What you need to know about the EU's new 'aid for trade' priorities

BRUSSELS — Better coordination and clearer impact are the focus of the European Commission’s new guidelines on how aid can help developing countries boost exports. The communication, released this week, updates the European Union’s 2007 Aid for Trade strategy, which aims to raise countries’ productive capacity and tackle poverty through trade. The EU and its member states are the world’s biggest providers of “aid for trade,” with around 13 billion euros ($15.3 billion) worth of commitments in 2015, most of which went toward building trade-related infrastructure and growing productive capacity in sectors such as agriculture and mining. “A lot has changed in the past 10 years,” an EU official who worked on the document told Devex, citing the Agenda 2030 goal of doubling least developed countries’ share of global exports by 2020, as well as the growing use of official development assistance in so-called blending operations. The official said there was “untapped potential” to consider trade factors in blending operations, such as through the External Investment Plan, where the EU contributes part of the cost of big infrastructure projects, as well as technical assistance, in the hope of catalyzing private sector investment. The commission also wants to reduce the current “fragmentation” of aid for trade efforts under 90 OECD-DAC purpose codes; better link it with cooperation through EU trade agreements; and improve results monitoring. “Reporting will be made more qualitative and results-driven with a reduced time-lag between aid for trade commitments and reporting of actions,” according to the communication, in which the commission sets out its policy priorities to the other arms of the EU. “We do have a clear picture of the flows, but that’s not enough,” the official said. “We would like to be able to say what impacts we are achieving overall. It’s very difficult when you have more than 3,000 operations a year, from the EU and member states, to tell the story.” The commission is also keen to help countries make better use of existing trade agreements and the General Scheme of Preferences, which cuts duties on certain goods for developing countries exporting to the EU. “Those are concrete market access offers that the private sector and the SMEs in the developing countries are eager to benefit from,” the official said. “When you see the rate of preference utilization in those countries, some use it well, but some others don’t.” The Fair Trade Advocacy Office in Brussels welcomed the communication, particularly the emphasis on EU delegations making greater use of market intelligence tools to guide aid for trade delivery, and more engagement with local civil society. FTAO Executive Director Sergi Corbalán praised a “more targeted approach on commodities,” aimed at ensuring sustainable value chains on goods such as coffee, cotton, and cocoa. Read more Devex coverage of EuropeAid