EU aid to improve partner countries' trading capacity increased and helped them tackle the COVID-19 pandemic, reveals the newest EU Aid for Trade Progress Report 2021 released today. As part of the new Team Europe approach, EU Aid for Trade supports implementing concrete commitments for a transition towards a more inclusive and greener global economy.
“Aid for Trade has proved to be efficient to reduce poverty and boost inclusive and sustainable economic growth through trade, building trade capacity and infrastructure in our partner countries. The European Union is committed to supporting its partners in developing low-carbon and climate-resilient economies, leaving no one behind. Boosting trade capacities can meaningfully contribute to this objective. This can bring about lasting change and a just, sustainable global recovery,” said Commissioner for International Partnerships Jutta Urpilainen.
“Trade is the lifeblood of economic activity and every region of the world will rely on trade to support economic recovery from the Covid-19 pandemic. Aid for Trade will help our global partners to recover and grow, notably by supporting SMEs and helping authorities to implement trade arrangements. Moreover, this support will help to develop more inclusive and climate conscious economic programming, which will benefit us all in the long run. In this respect, Aid for Trade is a great example of our values-based EU trade agenda,” said Executive Vice-President for an Economy That Works for People and EU Trade Commissioner Valdis Dombrovskis.
The report confirms the EU and its Member States as the world's leading Aid for Trade (AfT) provider with €17.9 billion in 2019, benefitting about 140 countries and territories eligible for Official Development Assistance. This represents about 38% of the global Aid for Trade funds and a 12% increase compared to 2018.
Women's economic empowerment, environment and biodiversity protection, as well as digitalisation have been the key areas of the EU AfT action. Africa continued to receive the largest share with 43% of the total volume, followed by Asia (21%), Europe - the EU Neighbourhood and accession countries (13%) and America (8%).
This year, the report features a special chapter on Team Europe Aid for Trade response to the COVID-19 pandemic, which has had a dramatic impact on trade. Overall EU imports from developing countries declined by almost €100 billion between 2019 and 2020. Team Europe, meaning the EU, its Member States and European financial institutions, reacted swiftly, mobilising €46 billion between April 2020 to April 2021 to help the EU's partner countries mitigate the pandemic's socio-economic impact. The AfT response included starting programmes early, releasing additional resources, fast tracking approvals of targeted programmes and reorienting existing ones.
The report also shows that the EU AfT generates better impact by providing relevant aid tailored to different needs of partner countries: the EU combines AfT with facilitated investments and market access offered by Free Trade Agreements / Generalised Scheme of Preferences. In 2020, the EU provided AfT through financial guarantees and blending operations for a total of €1.8 billion, leveraging with this over €10 billion. To help improve regulatory environment for the private sector, the EU provided about €1 billion per year for private-sector-development (PSD).
Countries with current preferential access to the EU market received 96% of the EU AfT. In addition, the EU AfT supported regional integration through multi-country programmes. These focus on the negotiation and implementation of regional trade agreements and support key regional value chains.
The EU has launched several global and regional initiatives for trade that promote gender equality, protect the environment, and foster decent work and digitalisation, such as the launch of the Digital for Development (D4D) Hub in 2020. The first operational regional component kicked off activities as the “African Union-European Union D4D Hub”, with €8 million EU support. The hub helps share knowledge and structured dialogue between African and EU partners to boost the digital transformation, one of the Commission's key geopolitical priorities.
The EU's Aid for Trade (AfT) strategy was adopted in 2007 in response to the Aid for Trade initiative the World Trade Organization (WTO) launched in 2005. It encourages developing countries to recognise the role trade can play in their sustainable development. The EU's AfT strategy helps partner countries better integrate into the global trading system and take greater advantage of the poverty-reducing benefits of economic openness and enhanced trade efficiency. The EU's AfT strategy was revised in 2017 to follow a broader approach, in line with the UN's 2030 Agenda for Sustainable Development. It considers the interlinkages that exist between investment and trade, which need to be fully exploited to achieve the Sustainable Development Goals.
The EU Aid for Trade Progress Report illustrates the EU's contribution to the global Aid for Trade global initiative and an overview of the implementation of the EU's Aid for Trade Strategy. The qualitative analysis is based on the responses to a questionnaire completed by 98 EU Delegations worldwide in 2021. The quantitative analysis takes into account the OECD/DAC data on Aid for Trade volumes in 2019, the last year for which full data are available.
The Commission had committed to dedicate €240 million for trade facilitation during the Multiannual Financial Framework (MFF) 2014-20. The cumulative value from 2014-2019 was €423.7 million, by far exceeding the commitment at the WTO when the Trade Facilitation Agreement (TFA) was signed.
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