Toespraak De Gucht over handel met Afrika (en)
Ladies and gentlemen,
In today's globalised world, where supply chains cut across national borders with an ease never witnessed before, trade and investment have become interlaced more than ever.
Finding your place at the heart of that complex, global web of economic interactions is THE challenge for any country, for any region, for any large company even.
A country's trade and investment regime is therefore crucial, not only directly: to link up with growth potential abroad, but also indirectly: for the dynamism it injects into an economy, into its companies, into its economic policies in the broader sense.
That goes for Europe. That goes for Africa as well.
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From that starting point, the European Union has created market access opportunities for developing countries many years ago, in an effort to kickstart Africa's economies.
The Lomé Convention between the then European Community and the African, Caribbean and Pacific countries started in 1975 and provided for preferential access to the European market, with some exceptions mainly for agricultural products.
In the meantime, under the new partnerships with ACP regions and for all least-developed countries, all exceptions have disappeared so that they now have full duty free/quota free access to the EU market.
We have made further improvements in the access to our market by improving the rules of origin, including cumulation of origin possibilities.
For the least developed countries across the world over, this regime for exports to Europe is granted through the Everything but Arms legislation. For ACP countries engaged in the new partnerships with Europe, the European market is in practice fully open also to them under the Economic Partnership Agreements.
For many years, the European Commission has been calling on the other developed and emerging economies to follow the Everything but Arms example. Many have done so in one way or the other, albeit to a lesser extent and we keep pressing the point that they should also deliver on this commitment, part of the Brussels programme of Action.
The question is: how do we go further? What can LDC's do to improve on their economic performance?
And the question I ask myself as European Trade Commissioner is: what should we do help them in that effort?
Because it is a plain fact that offering market access has proved to be insufficient. A kickstarter is no substitute for an engine.
Let me focus on ACP countries, by way of example. Their share of imports into the European market has gone down considerably; it halved from around 7% to 3.5% in the last 40 years. And despite Everything but Arms, exports that do make it to Europe are all too often limited to certain sectors: agricultural products, fuels and mining products make up about three quarters of 'everything'. And, with world tariffs at all-time lows, the preferential margins of LDCs are gradually eroding.
Africa has not yet been able to profit from a global boom in trade, to tap into rising demand world wide and to live up to its potential. To do so, it still needs to improve its attractiveness as a location for doing business.
I am very glad to be able to discuss with the business people from Africa and other placed today how to get there. More and more, the private sector is recognised as the main engine for economic growth and development. Therefore a business-friendly environment has become a key requirement especially for developing countries. EU trade and development policy has recognised this for some time now.
One-way opportunities are not enough to get trade flowing. You need businesses to take those opportunities, to breathe life into economic partnerships.
For in reality, making trade work requires much more than lower tariffs. [This notwithstanding, yesterday, the European Commission adopted a proposal to focus the EU Generalised System of Preferences on those countries that need them most. We continue to have your improved market access at heart. And because we have given you the fullest possible market access unilaterally, the best way to help you further was to narrow your pool of competition for exports to the EU].
As I said, there is a large non-tariff agenda still outstanding. To attract businesses and foster development, you need to tackle a complex package of challenges, going from trade facilitation, institutional improvements, regulatory reforms, investment-supporting measures, adequate competition policies and often issues of transparency and competition in government procurement.
Each of these affects the others. Trade facilitation, for instance, reduces transaction costs, which encourages production and attracts investment. Competition policy enhances the business environment and stimulates trade, which assists investment and nourishes growth. Stronger growth in itself is necessary to attract competitive private and foreign investors…
You can’t have one without the others. And it is an arduous task for most LDC's to tackle one, let alone all of these at the same time.
Yet that is where the challenge lies: turning a vicious circle of underdevelopment into a virtuous circle of economic progress.
Trade facilitation, especially, is increasingly seen as essential to assist countries in expanding trade, in the sense of easing and speeding up the process of importing and exporting through improved customs procedures, port clearing procedures and so forth. But also in the wider sense: lowering transport costs, better use of information technology, addressing a lack of transparency in import and export requirements, modernisation of procedures, of documents and infrastructure.
Trade facilitation is an essential component of the EU policy towards developing countries, to assist their efforts to integrate into the world global supply chain. The EU has also been consistently supporting a comprehensive trade facilitation agreement in the negotiations in the WTO, from which the LDC in particular stand to gain.
These are the first hurdles for LDC's, and especially for landlocked countries they make all the difference.
Is it a coincidence that, in the World Bank's Doing Business report, the lowest ranking country is the Central African Republic (at place 183) while Rwanda (taking 67th place) is the best performing African LDC and the top reformer worldwide in 2008/09. The contrast shows how important this challenge is. But also that it IS possible to meet it.
The WTO community is ready to support this process of trade facilitation with its Aid for Trade initiative. The EU contributes over €3 billion annually, 2.2 billion of which goes to LDCs.
Attracting investment and especially: attracting the kind of investment that creates spillover effects into the economy at large, is more complex.
In general, ACP countries have rather low level of investment, all too often focused on a limited number of sectors. Moreover, the productivity of these investments tends to be low.
Again, there's a variety of reasons for the lack of investment in LDC's: they are relatively small markets, often with high levels of economic and political instability; excess bureaucracy, weak property rights and corruption make doing business a difficult and unpredictable adventure; and this counts for local and international investors alike.
Regulatory reforms are needed to make investment in general more attractive, measures that make it easier to establish a business, reducing red tape, improve access to finance and high quality financial services, and the like.
On top of this, government procurement practices also play an increasingly important role: making sure public funds are used effectively, that transparency and accountability in a major economic sector are guaranteed, that prices are reduced and quality increases. Some ACP countries have reformed or are in the process of reforming their procurement policies and this, I believe, is a major issue for their future.
All these challenges are clearly linked to institution building in the broader sense: a stable, open society and political steadiness are indispensable.
Good governance at all levels, the theme of another panel in the margins of this conference this morning, is crucial and the debate cannot be avoided in this context. The overall costs of corruption are estimated at about $148 billion, which even exceeds any aid effort spent in the developing world. Good governance relates to governments (a stable economic and political framework, a reliable judiciary, transparency of rules and institutions) and to businesses (their ethical standards, corporate, social and environmental responsibility, subscription to transparency codes).
Where we can, the EU will help and support such developments, also if it means reminding our own companies doing business in Africa of their responsibilities. But from the outside, we can only do so much.
Apart from government institutions, I would like to stress that these issues are fundamentally linked to genuine international openness as well.
Now, in principle, many of these reforms can be undertaken in a strictly domestic context. In practice however - both in developing countries and elsewhere - trade agreements usually play a crucial role as a driving force, egging on governments to make the necessary changes. Bringing down tariff barriers between LDCs would be a good start. If your markets are small, you can get together with your neighbours.
Being from a small country at the heart of the European Union, I don't just believe this. I KNOW this to be true.
And I am not alone.
In a foreword to their important study on regional integration, the chairpersons of the African Union Commission, the UN Economic Commission for Africa and the African Development Bank conclude that 'there is a positive correlation between trade openness and economic growth'.
While in the European Union about two thirds of external trade of Member States is with other EU members, in Africa only about 10 to 12%. Therefore, a lot can be gained if the ongoing process of regional integration in Africa is spurred on.
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Ladies and gentlemen,
Though the challenges are huge and the results so far often discouraging, there is certainly room for optimism.
Only last month, Ernst & Young's first Africa Attractiveness Survey showed international investors buoyant about the continent’s economic prospects.
Especially the role of emerging markets investment - which now comprises 38% of the total into Africa, up from 30% in 2003 - can play a crucial role.
The survey also indicated a more diverse range of sectors beginning to emerge as attractive investment options, with sectors like tourism, consumer products, construction, telecommunications and financial services all on international investors’ radar.
Still, there’s no denying that interest is often focused on raw materials and a limited number of countries still account for too much of the whole to be good. Between 2003 and 2010, ten African countries attracted 70% of the new FDI projects in Africa. LDC's have to link up to them to gain access to the growth train.
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To sum up, ladies and gentlemen,
Africa is ready to work hard towards its goal of sustained economic development. And there are plenty of similar stories elsewhere in the world.
By whatever means possible, the EU, developed countries and hopefully emerging economies, should be ready to help LDCs in that effort.
Thank you very much.