Commissioner Lamy: European approach to Trade, External Aid and Sustainable Development

Globalisation has undoubtedly created huge wealth, but has also led to huge inequality. GDP in the 30 most developed countries increased over 10-fold between 1970 and 2000; but today more than a billion people live on less than a dollar a day, and almost a third of children in developing countries are malnourished. These vast disparities have led some to question the benefits of international trade, and to see globalisation as a negative and uncontrollable force.

If we are to answer these questions, and tackle these inequalities, we need to harness globalisation and use it to ensure a better quality of life for all. The EU offers Europeans the best chance to achieve this, by working together to ensure that our policies on international trade and external aid are headed in the same direction - towards sustainable development.

Sustainable development

What does sustainable development mean in the context of international trade and aid? The challenge of sustainable development is to achieve our economic, social and environmental objectives at the same time. This means that our policies are not just concerned with economic growth for its own sake; they are aimed at promoting global development and quality of life.

Sustainable development means making sure that the billions of dollars of European aid given every year are not cancelled out by the impact of trade barriers keeping out developing countries' exports; it means tackling poverty, which wastes skills that could otherwise help strengthen economies; and it means pushing for compatibility between international trade and environmental protection, to avoid potentially crippling long term costs from threats such as climate change.

The EU's role in the global scene

The EU has a major role to play. We are already the world's largest trading bloc. And when it comes to fighting poverty, the EU and its Member States are the largest aid donor, contributing a half of global overseas development assistance - over $26 billion in 2001. As we grow to 25, the responsibility we face to use our influence to promote sustainable global development is intensified.

Trade is an area where the EU has the tools to promote our shared aims at international level. Trade is a "Community competence", which means that the Commission receives a mandate to negotiate on behalf of all the Member States. This mandate is agreed by Member States through Qualified Majority Voting. Working to a single line is sometimes hard - but the pay-off is that we are able to promote our own European values and interests effectively.

The oddity is that we still haven't finalised this work; some Member States still push to keep certain issues outside Community competence, with the risk of national vetoes thwarting the will of the majority. Also, there is no formal role for the European Parliament in trade policy. The Convention and follow-up Inter-Governmental Conference need to fix these problems.

In the area of aid, the EU works to ensure that the combined assistance given by Member States and through Commission programmes is pulling in the same direction. The Commission works to complement the bilateral efforts of Member States, and has responsibilities in areas such as macro-economic support and capacity building. And - see below - trade-related technical assistance is becoming a key part of external aid.

What is the EU doing?.

Our trade and aid policies have the shared aims of encouraging sustainable development, eradicating poverty and enabling developing countries to integrate into the global economy, as set out in the Commission's communication on trade and development.

The EU has pushed hard to make development the key focus of the current round of WTO trade talks, known as the Doha Development Agenda. My aim for the Doha round is improved market access within a framework of rules. Better market access will boost international trade and promote economic growth, but it will contribute best to development is if it is combined with rules - for example, competition rules to prevent markets being controlled by hardcore cartels.

Market Access

According to the World Bank, the average duty on goods produced by people who earn less than $2 per day is 13%, compared to only 5% for people who earn more. The EU has already given tariff- and quota-free access to its markets for the 49 least developed countries, under the "Everything But Arms" initiative, and we have called for all rich countries to take similar steps. In the Doha round, we are negotiating reduced trade barriers for agricultural products, industrial goods and services.

But market access is not just an issue between developed and developing countries - we also need to lower trade barriers between developing countries, which according to the World Bank account for 70% of the burden on developing country manufactured exports. So for example, in our negotiations with the African, Caribbean and Pacific countries to establish new preferential trade agreements under the Cotonou accord, we are urging regional integration as a key requirement.

Trade related technical assistance

The EU is enabling developing countries to take better advantage of international trade through trade related technical assistance (TRTA) projects. Examples include training of agricultural negotiators in Namibia, to make Namibia's voice heard at the WTO; and training exporters in Peru to capture new markets in Europe. The EU has committed to further expanding its TRTA, and also improving its quality.

Environment

The EU is also driving for progress on trade and environment issues. In the WTO, we are arguing that international trade rules should not take precedence over multi-lateral environmental agreements (MEAs), such as the Kyoto protocol. And we are close to agreeing in the Doha Development Agenda the right for representatives of MEAs to attend WTO meetings as observers.

This is just one way for us to ensure that we have the right balance between economic, social and environmental aims. Initiatives like the new forum to discuss social impacts of globalisation suggested recently by the International Labour Organisation could have an important contribution to make.

Conclusion

The European approach on trade and aid policies is focused upon building capacity, levelling the playing field and creating a multi-lateral system of rules so that poor countries are better able to benefit from the global economy. And at the same time, by speaking as a single voice, rather than with 15 potentially dissonant ones, Europe is able to make a powerful international contribution to reducing poverty, advancing sustainable development and building a peaceful, multi-polar world.

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