The European Union (EU), comprised of its 27 member states, is the biggest economy in the world. As such, the EU is the biggest exporter and importer of goods and services provided by third parties (non-union members). On the other end of the spectrum, the world’s Least Developed Countries (LDCs) account for only 2% of the global economy and only 1% of global trade in goods and services. The EU’s social policies have always been supportive of these LDCs. Yet, they acknowledge that economic policies and opportunities are most effective in supporting these countries. Even though the LDCs function in the global economy, they struggle with exports (while obtaining the full benefits). Because of this, the EU began allocating resources to help these countries. The EU also opens the European market to their products and services. Here are 10 ways the EU supports Least Developed Countries.
10 Ways the EU Supports the Least Developed Countries
- No Customs Taxes, No Quotas: LDCs exporters are not taxed when accessing the EU market. There are no limits on how much LDCs can export to member states without this taxation. This applies to all products or services, as long as it complies with the EU’s quality standards. The only exception is the trade of arms and ammunition.
- EU Aid for Least Developed Countries: The EU encourages the LDCs to increase exports and production by investing in their local economies. The Aid for Trade is the EU’s stimulus for the LDCs to take on infrastructural projects such as roads, bridges and ports. It is believed this aid helps the countries develop further and become more competitive.
- Least Developed Countries Get Complimentary Access to the EU Market: The EU’s trade policy for LDCs differs from other developing countries. In some cases, it is even more accommodating than their partnerships with traditional allies. By giving LDCs uninhibited access, the EU is providing a competitive advantage over other third parties. This way, LDCs have more opportunities to trade with the EU than stronger economies. Hence, this gives them a better chance to grow.
- Full Access for Services: The EU makes it easy for companies in the LDCs to sell innovative services. For example, engineering, management advising and IT. There is dual reasoning behind this policy. First, it creates a more competitive market. Second, it helps LDCs enhance their local technology and engineering service sectors.
- Opt-out from World Trade Organization’s Patents: The EU created unique policies that apply only to LDCs to encourage innovation. The LDCs may request an opt-out from the World Trade Organization’s (WTO) rules on intellectual property. This could include things like expensive patents or designs. These things can block their developmental progress. Further, the EU gives LDCs access to otherwise patent-shielded drugs, to ensure that people have access to the medications they need.
- Governmental Support and Counseling: The EU supports the LDCs’ governments, so they can make trade a central part of their national agenda and plan to develop their economies. As part of this effort in 2015, the EU pledged €10m to a program designed and guided by top European economists.
- No More Unfair Competition Among Farmers: Subsidizing local farmers to export is a common practice around the world. As a result, farmers in weaker states struggle to compete; sometimes they even declare bankruptcies. In 2015, the EU and Brazil discussed a new deal with the WTO. This deal would scrap the unfair practices and export subsidies to farmers. The deal is still in process, but it hides an excellent premise for all the LDCs that would profit from it on the background.
- Backing the Fair Trade: EU trade deals with the LDCs that specially designed products to promote fair and ethical trade of products. This includes cocoa, coffee, fruits and other foods; these products are mainly supplied from these countries. Additionally, the EU supports the LDCs by partnering with the International Trade Centre. It invests in projects like 1 RUN that trains small-scale farmers in the LDCs to produce their crops more sustainably.
- The Trade Facilitation Agreement: The EU is the loudest supporter and promoter of the WTO’s Trade Facilitation Agreement. It will make it much more manageable and more affordable to clear goods through customhouses – giving crucial administrative relief to exporters from the world’s poorest countries.
- EU Supports the Least Developed Countries on the World Stage: The Union is a prominent member of the world’s international organizations, including the WTO, the UN, and the United Nations Conference on Trade and Development (UNCTAD). In each one, the EU prioritizes the needs of the Least Developed Countries and encourages other members to open up their markets and provide finance to help their advancement.
– Olga Uzunova