EU Statement - United Nations 2nd Committee: Macroeconomic Policy Questions, Trade and Development

Mme Chair,

I have the honour of speaking on behalf of the European Union.

The Candidate Countries Turkey, Croatia, and the former Yugoslav Republic of Macedonia, the Countries of the Stabilisation and Association Process and potential candidates Albania, Bosnia and Herzegovina, and Montenegro, as well the Republic of Moldova, Armenia, Serbia and Ukraine align themselves with this declaration.

It is particularly relevant that we should talk about trade and development today against a global backdrop that has changed radically compared to last year. These are clearly very challenging times for the global economy, with a severe financial crisis, sharp price rises and high volatility in international food, commodities and energy markets. Many countries, especially in the developed world, face a risk of slower growth or even possibly recession. While the present crisis has its origins in the developed countries, developing countries risk feeling the effects of retrenchment and economic downturn as much as developed countries, or maybe even more so. Developing and emerging market economies, while currently appearing resilient, can indeed be expected to be increasingly affected by the impact of the financial turmoil on global economic growth. The effects will differ across countries, mainly according to their dependence on exports, developments in commodity prices and the importance of remittances. The situation therefore poses policy challenges for all of us individually and collectively.

The global crisis we face underlines, not undermines the case for open economies. Now is a time for leadership, determination, and intensified efforts to ensure stronger and more effective international governance and global coordination. Trade has not triggered the present crisis - even if it has been in part one of the vectors of transmission, something inevitable in our modern inter-connected world - but trade, and a global trade deal, have their part to play in a global set of policy responses.

In fact, for developing countries as a group, trade is continuing to expand faster than the global average, helping to fuel economic growth and progress towards achievement of the MDGs. These overall positive trends should not blind us to the variety of experience among individual developing countries. Net importers of food and energy products, for example, have had to deal with the implications of rapid rises in their import costs, while another large group of developing countries, in particular the LDCs, have continued to face challenges in developing a wider range of competitive goods and services to sell into local, regional and international markets.

Madam Chair,

As was also shown in the Commission for Growth Report of May 2008, openness to international trade remains a strong engine for development, economic growth and poverty reduction. Closer integration and stronger participation in global markets within a framework of sustainable development, stimulates the competitiveness and trading performance of individual countries, contributes to economic growth, creates the resources that can be re-invested in sustainable national development and used to achieve the internationally agreed development goals, including the MDGs and works toward ensuring future generations can prosper from properly managed natural resources.

As the Monterrey Consensus itself puts it: a universal, rules-based, open, non-discriminatory and equitable multilateral trading system, combined with meaningful trade liberalisation, including on the part of Developing Countries, can substantially stimulate development worldwide, to the benefit of countries at all stages of development. Let me emphasize that the Monterrey Consensus says that trade "can stimulate" development; and rightly so. In fact this result is not automatic. There are no examples of closed economies thriving. But trade and trade openness alone do not guarantee any particular outcome in terms of development. A positive development trend depends on many factors, and in particular on the coherence and nature of policy choices and actions taken by individual countries at the national level. At a time when we are reviewing the implementation of the Monterrey Consensus, it is interesting to note how much of its assessment remains relevant, even in a crisis time. As also already stated at Monterrey, the foundation of successful sustainable development has to be built at the national level, while the ability of individual countries to put coherent national development strategies into effect of course also depends on a supportive and facilitating international environment and legal framework.

Madame Chair,

Looking ahead to the Doha Conference for the Review of the Implementation of the Monterrey Consensus on financing for Development later this month, the EU encourages all UN members to take the opportunity, that the Doha Conference will provide, to re-affirm the relevance of the Monterrey Consensus and its recognition of the vital role of trade in supporting sustainable development through its contribution to growth, employment and resource generation. Not all developing countries have been able to benefit equally from trade; and within countries, the benefits of trade have not always been equally shared. The challenge we face is therefore to work to ensure that these benefits are spread more broadly both between and within countries. The EU will continue to do what it can to maximise its own contribution to ensuring that trade supports development and to give effect to this objective in its own trade policy.

For the European Union, the top trade policy priority remains an ambitious, comprehensive and balanced outcome to the Doha Development Agenda negotiations in WTO, taking into account the needs and interests of developing countries. We would expect everyone in this UN body to share the same objective and agree on the desirability of achieving this goal quickly. There are numerous benefits to be reaped from the DDA, which are vitally important for development: a judicious combination of trade liberalisation, commensurate to the capacity of countries to assume commitments; a wider Duty- and Quota-Free access for the exports of LDCs; the reduction of trade distortions in agriculture, including the elimination of export subsidies and substantial reductions in trade-distorting domestic subsidies; stronger trade rules, including in the field of trade defence and to promote trade facilitation; and a substantial strengthening of Aid for Trade, to build countries' capacity to export and benefit from trade. And this list is not exhaustive. The DDA will also lock-in the significant amount of autonomous trade liberalisation over the last decade and provide a confidence boost for the global economy, together with an insurance policy against protectionist pressures for new trade-restrictive measures. On the other hand, the costs of failure - or prolonged inaction - would fall disproportionately on smaller and weaker developing countries, particularly LDCs.

During the intensive negotiations in Geneva in July, the EU demonstrated its determination to achieve progress and its readiness to make balanced compromises in order to do so. Thanks to the engagement shown by the EU and other participants, important progress was made on the vast majority of issues under discussion. But, as we all know, negotiators were not able to settle everything that needed to be resolved to complete the so-called "modalities" and move on to the final stage of the Round. That was obviously a disappointment and setback. But it is no reason to give up. Work has since re-engaged in Geneva to ensure that the DDA - and its prospective development dividends - do not slip through our fingers. The EU remains committed to the objective of bringing modalities to a successful close as soon as possible. The EU therefore calls on all participants in the DDA negotiations to intensify their efforts to conclude the Round quickly and on the major players in the negotiations, including the emerging economies, to demonstrate the political engagement and negotiating flexibility that will be called for in order to do so.

Next to the DDA, the EU continues to work to ensure that trade and the potential of trade is put at the service of development, be it in our regional trade agreements and bilateral relationships or in our autonomous measures and actions. The EU's bilateral engagement with Developing Countries is longstanding. It is obviously aimed at keeping an enhancing the two-ways substantial trade flows (which already make the EU one of the largest importer of goods from Developing Countries and the largest one when it comes to agricultural imports). But it does not end there. With our region-to-region approach, we intend to offer our support to the ongoing processes of regional integration and trade expansion among developing countries themselves. The EU recognizes that regional integration among DCs is an important policy tool for them to improve their own position in the world and their ability to compete in international markets, by creating larger regional markets and improving the overall business environment. This is particularly important for the poorest countries since it can improve their international competitiveness, attract more investment and put them in a better position to take advantage of emerging market opportunities in their non-traditional export markets, including those of other DCs.

The EU also continues to provide significant non-reciprocal trade preferences on an autonomous basis to developing countries, notably through the Generalised System of Preferences scheme. In July, the EU adopted a new legal instrument to govern the application of the scheme in 2009-11 and thereby ensured a seamless continuity with the current arrangements, which expire at the end of this year. In 2007, the scheme enabled developing countries to export €57 billion worth of products to the EU on preferential terms.

Madame Chair,

An important means to enhance the positive effects of trade in developing countries' economies is the delivery of Aid for Trade. DCs need more and better Aid for Trade to support their efforts to build an effective supply-side capacity to compete on global markets, address constraints affecting their trade potential and development prospects and cope with any adjustment challenges. For weaker and less competitive DCs, Aid for Trade is clearly essential if they are to be able to use the full potential of trade to underpin their economic growth, sustainable development and poverty reduction efforts in the same manner that many developing countries already have. But it is clear that the full potential of Aid for Trade to assist Developing Countries in harnessing the positive power of trade will only be achieved if partner countries also play their part - for example by integrating trade-related needs into their national development strategies and plans.

A year ago, I was able to announce to the Second Committee the adoption of the EU Aid for Trade Strategy, of October 2007. After the first year of its existence, this instrument provides a solid basis to take forward the implementation of the aid for trade component in the development assistance activities of both the European Commission and the EU Member States. The EU will remain committed to improving both the quality and quantity of its Aid for Trade, and calls on all other donors, both traditional and new, to do the same

Finally, Madame Chair,

Let me express appreciation for the constructive approach adopted by the proponents of the three resolutions under the macro-economic cluster that were recently tabled, on trade and development, external debt and on the international financial system. The EU welcomes this effort to streamline the work of the Second Committee and make optimal use the Delegates limited time.

Thank you for your attention.


* Croatia and the former Yugoslav Republic of Macedonia continue to be part of the Stabilisation and Association Process.

| Haut |

• L'Union européenne et les Caraïbes scellent un partenariat économique par des accords commerciaux sans précédent (15/10/2008)
• EU agrees to maintain trade preferences for developing countries (23/7/2008)
• EU Statement - United Nations 2nd Committee: Macroeconomic Policy Questions/Trade and Development (26/10/2007)