EN LA LEGISLACIÓN DE LA REPÚBLICA DEL PERÚ

1) TRADE AND DEVELOPMENT

Although the relationship between trade and development is a complex one, there is evidence that trade and openness are nevertheless important elements supporting the creation of jobs and prosperity in developing countries. Developing countries that have opened their markets have often seen high growth rates, and many have found that - when combined with sound domestic policies - trade openness can be an important basis for economic growth. On the other hand, no developing country has achieved sustained growth by erecting high trade barriers and limiting exports.

Open trade policies create opportunities for economic growth. In addition, globalization, trade and FDI integration are associated with better, not worse, working conditions. When examining the impact of international trade and FDI effects on labour conditions, there is convincing evidence that trade and FDI openness play a positive role.87 However, trade opening needs to be accompanied by domestic policies to create decent jobs. Countries promoting decent work objectives are better placed to benefit from trade opening. The EU emphasizes the promotion of social and labour clauses in its bilateral trade agreements and in unilateral GSP+ trade preferences. It relies on cooperation, transparency and dialogue with our trade partners. The Doha Development Agenda (DDA) is the first multilateral trade negotiation launched as a development round. Key elements for developing countries in the negotiations are (i) enhanced market access (ii) reduction or elimination of subsidies

in agriculture and (iii) trade facilitation. Trade facilitation in particular is vital for developing countries, since in many cases trade costs depend critically on the efficiency and cost of entry and exit of goods in the trading country, as well as on the cost of transit of goods via neighbouring countries.

The Economic Partnership Agreements (EPAs) between the EU and the African, Caribbean and Pacific (ACP) group of countries are a key tool for promoting sustainable growth and development in these countries. The EPAs seek to remove barriers to trade, encourage regional integration and boost regional markets, whilst ensuring that the ACP countries have sufficient time to make reforms. These are further supported by provisions such as the right to regulate to protect the environment or the rights of workers, and by links to enhanced development cooperation to support the implementation of the agreement.

Developing countries need assistance in building their capacity to trade (and to cope with the inevitable reallocation of resources that follows from trade liberalisation).

87 _{For instance, Newmayer and de Soysa (2005) present evidence that countries that are more open to trade} and/or have a higher stock of foreign direct investment also have a lower incidence of child labour. See Newmayer and de Soysa 'Trade Openness, Foreign Direct Investment and Child Labor', World Development, 33 (1), 2005, pp. 43–63.

There is evidence that trade and openness are nevertheless important elements supporting the creation of jobs and prosperity in developing countries.

Trade opening needs to be accompanied by domestic policies to create decent jobs.

Trade facilitation in particular is vital for developing countries.

Aid for Trade is financial assistance for developing countries that is specifically targeted at helping them develop their capacity to trade, and the EU is the world’s largest provider of Aid for Trade. In 2007, total Aid for Trade from the EU amounted to €7.2 billion, and specific commitments on trade- related assistance reached €2 billion.

One of the centrepieces of the EU's trade and development policies is the EU's GSP scheme. It has been in force for nearly 40 years and has been modified on several occasions, most often with respect to product coverage and preferential margins. In June 2008, the EU adopted the latest revision of the scheme which runs from 1 January 2009 until the end of 2011. The University of Sussex has carried out a comprehensive evaluation of the EU's GSP and found that it can be effective in increasing exports and welfare; that utilisation rates are typically high; that exporters tend to benefit from preference margins received; and that countries seeking GSP+ status are making efforts to ratify the appropriate conventions.88

However, the study also found that the generally low level of EU MFN tariffs and the trade structure of many beneficiaries' inevitably limit the effectiveness of the GSP regime. In addition, other studies have shown that utilisation rates of preferences tend to decrease with lower values of preferential imports.89 Further analysis is therefore needed in order to ascertain whether the simplified procedure in place (for consignments of less than €6000) for obtaining a certificate of origin needs to be accompanied by a higher threshold and/or if measures should be taken by the exporting countries to increase the preference utilisation rate for small trade flows.

In view, inter alia, of the progress made under the Doha Round and the negotiations of the EPAs with the ACP countries (and with other developing countries such as those in Central America or in the Andean Community), the Commission will reflect on future EU trade policy vis-à-vis developing countries in a forthcoming Communication on Trade and Development. Particular attention will be paid to the autonomous trade instruments, such as the GSP, and bilateral/ regional trade policy options that the European Union has at hand and the fact that larger emerging economies have different development needs from those of small, poor and vulnerable countries.

Global commerce is characterized by large and increasing volumes of trade in intermediate products. Producers take advantage of different costs in different locations to source the cheapest inputs possible. Allowing producers access to raw materials or intermediate products from low cost international sources through relaxed rules of origin (RoO) is therefore vital. This will generate economic activity in the beneficiary country and facilitate development. In developing countries, where labour is most often abundant and cheap, even simple manufacturing operations that provide only low levels of value added can create important job opportunities.

For specific situations, e.g. in case of earthquakes, flooding, etc., one could also envisage time limited ad-hoc initiatives in the area of rules of origin involving the private sector and a number of countries. For example, a finished product (associated e.g. with a high tariff on exporting markets) produced anywhere in the world using a certain amount of intermediate inputs from the crisis-hit country (associated e.g. with a low tariff on exporting markets)

88 _{Gasiorek M. et al, 'Mid-term Evaluation of the EU’s Generalised System of Preferences', CARIS, University} of Sussex, 2005. Available at http://trade.ec.europa.eu/doclib/docs/2010/may/tradoc_146196.pdf.

89 _{See e.g. Nilsson, L. 'Small trade flows and preference utilization',}

mimeo, European Commission, DG Trade,

2009. Available at http://www.etsg.org/ETSG2009/papers/nilsson.pdf.

Total Aid for Trade from the EU

amounted to €7.2 billion.

could become subject to duty free treatment when imported. Tropical fruits contained in downstream processed food products are one example. With a high enough tariff on the final good, such an incentive may be enough for large private companies to decide to source some of the intermediates from the crisis-hit country, and to ensure - for reasons of goodwill and corporate social responsibility - that some of the proceeds are channelled back to those in need.

2) SUSTAINABLE TRADE AND CLIMATE CHANGE

It is difficult to make general statements about the impact of trade on the environment – e.g. in terms of climate change emissions, depletion of natural resources and biodiversity loss. Positive and negative effect may occur side by side. Standard environmental analysis methods90 suggest that trade can potentially have several types of impact on the environment. Trade as an activity that transfers goods from one country to another can have an impact on the environment, the traded products themselves can affect the environment, trade can expand economic activity, and trade can change the composition of a production. To illustrate the complexity of assessing the environmental footprint of trade in a tractable way, we focus on climate change effects in the remainder of this section.

The impact of trade opening on climate change