Incoherence in practice: trade, agriculture and development

Mr. Koenders’ statement was a reaction to a recent report by the AIV (the official Dutch advisory body for International Affairs) on European Development Cooperation.

According to the report, the EU, among the largest donors of development cooperation in the world, is often seen by the public as very bureaucratic, which results in slow and ineffective procedures. Besides, as the AIV report outlines, clear incoherencies are visible between two of the EU’s key policy areas, trade in agricultural products , and development cooperation. On the one hand the EU, via its development policy, tries to encourage the developing countries to open up their economies in order to enhance export opportunities, both for the countries themselves and for the EU. On the other hand, however, within the EU, the agricultural market and trade in agricultural products is still strongly subsidised and protected, preventing the developing countries from being able to compete. Like for instance during the WTO Doha round and during the EPA negotiations, where the development dimension was not given the attention that was needed to come to balanced agreements.

During the EPA negotiations, it was assumed that developing countries would benefit from better trade opportunities and the possibility to further integrate into the regional and international trading system. Yet this is extremely naive as the economies of many ACP countries are so instable and poorly established that further integration is very unrealistic at this point in time. Besides, how can one demand from ACP countries to renounce protectionism while within the EU significant subsidies are still permitted.

If within these policy areas more attention would be paid to Policy Coherence for Development (PCD), less incoherencies would occur and developing countries would indeed be able to benefit from the development aid offered to them.

Aid effectiveness

Currently, aid effectiveness is a highly debated topic within the EU and its member states. The effectiveness of development aid would improve significantly if more attention would be paid to the coherence of policy objectives. When developing countries are actually given the development space for their economies, without being confronted with absurd and unrealistic conditionality’s and standards, they will in the end be able to benefit from such policies installed. Which is of course for the benefit of the EU itself, as these countries will eventually become less dependent on EU development aid, and become more important trade partners.

EU as centre of gravity for development

The same report suggests that more development money should be spent via the EU. Currently, the Netherlands spends about 8 percent of its development cooperation budget via European Development Cooperation (development cooperation initiated at the EU level). In the future, this amount should be increased, according to the AIV. Nowadays, development cooperation initiatives from the EU and individual member states often overlap, resulting in the loss of money due to poor coordination.

The AIV welcomes the way in which the European Commission has dealt with the criticism concerning its development cooperation policy. At some points improvements have been made, such as the initiation of a code of conduct, "the Paris principles", which states that the development activities undertaken by the individual member states and at EU level have to be better coordinated. More often one leading donor should be appointed, who should then on behalf of the other EU donors support one particular sector within a partner country.

Finally, the AIV report gives some key recommendations concerning the development cooperation policy of the EU. It is suggested that further coordination among the member states and the EU should be given priority, as this would result in better development allocation, more complementarities and less transaction costs. More development money should be spent via the EU rather than on a member state individual basis. And the European Commission should take upon a leading role as donor within the international trade arena.

For more information on policies that are incoherent with development objectives, please see our case studies on this website.

Read the full report on the website of the AIV (in Dutch language only)