Speech by Commissioner Mandelson to the Development Committee of the EP

This first appearance in front of your committee matters a lot to me. My driving mission as Commissioner is to put trade at the service of development and to ensure the needs of the poorest are at all times at the forefront of our European policy.

I set out my views in detail in a lecture at the London School of Economics last month. This year's task is to put them into practice in trade policy making. I started in the WTO trade talks, in Mombassa earlier this month.

Trade is the third leg of the development triad. Actions on trade, aid and debt need to complement one another. Action on one dimension alone is not enough. Neither are all three sufficient in combination.

Trade can help promote development, but only if accompanied by the right domestic policies, and only if developing countries integrate trade into a broad programme of development that includes action on infrastructure, killer diseases, education, better governance and corruption - something the Commission for Africa report, published last Friday, has unambiguously brought home.

My overall philosophy is simple: I believe in progressive trade liberalisation. I believe that the opening of markets can deliver growth and the reduction of poverty.

But under three conditions.

First, market opening must be properly sequenced and adapted to development situations and needs. In other words, in contrast to the neo-liberals, don't expect open markets to work like a magic wand.

Second, open markets must be underpinned by an open, equitable, rules-based multilateral trading system, that has protection of the weaker nations of the world explicitly built into its rulebook and modus operandi. That principle has to become second nature to all involved in trade negotiations.

Third, the creation of new opportunities to trade must be combined with the active support for building the necessary capacities to trade for the poorer countries. That means in practice - aid directed at promoting trade.

2005, with the Monterrey and United Nations reviews, with a G8 Presidency focussed on Africa, is presents a real window of opportunity for progress - in all meanings of that word. The EU must through its trade policy make a strong contribution.

WTO/DDA

On the development and multilateral agenda, our top priority is to complete Doha. The gains for the global economy are huge and we cannot afford them to be lost.

Doha will also "deliver" for all WTO members, including the weaker and more vulnerable countries, if it combines a North/South market opening agenda with a South/South agenda.

Concretely, there are four areas for the DDA where we can do a lot to promote development. These are: (1) the delivery of better market access for - and indeed between - developing countries; (2) adequate levels of development assistance effectively used; (3) strong and development-friendly trade rules (4) new flexibilities for developing countries, including on Special and Differential Treatment (SDT).

Trade liberalisation can no longer be seen as a precise reciprocal bargain. The result of Doha should be to improve access conditions for developing countries, especially the poorest.

But at the same time we should ensure that LDCs and most vulnerable developing countries maintain the policy space to open their markets in a gradual and controlled manner. We are not asking them to cut their tariffs. All we are asking of them is to accept tariff bindings that impose upper limits on the tariff they can at present theoretically impose. This will improve predictability for business, both their domestic industries as well as potential inward investors. I see that as a pro-development policy.

Also I will argue forcibly that all industrialised Members make a firm commitment to their own version of Everything But Arms. Either by the time of the HK ministerial or at it, all the rich countries should commit to provide - at HK or no later than the end of the Round - duty and quota free market access to all LDCs, in line with the positive pro-development example that the EU has set.

On aid for trade, let me just record here that the EU is the largest provider of TRA, and counts for roughly 50% of all resources made available for that purpose.

But unfortunately this is still not enough if we want to create the conditions for developing countries to reap the benefits of trade liberalisation, or in some cases adjust to necessary but painful change. The EU should do better and give more. As should others. We hope for a commitment from this year's G8 to help make this happen.

On the development friendliness of our policies, if we want to ensure that trade opportunities are actually tapped into, we have to look at how to make rules of origin more development-friendly - simpler and more flexible. We are doing this on the EC preferential rules of origin as a priority.

But we should also not forget that we have a long running work programme in WTO to harmonise non preferential origin rules. This too can make origin rules simpler. I am determined that we will give political priority to finishing this work programme.

On the "rules of the game" , I strongly believe that abiding by multilaterally agreed, equitable rules is good for development. Permanent opt-outs and exemptions from WTO rules run against developing countries' proper participation in the system.

My aim is to ensure that in the first place the rules are equitable. Then to give developing countries who may have difficulties in applying them, the necessary time and flexibility, to do so gradually. To give the poorest countries the policy space to ensure that progressive liberalisation works in their interest and in line with their increasing capacities to trade.

For this reason I am prepared to look positively at waiving specific WTO obligations for developing countries, especially LDCs, who can present solid grounds for individual treatment. I support the idea of looking at the situation of developing countries on a case by case basis, to see where more flexibility in the rules would be helpful.

I made some concrete suggestions to our trade partners in the ministerial meeting that took place earlier this month in Mombassa, Kenya, so as to bring these issues to the forefront of the Doha trade talks.

Economic Partnership Agreements

The multilateral route is not the only route to development. We must also nurture and renew our traditional bilateral relationship with the ACP family, using the Economic Partnership Agreements under Cotonou as positive development tools.

The EPAs are not typical, hard nosed free trade agreements. I see them as tools for development and the promotion of regional economic integration. They must serve as stepping stones for the successful integration of ACP countries in the global economy - and the multilateral trading system.

Our dialogue with the ACP is progressing well on these partnership agreements. More and more of my counterparts in ACP countries tell me they are busy preparing for them and examining how to harness their potential for boosting their own development strategies.

This development focus and the task of regional integration are reflected in the Negotiation Roadmaps already agreed with the six ACP regions. These roadmaps build on the vision of greater regional integration set out in existing ACP regional agreements.

The negotiation deadline agreed in Cotonou is 1 January 2008. My aim is for talks to conclude by mid 2007.

Our aim is to develop tailor-made agreements that reflect the needs of each region. For our part we will be flexible, if need be very flexible, in determining the transition periods for the gradual opening of ACP markets to EU exports.

We will also use EC development assistance to support the ACP countries and ensure they gain maximum benefit. This assistance will be available during the negotiations and beyond.

At every stage, the EPA process will be under review, to ensure that these agreements really do deliver on our promise to put development first.

Linking progress on the trade dimension of EPAs tightly to development co-operation is vital to their success. This is why I have decided, in agreement with Commissioner Michel, to put in place a new monitoring mechanism, to check on a systematic basis what benefits our money and assistance and money is actually bringing our ACP partners in terms of capacity building. In other words, is it addressing their 'real needs'? Is there enough help available? And is it being effective in what it aims to do?

Let me be very specific about this. We will establish within the Commission a dedicated structure of people to review the progress of our aid programmes to our EPA partners and identify any possible bottlenecks that may arise across the whole range of programs and projects that constitute our EPA-related assistance. We have to be coherent if our aid is to be effective.

This is not about making the progress of our talks conditional on any specific, quantitative - and inevitably artificial - benchmark. It is about delivering in practice on the ground by getting the most out of our existing development tools.

Obviously, this monitoring will be undertaken in partnership with the ACP. I have formerly submitted my proposal to them. The ACP Secretary General has written to me expressing their support. We will take stock of progress at the next ACP/EU "Joint Ministerial Trade Committee". And we will publish the results.

We have already put in place a substantial trade related assistance effort for ACP countries: some 650 million euro.

Additional financial needs will become clearer as we progress with the EPA negotiations. This will be a joint effort involving Commission/ Member States but also other actors such as development banks and institutions.

Finally, the Commission is ready to propose using the development and economic instrument of the EU budget for EPA-related support, which would mean increased money under the new financial perspectives.

Everything But Arms (EBA) and our record in opening markets to developing countries

The EU was the main destination of LDC exports in 2003 amounting to € 10.2 billion. This is thanks to its unilateral preferences, under the Cotonou Agreement (€7.7 billion) or the EBA regime (€2.5 billion). The EU was also among the first to respond to the UN call to extend duty-free and quota-free treatment to LDCs in May 2001.

But we must constantly review whether we are effective in granting market access, and whether our preferences to poorer countries deliver real economic gains to them.

This is the reason why I propose that I publish an annual White Paper to the European Parliament monitoring the take up of our various trade preference programmes.

Chair, I hope this is an initiative that, among other opportunities, will enable us to intensify my exchanges with your Committee. I look forward to this and the debate that follows.

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