Declaration: EU trade assistance to impoverished nations fails to meet set objective
The European Union (EU) is facing a significant challenge in meeting its target of allocating 25% of its Aid-for-Trade funding to least developed countries by 2030. According to a report by the European Court of Auditors, the EU has not established a concrete plan to achieve this goal, and the funding share for these countries has actually decreased recently.
The EU's Aid-for-Trade strategy, adopted in 2007 and updated in 2017, aims to progressively increase the share of joint EU and member states' overall Aid-for-Trade directed towards the least developed countries. However, the EU has allocated only €17.2 billion to the Aid-for-Trade program for least developed countries between 2017 and 2022, which is just a fraction of the funds sent to other developing countries. This represents a decline in the share of funds allocated to least developed countries from 18% (2010-2015) to 12% in 2022.
The report highlights that these countries, which account for just 1% of global exports and less than 2% of world gross domestic product (GDP), are home to more than 75% of their population still living in poverty. There are currently 44 countries categorized as least developed countries, home to around 880 million people and representing 12% of the world population.
The European Court of Auditors has identified several areas for improvement. The EU's Aid-for-Trade strategy lacks an operational action plan to meet the goal of directing 25% of funding to the least developed countries by 2030. The Court also calls for improved coordination between EU delegations at country level and their regional counterparts to ensure that support aligns with the specific needs of individual countries.
The incomplete reporting limits the ability to fully assess the overall effectiveness of the interventions. The European Commission has made progress in monitoring and reporting the results and impacts of EU Aid-for-Trade, but its reporting remains incomplete. The Court found that reporting on the overall impact of EU support is incomplete.
Despite these challenges, the audited projects in Rwanda, Malawi, Angola, and Cambodia were successfully implemented and generally contributed to increasing the countries' trade potential. The EU's Aid-for-Trade program operates in a complex environment with many stakeholders, and coordinated implementation and strong partner country ownership are vital for success.
The European Court of Auditors has recommended that the target should be reassessed and an action plan with specific and realistic milestones should be drawn up. There is a risk that these countries may not be able to capitalize on the results of the projects and ensure their economic sustainability if the EU does not take action to address these issues. The special report 'EU aid for trade to least developed countries' is available on the European Court of Auditors' website.
