific areas or sectors.Development assistance can complement the market-driven demand, e.g. through support tocapacity building and training to assist poor farmers and manufactures to produce undersocially responsible and environmentally sustainable conditions meeting consumer demand andinternational certification schemes.See reply to question 10 regarding the private sectors voluntarism in relation to CSR.The Commission has funded 'corporate social responsibility' campaigns encouraging new models of private sectorinvolvement in the economic development of developing countries. These models involve a partnering approachconsidered beneficial for the company concerned and for the local community in which the company invests.
17. Do you think this approach is successful? And should it be encouraged through EU tradeand development policy?A partnering approach is perceived as the right way forward, and should definitely beencouraged through EU trade and development policy in coordination with UN initiatives.Trade policies and trade liberalization impact differently on women than on men due to factors like unequalaccess to the formal sector, income-generating jobs, land, credit, information and economic decision-making.18. What are the main factors limiting the involvement of women in trade in developingcountries? How can trade and development policies address these constraints?Women are frequently systematically discriminated against also in the economic domain. Theyconstitute a considerable, unutilized potential in terms of influencing and contributing togrowth. Focus should be on supporting equal access by women to property rights, financialservices, the labour market, education, vocational training and technology with the aim ofenabling them to break into more and more lucrative areas of economic activity. Safety netsand insurance against shocks are also often particularly important to female entrepreneurs.Trade AgreementsAlongside global negotiations in the WTO (the ‘Doha development round’), the EU conducts bilateralnegotiations with partner countries and regions around the world, to better tailor its relations with each countryand group of countries.19. What can the EU do to ensure that the free-trade agreements it is currently negotiatingcontribute to further development, including beyond the partners directly involved in thenegotiations?When negotiating bilateral arrangements the EU should remain sensitive to the developmentalimpact on third party LICs, seeking to avoid trade diversion and disruption of ongoing regionaltrade integration efforts. In this regard, there could be scope for making more effective use ofthe Commission’s Trade Sustainability Impact Assessments which are carried out in connectionwith EU's trade negotiations. This positive assessment tool could probably be used on a moresystematic basis during the negotiation process in order to avoid negative impact on countriesnot involved in the negotiations. In this connection it should be noted that the Commission inthe new EU trade strategy “Trade, Growth and World Affairs” mentions that oncenegotiations are concluded and before signature, the Commission will prepare an analysis ofthe consequences of the proposed deal for the EU. The scope of such an analysis shouldpreferably be expanded to also cover consequences for partners not involved.Moreover, another important area which can have repercussion for countries not involved inthe EU’s trade negotiations is rules of origin (RoO). Here it is important that provisions onRoO in EU’s trade agreements are coherent with the objective of increasing developmentcountries’ possibilities to take advantage of increased South-South regional trade.
Raw MaterialsThe integrated EU raw materials policy acknowledges that volatility and unpredictability of prices harm theinterest of both importers and exporters. The Commission has therefore called for increased transparency andreporting requirements on the underlying physical and (financial) derivatives markets. EU policy proposes aholistic approach to guarantee a fair and sustainable supply of raw materials from the developing world. Bysupporting initiatives like EITI and FLEGT, it encourages supplier countries to use their revenuestransparently and for development purposes. And it acknowledges the need to apply trade rules as flexibly aspossible to take account of the different levels of economic development in these countries.20. What is the best way for EU trade policy in raw materials to boost key developmentobjectives of improving governance, building up administrative capacity, minimizing globalprices volatility and opening new foreign investment possibilities, in developing countriesand notably in LDCs?There is evidence that economies overly reliant on natural resources extraction have a tendencyto develop in socially and democratically skewed directions. The EU should support thedevelopment of diversified and inclusive real economies and a broadening of the basis oftaxation. This includes assisting in building democratic and administrative structures that createtransparency and predictability in public management and a steady strengthening of theaccountability of governments and the civil service towards the citizens. This is best achievedby way of the EU’s development and political instruments and is particularly important incountries in risk of falling into the natural resources trap. Supporting and acting within theframework of the Extractive Industries Transparency Initiative (EITI) and related internationalefforts can help steer development in the right direction.Trade and Natural DisastersIn the recent "Trade, Growth and World Affairs" Communication, the Commission announced its intention toexplore how trade can help third countries (in particular the most vulnerable ones) hit by natural disasters, suchas the earthquake in Haiti and the floods in Pakistan. The objective is to discuss if and how trade tools may beemployed in post-disaster situations, with a view to help rebuild the economic infrastructures and tradingcapabilities of a developing country. These goals have traditionally been pursued by development assistance and insome cases humanitarian tools in the early recovery phase; hence the feasibility, impact and timeliness of tradeactions in this context as well as the possible distorting effects have to be assessed carefully.21. Can trade policy be used as part of the response to natural disasters? If yes, which EUtrade instruments could be used to support poor and vulnerable countries hit by naturaldisasters? And how could possible distorting effects of such intervention beminimised/avoided?When countries are hit by natural disasters, it is important that the EU is both coherent andcomprehensive in its approach, including the use of both political, development assistance andtrade instruments. While the immediate focus should be on the delivery of budget support tocounter potential fiscal impacts of a natural disaster as well as humanitarian aid andreconstruction of basic infrastructure and productive resources, the extension of a country’s
market access to the EU can also be an essential contribution to economic reconstruction andlong term social and political stability. Unfortunately, the recent practical experiences inconnection with the floods in Pakistan have underlined the political difficulties of usingimmediate short term market access as an emergency measure. Nonetheless, this disappointingcase should not make the EU disregard trade instruments as part of the policy toolbox whenresponding to natural disasters in the future.Aid for Trade initiativeAid for trade (AfT) is financial assistance to help developing countries (especially the least-developed countries)beat poverty by developing their capacity to trade more effectively. Support can cover virtually any area that therecipient country considers important for this purpose, e.g. transport, productive sectors, trade negotiationscapacity, port or customs facilities, helping factories meet European health and safety standards for imports, etc.The EU is continuing to make progress in AfT, together with the EU Member States. Total EU and MemberStates AfT actually reached €10.5 billion in 2009 (it was €10.4 billion in 2008, €7.3 billion in 2007 and6.5 billion in 2005).22. How could the EU make AfT more effective at country level?It is important that Aid for Trade (AfT) is delivered as an integral part of an overall package ofexternal support designed to help boost a country’s capacity to trade and aimed at addressingthe binding constraints. Despite some progress, AfT remains too much of a reporting categoryand not enough of a functional framework structuring aid delivery around needs, coherenceand synergy. The EU should become a much stronger player in the effort to materialize theintended benefits of AfT, by helping to create the necessary in-country platform for AfTcoordination with participation from the private sector, government and donors, and bydrawing actively on the analyses and frameworks provided by the Enhanced IntegratedFramework (EIF), International Trade Centre (ITC) and the other agencies providing AfT.23. What are the main constraints on increased trade that should be addressed in the least-developed countries?From an external partner perspective the main constraint is to ensure that external aid isdelivered within a coherent framework that systematically and comprehensively address thebinding constraints to trade in partner countries.The constraints to trade faced by LDCs are numerous and differ across countries, but amongthe most common ones are often inadequate economic infrastructure, financial services,competitiveness, export diversification and institutional capacity to support private sectordevelopment.Due to the fact that resources and the political capital for reforms are limited, there is a clearneed to identify the most binding constraints in order to prioritize policy interventions. Herethe EIF has a crucial role to play as the main mechanism for identification, coordination andmainstreaming of priorities into the LDCs’ development strategies.
24. Should emerging economies devote part of their cooperation for development facilities tosupport trade in poorer developing countries?The value of trade between LICs and emerging economies has grown six-fold over the pastdecade and financial flows in the form of both investment and aid have also increased rapidly.This development offers new opportunities, resources and perspectives for developingcountries. At the same time, the interests and values of the emerging economies challengesome of the key items on the development agenda of the traditional donors, such as theefficiency of development assistance, the use of the recipients countries’ own systems, donorcoordination and a focus on environment, human rights, democracy and good governance.Given this fast evolving relationship, a close dialogue and exchange of experiences with theemerging economies should be further promoted while also encouraging, for example via theG20, these countries to provide DFQF market access for LDCs and play a more active role inthe trade & development/AfT agenda.Final Comments25. Please point out any other aspect you think important for EU trade and developmentpolicy, mentioning useful links or documentation publicly available.Strategic Framework for Priority Area Growth and Employment, 2011-2015, Danida, Ministryof Foreign Affairs of Denmark:http://amg.um.dk/NR/rdonlyres/C1BB6F35-39AC-4AD3-9024-4B3B476139C3/0/GrowthandemploymentstrategicframeworkFINALMarch2011.pdfDanish Action Plan on CSR:http://www.csrgov.dk/