The contribution of the European Union s trade policy to a post-2015 consensus on international development. BACKGROUND PAPER

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1 The contribution of the European Union s trade policy to a post-2015 consensus on international development. Coordinated and differentiated trade, investment and development policy. Christopher Stevens, Senior Research Associate (ODI) BACKGROUND PAPER

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3 The contribution of the European Union s trade policy to a post-2015 consensus on international development. Coordinated and differentiated trade, investment and development policy. Synopsis This background paper aims to illuminate the role that European Union trade and investment policy can play in the achievement of the Millennium Development Goals. As the largest trading partner of lowincome countries the EU s policy has greater potential to affect their development than does the trade policy of any other state actor. The paper focuses on changes to EU policy that could help LICs meet the MDGs. MOBILISING EUROPEAN RESEARCH FOR DEVELOPMENT POLICIES Disclaimer The content of this background paper does not reflect the official opinion of the European Union or of its Member States. Responsibility for the information and view expressed lies entirely with the authors.

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20 1.4% Share of EU27 trade with Extra-EU27 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Exports to LICs Imports from LICs

21 Euros million 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, Exports to LICs Imports from LICs

22 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% EU27 World LIC exports LIC imports Euros million 130, , , ,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, , , , ,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, to EU27 to RoW from EU27 from RoW

23 Bangladesh Cambodia 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% EU27 Other OECD RoW EU27 Other OECD RoW Kenya Rest of LICs a 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% EU27 Other OECD RoW EU27 Other OECD RoW

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25 Bangladesh Kenya 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% EU27 Other OECD RoW EU27 Other OECD RoW Rest of LICs a 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% EU27 Other OECD RoW

26 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Bangladesh Cambodia Kenya Rest of LICs 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Bangladesh Kenya Rest of LICs

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33 I Live animals; animal products II Vegetable products III Animal or vegetable fats and oils IV Prepared foodstuffs; I Wood and articles of wood V Mineral products VI Products of the chem... & allied inds VII Plastics and Articles thereof VIII Raw hides and skins, leather, furskins Pulp of wood or other fibrous... Ia Textiles Ib Textile articles (clothing) II Footwear, headgear, umbrellas... III Articles of stone, plaster, cement,... IV Pearls, precious, semi-precious stones I Arms and ammunition; V Base metals and articles of base metal VI Machinery and mechanical appliances VII Vehicles, aircraft, vessels, transport VIII Optical, photographic,... Instruments Miscellaneous manufactured articles I Works of Art, collectors' piece Margin of preference (percentage points) GSP GSP+ EBA

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35 EU* Japan United States Norway Canada Australia Switzerland Korea Kuwait United Arab Emirates New Zealand Constant 2009 US$ billion

36 LMICs LDCs LICs UMICs Unallocated by income MADCTs Constant 2009 US$ billion All donors EU Institutions and Member States

37 100% 90% 80% 70% 60% 50% 40% 30% Other Trade facilitation Communications Transport & storage 20% 10% 0% EU* Other donors

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51 Market GSP regime a beneficiaries No of b Percentage of non-zero MFN tariff lines, 2010 c Covered Duty free Reduced duty EU d GSP % 82% 3% Standard GSP % 42% 42% GSP for LDCs (EBA) d % 99.7% Standard (GSP 1 DCS) % 6% 20% Australia GSP 2 (DC) e 56 97% 89% 8% GSP for LDCs % 100% Belarus Standard GSP 86 25% 25% GSP for LDCs 49 25% 25% Canada Standard GSP % 20% 43% GSP for LDCs 49 96% 96% Japan Standard GSP % 33% 23% New Zealand GSP for LDCs 49 61% 61% Standard GSP 91 15% 4% 10% GSP for LDCs 50 97% 96% 1% Norway f GSP for LDC/low-income countries g % 100% Standard GSP 75 84% 36% 48% Russian Federation Switzerland Turkey USA Notes: (a) (b) (c) (d) (e) (f) (g) Standard GSP 96 27% 27% GSP for LDCs 48 27% 27% Standard GSP % 62% 22% GSP for LDCs % 100% Standard GSP % 42% 30% GSP % 72% GSP for LDCs 50 73% 73% Standard GSP 87 51% 51% GSP for LDCs 42 73% 73% Information on the GSP regimes available, and the beneficiaries of each, obtained from the following sources: EU: TARIC ( Australia: Australian Customs and Border Protection Service ( Belarus, Russian Federation: UN, ( =3765&lang=1). It is not known whether this information is still up to date, and attempts to find national websites detailing current beneficiaries failed. Canada: Canada Border Services Agency ( Japan: Ministry of Foreign Affairs of Japan ( New Zealand: New Zealand Customs Service ( Norway: Norwegian Customs ( Switzerland: Swiss Federal Customs Administration ( Turkey: Tariff information and Legislation of Turkey ( USA: United States International Trade Commission ( The number shown in the Standard GSP row for each country excludes states covered by other GSP tranche(s) listed. Calculated from the 2010 tariff schedules (or 2009 in the case of Belarus, Norway and Russian Federation) available in UNCTAD s Trade Analysis and Information System (TRAINS) database. The figure shown for Standard GSP omits Belarus, and that for EBA Myanmar (both of which are suspended from GSP benefits until further notice) and Mayotte. There is considerable overlap between Australia s GSP 2 (DC) and LDC regimes. The only GSP 2 countries not also included in the LDC regime are: American Samoa, Botswana, French Polynesia, Guam, Namibia, New Caledonia, Northern Mariana Islands, Palau, Pitcairn, Tokelau Islands and Wallis and Futuna Islands. Preferences under both of Norway s GSP schemes do not become effective until certain administrative procedures have been complied with; according to information from the Norwegian Customs website (see note (a)), 49 Standard and 37 LDC/low-income GSP beneficiaries have so far completed the required procedures. Norway grants LDC preferences to 14 LICs (but not LDCs) with a population of less than 75 million.

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58 Country LICs a LDCs Developing countries EU b UN/WTO c EU d IMF e Total number of countries Afghanistan Albania Algeria American Samoa Angola Anguilla Antarctica Antigua and Barbuda Argentina Armenia Aruba Azerbaijan Bahamas Bahrain Bangladesh Barbados Belarus Belize Benin Bermuda Bhutan Bolivia Bosnia and Herzegovina Botswana Bouvet Island Brazil British Indian Ocean Territory Brunei Darussalam Bulgaria Burkina Faso Burundi Cambodia Cameroon Cape Verde Cayman Islands Central African Republic Chad Chile China Christmas Islands Cocos Islands (or Keeling Islands) Colombia Comoros Congo Congo, Dem. Rep. Cook Islands Costa Rica Côte d Ivoire Croatia Cuba Djibouti Dominica

59 Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Ethiopia Falkland Islands Fiji Former Yugoslav Republic of Macedonia French Polynesia French Southern Territories Gabon Gambia Georgia Ghana Gibraltar Greenland Grenada Guam Guatemala Guinea Guinea-Bissau Guyana Haiti Heard Island and McDonald Islands Honduras Hungary India Indonesia Iran Iraq Jamaica Jordan Kazakhstan Kenya Kiribati Korea, Dem. Rep. Kosovo Kuwait Kyrgyz Republic Lao People s Democratic Republic Latvia Lebanon Lesotho Liberia Libya Lithuania Macao Madagascar Malawi Malaysia Maldives Mali Marshall Islands Mauritania Mauritius Mayotte

60 Mexico Micronesia, Federated States of Moldova Mongolia Montenegro Montserrat Morocco Mozambique Myanmar Namibia Nauru Nepal Netherlands Antilles New Caledonia Nicaragua Niger Nigeria Niue Norfolk Island Northern Mariana Islands Oman Pakistan Palau Panama Papua New Guinea Paraguay Peru Philippines Pitcairn Poland Qatar Romania Russian Federation Rwanda Saint Helena Samoa São Tomé and Príncipe Saudi Arabia Senegal Serbia Seychelles Sierra Leone Solomon Islands Somalia South Africa South Georgia and South Sandwich Islands Sri Lanka St Kitts and Nevis St Lucia St Pierre and Miquelon St Vincent and the Grenadines Sudan Suriname Swaziland Syria Tajikistan Tanzania Thailand

61 Timor-Leste Togo Tokelau Tonga Trinidad and Tobago Tunisia Turkey Turkmenistan Turks and Caicos Islands Tuvalu Uganda Ukraine United Arab Emirates United States Minor Outlying Islands Uruguay Uzbekistan Vanuatu Venezuela Vietnam Virgin Islands, British Virgin Islands, US Wallis and Futuna Yemen Zambia Zimbabwe Sources: (a) World Bank List of Economies (April 2012) (b) EC Taxud TARIC Consultation (list of countries shown as eligible for EU s LDC (EBA) preferences, 14 June 2012) Description=&Group=SPGA&Expand=true. (c) UN Office of the High Representative for Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLSS) (downloaded 14 June 2012). (d) Official Journal of the European Communities L 211 of 6 August 2008: pp (Beneficiary countries and territories of the Community s scheme of generalised tariff preferences). (e) IMF World Economic Outlook, April 2012: Table A4 (n.b. (f) emerging and developing economies) Notes: i. Shading indicates that a country is covered by the relevant list. Dark blue for column 5 indicates that the country is covered by the current EU GSP but will probably be excluded from it from 2014 under the current proposals because it is a UMIC or has a trade agreement with the EU. Pale blue for column 5 indicates that the country is an OCT and will not be listed under the proposed next EU GSP. ii. Italics in column 1 identifies states that are classified as LDCs but not LICs; bold identifies states that are classified as LICs but not LDCs. Red font indicates countries covered by the EU s GSP but not defined as developing countries by the IMF; blue font identifies states that are listed as developing countries by the IMF but are not covered by the EU s GSP.