TABLE OF CONTENTS1.2.2.1.2.2.2.3.2.4.2.5.2.6.2.7.3.3.1.3.2.4.4.1.4.2.5.6.Introduction .................................................................................................................. 3High impact development policy ................................................................................. 6Putting “High Impact” cooperation into practice......................................................... 6Growth for human development .................................................................................. 7Promoting Governance................................................................................................. 7Security and fragility.................................................................................................... 8Making coordination of aid a reality............................................................................ 9Policy Coherence for Development ........................................................................... 10Improving the impact of Budget Support................................................................... 11Development policy as a catalyst for inclusive and sustainable growth.................... 11Partnerships for inclusive growth............................................................................... 12Fostering regional integration; continuing to ensure trade for development ............. 14Sustainable development, a new driver...................................................................... 15Climate change, biodiversity and development ......................................................... 15Energy and development............................................................................................ 17Agriculture and Food security.................................................................................... 19Conclusion.................................................................................................................. 21

In 2000, developed and developing countries adopted the Millennium Development Goals(MDGs); 8 main goals and underlying targets to reduce poverty by 2015. As recentlyacknowledged by world leaders at the High-Level Plenary Meeting of the General Assemblyin New York on 20-22 September 2010, although progress is mixed in terms of both MDGsand countries, much has been achieved and millions of people have pulled themselves out ofpoverty.However, while in the past decade economic growth has been robust in many parts of theworld, a great deal remains to be done and many developing countries risk lagging behind inrecovering from the negative impacts of the global economic and financial crisis. Around 1.5billion people still live in extreme poverty (half of them in Sub-Saharan Africa) and one sixthof the world’s population is undernourished. In many of the least developed countriesresilience in the face of the current economic crisis has been fragile, with GDP in thesecountries generally reducing in 2009. There has been very little progress in the MDGs onreducing maternal and child mortality, and quality of education and prospects for access tosanitation are concerns. Furthermore progress has varied greatly between regions and in somecases the benefits of growth have not been felt by the wider population even in countrieswhere economic growth is robust.As for the European Union (EU) and its Member States, over the last ten years, and inparticular since the adoption of the European Consensus on Development1in 2005, it hasdoubled the amount of official development assistance (ODA) it provides, improved itsperformance in terms of aid delivery, and Member States have rallied around shared policyapproaches. Aid effectiveness2has improved, partnerships and cooperation agreements aswell as financial instruments have been modernised, and mechanisms have been put in placeto improve policy coherence for development (PCD)3. Recognising that its partner countriesbear primary responsibility for defining their own development strategies while emphasisingthe key role of good governance, the EU has increasingly moved from a donor-beneficiarytype of relationship to a partnership4, involving contractual approaches, based on policydialogue and linking results to specific cooperation programmes or instruments.In 2010, the EU adopted an ambitious position in support of the MDGs, including thereaffirmation of the collective target of devoting 0.7% of its GNI to ODA by 2015. It remainsthe world’s leading donor. It has made a real difference on the ground to millions of peoplearound the world. Whilst recognising that further efforts are needed, the EU is proud of theseachievements; for the Union development assistance remains a matter of solidarity, ofcommitment and of mutual interest. Indeed, the Lisbon Treaty has placed development policyat the heart of the EU's objectives, Article 208 specifying that "Union developmentcooperation policy shall have as its primary objective the reduction, and, in the long term, the

eradication of poverty. The Union shall take account of the objectives of developmentcooperation in the policies that it implements which are likely to affect developing countries".Development assistance will continue to require long-term financial commitment. It istherefore particularly important to demonstrate its relevance to EU citizens, and this for anumber of reasons, notably to address poverty reduction and other global challenges. Climatechange is closely interlinked with development as it further enhances the need fordevelopment assistance and requires increased focus on other major questions such as energyaccess and security, water scarcity and food security. Development assistance needs toaddress bad or weak governance which provides fertile ground for terrorism, piracy,trafficking and criminality; to better manage migration flows by facilitating legal migration inline with labour markets needs, fighting illegal migration and making migration work fordevelopment; to promote economic growth in developing countries and accompany theirintegration into the world economy. In this framework, development education and awarenessraising are of strategic importance in view of gaining the support of European citizens fordevelopment cooperation.The review of progress on the MDGs therefore makes it clear that the world needs to do morein support of countries' efforts towards the MDGs, not just in terms of ODA levels, but atleast as importantly, in terms of how aid is granted and used. In particular, aid alone willnever succeed in pulling millions of people out of poverty. Beyond safeguarding andimproving essential services, development assistance can only be effective by addressing theunderlying causes of insufficient progress towards the MDGs. Aid is not a panacea and is oneof several financial flows towards developing countries. It must tackle the roots of povertyrather than its symptoms, and primarily be a catalyst of developing countries' capacity togenerate inclusive growth, which allows people to contribute and benefit from economicgrowth, and to mobilise their economic, natural and human resources in support of povertyreduction strategies. It is thus increasingly obvious that MDGs will not be achieved withoutmore and more inclusive growth. A 1% increase in developing countries' gross nationalincome can be far more effective than an increase in aid to these countries. It can significantlyimprove countries' capacity to achieve poverty reduction and have a multiplier effect throughemployment creation and social protection.The achievement of the MDGs by 2015 must therefore remain Europe’s first and overridingpriority, and the European Consensus on Development provides the fundamental principlesfor moving forward5. Combating global poverty is one of Europe's core values, goals andinterests. And there is clear evidence that pursuing this objective at EU level can offer highadded value, notably by ensuring a global and coherent reach and presence across the world,creating scale and political weight of action, as well as division of labour leading to aidefficiency gains both in the EU and in partner countries.Given the current challenges, this Green Paper seeks to launch a debate on how the EU canbest support developing countries' efforts to speed up progress towards the MDGs, and how itcan strive to leverage new opportunities to reduce poverty. It sets questions around four mainobjectives to be pursued collaboratively by the EU and its Member States:

•how to ensure high EU impact development policy,so that every euro spent provides thebest value added and value for money, the best leverage and the best legacy ofopportunities for generations to come,•how to facilitate more, and more inclusive, growth in developing countries,as a meansof reducing poverty and providing a chance for all to have a decent living and a perspectivefor their future.•how to promote sustainable development as a driver for progress, and•how to achieve durable results in the area of agriculture and food security.ThisGreenPaperwillbepublishedontheCommission'swebsite(http://ec.europa.eu/yourvoice/). The consultation will run from 15 November to 17 January2011 and is open to any interested stakeholder. Individuals, organisations and countries areinvited to send their contributions, in the form of answers to the questions presented in thedocument and/or as general comments on the issues raised. In particular, contributions wouldbe greatly valued from the EU's partners in developing countries.Contributions received will be published, possibly in a summarised form, unless the authorobjects to publication of their personal data on the grounds that such publication would harmhis/her legitimate interests. In this case, the contribution may be published in anonymousform. Otherwise, the contribution will not be published nor, in principle, will its content betaken into account. Furthermore, since the launch in June 2008 of the Register for InterestRepresentatives (lobbyists) as part of the European Transparency Initiative, organisations areinvited to use this Register to provide the European Commission and the public at large withinformation about their objectives, funding and structures. It is Commission policy thatsubmissions from organisations will be considered as individual contributions unless theorganisations have registeredContributions should be sent to [email protected]. Enquiriesabout this consultation can be made to the same mailbox, or to the European Commission, DGDevelopment, Unit A/1, Office SC-15 03/70, 1049 Brussels, Belgium.The result of this consultation will inform the Commission's proposals related to modernisingEuropean development policy to be made in the second half of 2011 as well as other policyinitiatives in related fields.

The impact of cooperation is influenced by a whole range of factors that shape the broaderframework of EU development policy, including the global economic context, partnercountries' own policies, the coherence of donors' policies (on trade, agriculture, migration,humanitarian policies, climate mitigation, etc.), and the policy dialogue that precedes aidprogramming decisions. In certain countries, the external dimension of EU policies has agreater impact on development than aid.That said, the financing needs to meet the MDGs go far beyond public funds available today,be it at national level in developing countries or at international level through developmentcooperation and the emerging South-South cooperation. Moreover, in the current economicand financial context, the need for fiscal consolidation will exert increasing pressure ondonors' aid budgets. Innovative solutions must seriously be considered. They include optionsconsidered in the framework of the debate on innovative sources of financing6"withsignificant revenue generation potential"7as well as efforts to improve the impact of existingODA flows.It is clear that European aid must bring strong value added and real value for money, and mustfocus on areas where a clear added value can be shown. Put simply it means that, in allrelevant forms and all sectors, the EU has to demonstrate that its aid programmes will providethe greatest long term impact and will be used as a key instrument to focus on achieving theMDGs and beyond. This starts primarily by targeting four fundamental and underlyingrequirements: human development and security as preconditions for any country'sdevelopment, growth and social inclusiveness for any long lasting engagement. These are allnecessary and complementary conditions on which we need to work consistently.2.1.Putting “High Impact” cooperation into practice

It is important that the objectives outlined above are reflected in all stages of the programmingand expenditure cycle, thus investing in projects where one Euro spent, be it fromdevelopment aid, climate finance, or other aid budgets, can result in leverage and growth inthe partner country. The EU and its Member States might consider a certain number ofconditions to be met for programmes/projects/support, in terms of:(i) Added Value,(ii) Prerequisite of EU co-ordination prior to approval of grants/programming for examplethrough the existence of a European Country Strategy document,(iii) Demonstration that the programmes/grants/budget support proposed will produceleverage on reforms and sound policies on one hand, and on other sources of funding(including by involving the private sector or mobilising domestic fiscal resources), on theother.

In addition, the monitoring and evaluation of and communication on achievements of aid areof increasing importance against the background of ongoing fiscal consolidation as aidbudgets may come under increasing pressure. Increasing the accountability and visibility ofthe EU's contribution also shows its partners that it has delivered on its internationalcommitments. We therefore need to be able to convincingly demonstrate the achievements ofEU development cooperation. This will require increased efforts to strengthen monitoring andevaluation systems as well as reporting requirements in both the EU and its partner countries.1.How could the EU and its Member States develop a set of Guidance Instructions onprogramming and expenditure requiring a certain number of conditions to be met(added value, coordination, impact) for all programmes/projects/support?What are current good practises at EU and Member State level on which to build?How could the diversity of aid flows (from public and private sources, from variouspolicies' external action budgets) be adequately combined, tracked and reported onfor maximum impact, accountability and visibility?Growth for human development

Without a food-secure, educated and healthy population, a country can never grow and pullitself out of poverty. Economic growth has to be socially inclusive if it is to deliver sustaineddevelopment benefits, requiring coherence and balance across policies. Reduction ofinequalities through income generation, including productive and decent employment, genderequality, social protection, as well as universal access to quality education and training, aresponsive higher education system which can supply the human resources required, as wellas health care services are of key importance to reduce poverty, achieve the MDGs andcontribute to social cohesion, human rights and peace.These must and will remain priorities of the EU and Member States' development efforts inthe countries most in need.Building on its deep experience of support for human and social development and lookingbeyond the traditional areas of activity, the EU is now in a position to review how to betterintegrate a focus on skills, innovation, creativity and entrepreneurship, in a comprehensiveapproach to social policies, and how to support active labour market policies, the decent workagenda, and the development of effective national social protection systems.4.How can the EU and its Member States best ensure that aid on education andhealthcare becomes more focused, and increases further its impact, effectiveness interms of human development and growth?How should the EU support skills development in partner countries in line with thefeatures and needs of local labour markets, including in the informal sector? Howcould the EU's global approach to migration contribute in this regard?Promoting Governance

Effective governance requires sound financial management of funds and effective prevention,control, and sanction/reparation mechanisms to fight corruption and fraud.The promotion oftransparency, accountability and participation in decision-making also play a key role, notablythrough the role of Parliament, an independent judiciary system and audit institutions. Focusmust also be put on enhancing the regulatory capacity of governments with a view to creatinga business-friendly environment which would make the best use of domestic resources andattract domestic and foreign investment, combined with mechanisms to ensure that thebenefits of growth reach all parts of society. In this regard, the EU's experience on transitioncan be valued. Civil society organisations are also vital partners. In its political dialogue withnational authorities, the EU promotes minimum standards of an enabling environment forcivil society organisations and encourages a genuine dialogue between State and Non-StateActors.Dialogue between partners and a focus on providing incentives for result-oriented reforms arethe main principles of the current EU approach. This is done by integrating indicators ofprogress both in the periodic reviews of aid allocations and in specific programmes or budgetsupport. The EU has already moved towards contractual and demand-based aid programming,for example in the form of the Governance Initiative8with the African, Caribbean and Pacific(ACP) States, the MDG Contract9and governance clauses in EU partnership agreements withthe ACPs countries and countries in Asia, Latin America and the European Neighbourhood.The regional dimension of promoting governance is important to secure better acceptance andlegitimacy of reforms.However, a continued focus on using aid as a catalyst for improvements in governance as anintegral part of development partnerships has to remain a priority of the EU’s developmentpolicy, and in some partner countries much remains to be achieved. This gives rise to anumber of questions on how best to make a further step forwards in using aid to promotegovernance. For example, whileex antemultiannual country allocations bring somepredictability to developing countries' financing, consideration may be given to movingtowards new approaches offering incentives for reforms and for mobilising internal resources.6.7.8.How can the EU adapt its approach, instruments and indicators in support ofgovernance reforms in developing countries/regions?How and to what extent should the EU integrate more incentives for reform into itsaid allocation process, for both country and thematic programmes?How should the EU promote sound frameworks to assess and monitor developmentresults achieved by recipient countries?Security and fragility

approach at EU and Member State level. This is especially true in fragile states, post-conflictsituations, and countries where a combination of factors provide fertile ground for theemergence of, or support to, social violence and violent extremism.The post-Lisbon Treaty institutional arrangements in the EU provide an opportunity for amore comprehensive and better coordinated European approach to address the root causes ofconflicts and support partner countries' efforts to build peaceful, democratic, legitimate andinclusive states.In particular, the EU, by making use of the new European External Action Service (EEAS), incollaboration with the relevant Commission services, might wish to establish consistent andcomprehensive political strategies linking early warning and preventive diplomacy to short-term, crisis response measures (humanitarian, diplomatic, civilian and military crisismanagement) and to longer term instruments and policies (on development cooperation, trade,environment and adaptation to climate change to reduce vulnerability to natural disasters,migration, etc.). These could also integrate a proper development component to addressgovernance, state building and other development-related reforms required to sustain peaceand stability and foster human rights.In this context, coherence and proper articulation with humanitarian-related activities isfundamental towards the reduction of vulnerability of crises-prone countries, thestrengthening of their resilience and the effective transition from emergency response torecovery.9.How should the EU tackle the nexus between security and development, especially infragile and conflict-prone countries, and put greater emphasis on democraticgovernance, human rights, the rule of law, justice and reform of the security sector,when programming development interventions?How could the EU better coordinate with development actions when programmingsecurity interventions?How can the EU best address the challenge of linking relief, rehabilitation anddevelopment in transition and recovery situations?Making coordination of aid a reality

However, until now, truly effective aid coordination at the programming stage has remainedan exception rather than a rule.Coordination has to become much more systematic and effective, as recognised by theCouncil13, which has invited the Commission to "presenta proposal to the Council by 2011for progressive synchronisation of EU and national programming cycles at partner countrylevel and based on partner countries’ development strategies and taking into account theirprogramming cycles".The Commission intends to put forward such a mechanism in 2011.12.What are the most appropriate manner and structures, legal and practical, to makeaid effectiveness and European Country Strategy documents a reality? How canpractical effect be best given to the Lisbon Treaty and the Council conclusion of 14June in that regard?Policy Coherence for Development

Policy Coherence for Development is a legal requirement under the Lisbon Treaty14. Policiesin areas such as trade, fisheries, agriculture, migration or climate and energy, just to name afew, can have a huge impact on the poorest countries' capacity to reduce poverty and grow.In the “Twelve-point EU action plan in support of the Millennium Development Goals”published by the Commission on 21 April 201015, the Commission underlined that “The EUalso supports MDGs by making other policies beyond aid more supportive of developmentobjectives. Over the last five years, the EU has put in placeex anteandex postmechanisms tothis end, including impact assessments which look into the external impact of policyproposals. The PCD Work Programme sets concrete targets and indicators of progress toimplement the EU commitments on PCD across a whole range of policies impacting thefollowing five global challenges: trade and finance, climate change, food security, migration,and security. It is being used as a tool to guide EU decision-making, in particular involvingthe Commission, the Council and the Parliament, on the broad range of decisions that affectdeveloping countries beyond development assistance.To make further progress, one approach may be to use the PCD Work Programme moreproactively and at an earlier stage in the preparation of new initiatives. Further work andconsultation is thus needed on how to turn this commitment into a concrete programme ofaction. In particular, a key remaining challenge is to further develop current approaches toassess the concrete impact of EU policies on development objectives.13.What practical and policy related measures could be taken in the EU to improvePolicy Coherence for Development? How could progress and impact be bestassessed?

Budget support is a way of implementing development aid which consists in giving financialaid to the treasuries of the recipient countries. Over the last years, budget support (general orsectoral) has become important at EU level to support sound economic and public financepolicies as well as the reform agendas of partner countries. The Commission is committed toensuring that budget support is used selectively and with the maximum possible effectiveness,efficiency and impact.Given the importance of ensuring a comprehensive review on the use of this importantinstrument, a Green Paper on "The Future of EU Budget Support to third countries"16hasbeen adopted by the Commission on 19 October 2010. It aims at a widespread publicconsultation, gathering views and evidence from relevant stakeholders on how lessons learnedcan result in improved use of budget support at both Community and Member State level inthe future.3.DEVELOPMENT POLICY AS A CATALYST FOR INCLUSIVE AND SUSTAINABLE GROWTH

The underlying objective of aid is to act as a catalyst, to support partner countries growth andin particular to help create an environment that is friendly to sustainable and inclusive growth,enabling these countries to pull themselves out of poverty. Economic growth, providing that itis socially inclusive, produces a much greater effect in terms of poverty reduction thanincremental increases in ODA.Many factors influence a growth friendly environment, including political andmacroeconomic stability, good governance, security, respect of human rights, a conduciveregulatory and policy business environment able to generate productive and decentemployment, a well educated, healthy and creative population, the sustainable use of scarcenatural resources, economic infrastructure, implementation of core labour standards, andeffective and beneficial participation in international trade.The EU is already working in all those areas in its existing partnerships with developingcountries. A reflection is however needed on how to further improve its impact on growth, notas an end in itself, but as a means for poverty eradication.Obviously, the capacity of developing countries to pursue good governance and growthenhancing policies differ widely. Growth oriented cooperation will be more appropriate forcountries which are embarking on policies on growth enabling factors and which provide forsocially inclusive growth, while more traditional development instruments need to becontinued for countries most in need or those in a conflict cycle or in a fragile situation.Differentiation between countries and regions may thus lead to develop new approaches forbetter cooperating with countries willing to engage in new forms of partnerships, whilecontinuing to support state building, good governance and poverty focused strategies whereneeded. It follows that a country specific policy mix, which recognises its particularchallenges, is important, while working in partnership and respecting ownership, focusing onresults and ensuring mutual accountability.

A predictable, transparent, rule-based and non-discriminatory business environment,combined with support to investment in the productive sector and the existence of marketopportunities, are all needed in order to attract and retain domestic and foreign investments.The question therefore arises whether the EU should consider newJoint Strategies forInclusive Growthin partnership with the individual or regional groupings of developingcountries, also involving private-sector stakeholders — businesses, foundations, academia andcivil society organisations (CSOs) at large, etc. — all committed to the goal of makingmeasurable progress on issues where they can act together. These Joint Strategies can bedeveloped within exiting formal partnership arrangements between EU and groups ofdeveloping countries, or indeed with individual countries.Non-state actors are a force for and a component of development with their multiple roles ofadvocacy agents, service providers and donors or lenders in their own right, thereby bringinginsight and added value. A regular dialogue with them needs to be sustained, such as the onelaunched by the Commission18aiming at reaching consensus on the challenges ahead and theareas most in need of change.Such joint strategies can be based on a number of different priorities, with both the EU andpartner countries agreeing clear respective responsibilities and deliverables such as:– Promoting and supporting productive and sustainable investments, both foreign anddomestic, in the poorest developing countries, in particular those which do not benefit fromincreased trade and do not currently attract large investment flows. Possibilities includeleveraging aid to support ancillary infrastructure investment to accompany privateinvestment (e.g. to get products to market), and supporting projects that pose a level of riskmaking it difficult to attract private financing, where appropriate, in the form of risksharing finance. Such investment should aim less at supporting the development of existingindustrial activities, notably extractive industries, but rather focusing on activities withhigher value added, notably post-extractive industries. It should also aim to benefit thewidest possible range of citizens in the country concerned.– Access to capital and affordable credit, particularly for Small and Medium Enterprises(SME) and micro-enterprises, is of key importance to support the growth of localagriculture, industry and services, fostering leverage between aid and financialinstruments. In situations where access to domestic finance is difficult or not available, the

EU could further support a gradual evolution of the domestic banking system and localcapital markets allowing domestic or foreign investors to enter into operations with a clearimpact on development, which they would otherwise not engage in because of the risksinvolved. This might, for example, be achieved via an integrated EU fund or mechanism,operated jointly by the EU institutions and European development banks and financialinstitutions that would offer subsidised loans, technical and financial support wherenecessary and risk sharing, in a closely coordinated manner, to promote privateinvestments in developing countries.– Legal and regulatory framework. The ease and cost in establishing a new company,particularly an SME, or running an established one, plays a very important role. Thisconcerns not only initial registration formalities, but for example subsequent taxcompliance, the fight against corruption and capital flight outside the country and permitissues. EU assistance, both financial and technical, can support reforms in this area, basedon commitments and determination to introduce improvements by partner countries. Thisalso includes investment protection, transparent and open business registration and closureprocedures, and affordable and trustworthy contract enforcement modalities. Because ofgrowing pressures of global demand, the governance of rights related to the exploitation,management or alienation of natural resources, including land, water, raw materials orfisheries is gaining importance. However, progress on such issues depends greatly on thedetermination of partner countries.– Innovation: Scientific and technological cooperation and capacity-building, as well asinvestment in knowledge, innovation and new technologies can play a key role in fast-tracking inclusive growth and lifting people out poverty. One of the greatest challenges fordeveloping countries is to identify and exploit the areas where they have a comparativeadvantage, in order notably to be able to compete with larger emerging countries. Thus,country-specific measures to encourage technology development and transfer that can betranslated into viable businesses are of paramount importance to multiply the number ofinvestment opportunities. The potential growth impact of cultural and creative industrieson the local economy of many developing countries should also be given special attention.Protection and enforcement of intellectual property rights in line with internationalobligations and taking into account development levels and needs can play an importantrole to support innovation. Information and Communication Technologies (ICT) can havea huge and rapid transformational power in all socio-economic domains and areremarkably cost effective regarding the provision of services in areas such as healthcare,education, energy and environment management, transport systems, governmentadministration or trade and financial services19.– Decent work and social protection: Higher inequality sharply reduces the pace of povertyreduction and has considerable adverse effects on economic growth. By reducinginequality and supporting the most disadvantaged people, social protection promoteshuman capital investments, enhances productivity, improves socio-political stability, andcontributes to the creation of sound institutions. An integrated employment and inclusivegrowth agenda focussing on skills, productivity and a regulatory business-friendlyenvironment is necessary. In EU cooperation with Latin American countries for instance,

social cohesion is a central objective and is considered a key ingredient for inclusivegrowth.In all those fields, the respect for human rights and social and environmental sustainabilitystandards must be ensured by reference to the UN Global Compact and OECD guidelines,either by means of sectoral arrangements or regulations, such as under the Forest LawEnforcement, Governance and Trade20Agreements, Fisheries Partnership Agreements,Extractive Industries Transparency Initiative21, or the Kimberley process22, or in the form ofCorporate Social Responsibility23and accountability. These initiatives should complement,not substitute the efforts undertaken to enhance the business environment at country level andhelp to fill regulatory and enforcement gaps.14.How and to what extent should EU aid support industrial investment projects indeveloping countries and how can the correct balance be made between developingextractive/energy interests and promoting post extractive and industrial sectors?How can the EU ensure that support to economic development guarantees fair socialinclusion of the benefits and provide better protection of social and economic rights,including implementation of core labour standards, and better corporateaccountability?Which measures should be taken – and how should they be best differentiated – toassist developing countries' efforts in establishing an economic environment that isapt to promote business, particularly SMEs?Which measures or structures might be developed with partner countries, andEuropean and international financial institutions to provide financial support andwhere necessary low cost finance and financial guarantees to support such growth?Which instruments could the EU use to promote creativity, innovation andtechnology transfer and ensure their viable applications in developing countries?Fostering regional integration; continuing to ensure trade for development

Fostering regional integration

The success of the European Union in producing a peaceful and prosperous society andextending the geographic scope of the Union has been in progressively integrating its markets,legally, economically, financially, politically and fiscally. Its focus on infrastructure, in termsof transport, telecoms and energy has enabled trade to develop and growth to flourish. It hasfound that the key to growth and development starts with an integrated, vibrant, regionalmarket.In the developing world, including in Africa, South-East and East Asia, and Latin America, asimilar process is emerging, but at a much earlier stage of development. The overwhelmingmajority of African trade is with non-African countries and there exists fragmentation and

Continuing to ensure trade for development

To fully release their economic potential, experience shows that developing countries need toimplement a mix and sequencing of domestic reform and international policy measuresadapted to their own needs. Development usually involves the gradual liberalisation of tradein goods and services in a favourable business environment so as to facilitate integration intothe world economy and regional integration.The EU has one of the most open markets in the world for developing countries. Togetherwith its Member States, it is a major provider of Aid for Trade, reaching an all-time high of€10.4 billion in 2008, an increase of €3.4 billion (48%) since 2007. Over the years, the EUhas deployed trade instruments to support both social and economic well-being in developingcountries.The key objectives for the near future are to keep ensuring consistency between the EU's tradepolicy and the objectives of development cooperation, to conclude comprehensivedevelopment-friendly cooperation and trade agreements with a variety of developingcountries, to continue strengthening Aid for Trade efforts and impacts on the ground and toexplore the synergies between national and regional strategies for trade.20.21.What can be done to ensure more consistency between the EU's trade anddevelopment policies?How to improve the aid for trade provisions in order to make maximum use of itsleveraging potential for expanding sustainable economic activities in the developingcountries, leading to further growth?SUSTAINABLE DEVELOPMENT,A NEW DRIVER

out of poverty will require ensuring that more people have access to energy; this will lead to ahuge increase in energy consumption with an associated impact on Greenhouse Gas emissionsand the global environment. Therefore, sustainable development needs to be at the core ofboth our development and climate change policy to ensure that action to combat ClimateChange benefits, rather than increases the risk to, the growth potential of the world's poorestcitizens.Development based on the sustainable economy could provide the developing world withmany opportunities for growth. The most effective way to achieve this is to mainstreamclimate change in development. A strategic approach which “climate proofs” development -combining mitigation, adaptation and disaster risk reduction and prevention activities, iscrucial, and initiatives mixing low carbon development with strategic resilient planning willprovide multiple benefits in developing countries24.Sustainable development requires strategies addressing economic, social and environmentalissues. From the environmental point of view, sustainability needs to address both use andmanagement of natural resources, in particular land, water, forests and biodiversity.Integrating adaptation priorities and moving towards low-carbon development will be vital inensuring the sustainability of development.Developing countries' economies depend significantly on the exploitation of naturalresources, such as agriculture and raw materials. At the same time there is increasingrecognition that ecosystems, such as forests and wetlands, have an important role to play aseconomically productive assets that generate flows of beneficial goods and services. As aresult it is crucial to understand how dependant businesses may be on biodiversity andecosystem services and to consider the full impact the loss of biodiversity may have on thepotential to develop new products, new jobs and new technologies. The Economics ofEcosystems and Biodiversity (TEEB) study raised awareness of this challenge by putting aneconomic value on a broad range of services provided by nature which before had no priceunder conventional economic models.Managing natural ecosystems as carbon sinks and resources for adaptation is increasinglyrecognized as a necessary, efficient and relatively cost-effective climate solution. Variousland use management strategies are needed to reduce the emission of GHGs from land usechange, and to sustain ecosystem services that are vital in adapting to climate change.Protected areas, in particular, play a very important role in developing national measures forclimate change mitigation and adaptation, and therefore increasing the protection granted tosuch areas as well as the overall coverage and management of such sites is crucial.Mainstreaming and integration of climate concerns into development policy will havefinancial aspects. At the Copenhagen Conference, the EU committed €7.2 billion of fast-startfinance for mitigation and adaptation measures, including for disaster risk reduction andprevention activities in disaster-prone countries, for 2010-2012. Developed countries alsocommitted to a goal of jointly mobilising US$ 100 billion a year by 2020, from a variety ofsources, including alternative sources, provided that developing countries put in placemeaningful mitigation actions and are transparent about their greenhouse gas emissions. Abalanced allocation between adaptation and mitigation funding should contribute to increasethe resilience of developing economies to climate change and support the move towards low-24

carbon development25. Whereas adaptation will continue to be primarily financed from grantsand aim in a first phase at helping developing countries develop National Action Plans forAdaptation, mitigation actions will also need to draw from concessional lending and privatesector co-financing. Climate and development funding should thus also focus onstrengthening, at all levels of society, the capacity to attract investments in low emissiontechnologies and sustainable land use practices. At the October 2010 Nagoya Conference, allparties to the Convention on Biological Diversity agreed on the need to mobilise resources insupport of biodiversity, in particular to assist developing countries in implementing the new10 year strategic plan adopted on that occasion.22.Given the close interlinkage between climate change, biodiversity, and development,and given the new opportunities offered by climate finance and the markets, how canthe mainstreaming of climate adaptation as well as disaster risk reduction into theEU's development policy be strengthened in order to ensure more climate resilientand sustainable economies, as well as forest and biodiversity protection?Energy and development

Out of the many challenges of sustainable development, access to sustainable energy for allcitizens is a key issue. In fact, generalised access to energy constitutes a pre-requisite to meetmost MDGs: access to reliable, stable priced energy, and in particular electricity, is a driver ofpoverty eradication; vital for health, education, agriculture and economic development. Theseare challenges which call for innovative solutions and there are many positive opportunitiesthat can result from an objective of "climate-proofing" development and cooperationstrategies and investing in sustainable development.In Sub-Saharan Africa, for example, less than 30% of the citizens have access to grid-basedelectricity, and for those that have access, it is often an unreliable source of energy, withblackouts and interruptions occurring all too frequently and for prolonged periods. Thisposition is shared by many other developing countries, and has huge consequences for socialand economic development and notably on the possibility of achieving the MDGs.Over the last decades, oil prices have varied enormously. This has had huge effects on fragileand developing economies, particularly those that are largely dependent on oil, and even moreso where fuel driven generators play an important role due in part to the absence of reliableelectricity supplies. Finally, due to the lack of reliable electricity supplies charcoal becomesthe cooking fuel by default, resulting in widespread health problems and deforestation.However, it is notable that many areas in the developing world represent ideal places todevelop renewable energy, including hydro, wind, photovoltaic electricity and concentratedsolar power notably due to the highly advantageous natural resources available (water,sunshine). Moreover, where energy infrastructure is not available and renewable solutionscan be provided outside the grid, overall costs can be reduced. In many respects, by investingin local, competitive renewable energy in many parts of the developing world, it is possible toskip a generation in technology terms. Furthermore, introducing modern solutions for energyproduction and distribution would allow important gains in energy efficiency. Moderntechnology can achieve important reductions of greenhouse gas emissions and substantially25

improve local environmental conditions. On the latter, Europe can play a key role inproviding know-how. Where infrastructure is present, upgrading existing facilities andinterconnecting them may ensure a broader access to energy.By combining highly leveraged EU development and the fast-start Copenhagen fundsmentioned above to promote investments in renewable electricity in developing countries,huge leaps forward in providing sustainable energy to the world's poorest countries could betaken. The development of renewable energy in these countries, particularly LDCs, providesan additional, very important development advantage by reducing their dependency andvulnerability to highly volatile oil prices.The EU is uniquely well-equipped to providing this assistance. It is the leading producer ofrenewable energy technologies. Europe has the greatest experience in the legal andadministrative measures necessary to catalyse investment in renewable energy, also due to itbeing the only world's region with legally binding targets on all Member States. The EU hascommitted to source 20% of its energy needs from renewable sources by 2020.Finally, investments in energy do not,per se,need significant grant related assistance. This isimportant; development funding alone will never be able to finance the hundreds of billions ofEuros of investment necessary to provide every citizen with sustainable electricity. Indeed, inprinciple, such investments can be profitable. Leveraging the EU budget with funds fromdonors and financial institutions, including from the private sector, should therefore be easierto achieve in this sector than in others.It thus needs to be considered whether the EU and developing countries and/or regionalgroupings should act together, in the context of existing partnerships, to put into placeconcreteJoint Programmes to progressively provide sustainable energy to all citizens.Such programmes, involving highly leveraged EU development and climate change finance,EU and developing countries, the energy industry and EU financial institutions, could aim atidentifying a timetable for joint actions, and include reforms in low income countries, both interms of investment protection, taxation and regional power collaboration. They should buildon existing actions in energy partnerships such as the EU-Africa Energy Partnership. Actionin the renewable sector can be a significant part of the solution to the energy needs of thedeveloping world, but will need to be seamlessly integrated in a wider energy policy, coveringfor example, energy efficiency, networks and infrastructure, and ensuring effective suppliesand development of other, more "traditional" energy sources. The cooperation should be opento non-EU donors and international institutions, and could focus,inter alia,on the following:•Financing. During the recent financial crisis it has been difficult for developers ofrenewable energy projects to secure commercial financing in the EU, where a stable and'renewable friendly' administrative and legal framework exists. To secure financing formore risky projects in the developing world, where such administrative and legalconditions do not exist, is practically impossible.•Stable regulatory and administrative conditions. Without stable and predictable conditionsthat enable and encourage investment by private companies, even with appropriatefinancial instruments in place, investment will not take place. This ranges from grid issues,tax, company law, to planning rules. It also requires legal provisions allowing opencompetition on electricity markets to supply customers. It also requires clear, fair andeffective regulatory rules to ensure cost recovery and protect consumers.

•Technical knowledge, education and training. In many parts of the developing world, thetechnical training facilities are inadequate, or do not exist. Without a well-trained workforce, from electrical engineers to craftsmen, renewable energy will never meet itspotential. Job creation is a central benefit of any such development, but training andknowledge will require real efforts.•Regional markets. In many cases the need to have the possibility to sell electricity acrossborders will be important, particularly for larger hydro projects. This will require clearregional agreements, and regulatory stability.23.How can the EU best act to support developing countries' efforts to securesustainable energy for all their citizens? What role might, for example, an EU-AfricaJoint Programme to progressively provide sustainable electricity to every citizen,combining development and climate change funding and leveraged loans fromDevelopment Financial Institutions?AGRICULTURE ANDFOOD SECURITY

Food security remains a key challenge for rural and urban populations in many developingcountries where 75% of the population still depends on agriculture. It is estimated that globalagricultural production must increase by 70% in order to feed a global population that theUnited Nation expects to increase to 9 billion people by 2050. Hunger affects humandevelopment, social and political stability and any prospect of achieving the MDGs. Recentprice developments on world food markets have highlighted the continued challenge,particularly for food-importing developing countries.Development and food security go hand in hand; experience demonstrates that agriculturalreform and the capacity to feed a country's population is a precondition to wider developmentand poverty reduction. Most of the poor and hungry in the world live in rural areas whereagriculture forms the main economic activity. In these areas, small-scale farming is dominant.In Africa, for example, small-scale farmers produce about 80% of the food consumed in thecontinent. But agriculture also holds great potential in stimulating widespread income growth:in developing countries; GDP growth generated by agriculture is up to four times moreeffective in reducing poverty than growth generated by other sectors26. Investment in foodsafety through the implementation of sanitary and phitosanitary standards further stimulatesfood security and human health. Biodiversity protection and related ecosystem services arealso key to ensuring sustainable agriculture and contributing to nutritional adequacy.Agriculture has important linkages to other sectors and its growth generates multiplier effectsthroughout the economy. Moreover, well-managed agriculture is an important factor inmitigating environmental challenges such as deforestation, land degradation, water scarcityand climate change. Accelerated low carbon agricultural production will also enhance globalprice stability with the existence of varied and reliable production areas.A concerted initiative from the EU to capitalize on investing in inclusive, intensifiedsustainable and ecologically efficient agriculture can therefore create a win-win situation:

enhanced green growth with lower emissions, and increased social stability27. In order for thisto be successful, production should be seen in a value chain context with adequate access tofinancing, processing and markets. In this regard, public-private partnerships could play animportant role.The aim of ensuring that EU cooperation is "High Impact" in nature is particularly pertinent toagriculture and food security. In particular, experience has demonstrated the need to addressthis challenge in a comprehensive way, looking at the whole value chain: research andextension to farmers training, access to land, appropriate fertilizers, irrigation methods,transport to markets, storage, finance, banking and insurance, and processing capacity.Research and innovation can play a key role in allowing a step change in enhancing foodproduction if it is demand-driven, participatory and adapted to the needs and priorities ofbeneficiaries. The EU possesses wide expertise on sustainable agriculture in varyingconditions, as well as extensive networks with developing countries.The EU should therefore make agriculture and food security a test case of its capacity todeliver high impact cooperation and promote inclusive and green growth by concentrating itsefforts on ensuring that where assistance is granted, it considers the whole production chain.This might be done by EU programmes focussing on the chain, or working better and moreclosely with partner countries and other donors to combine efforts. The cooperation, inpartnership with non-EU donors and international institutions, could focus,inter alia,ondemand-led research and innovation, governance of sectors and value chains, regionalagricultural and food markets.This comprehensive approach to agriculture and food security should also take into accountthe nutritional dimension. Recent scientific evidence shows that malnutrition hampersdevelopment efforts and undermines economic growth, with up to 3% of GDP loss. It is theleading cause in child deaths, and, for those who survive malnutrition, it can have irreversibleeffects on their mental and physical development. Addressing nutrition has a "multipliereffect" in achieving the MDGs.Finally, both in the general fight against food insecurity and in its nutritional dimension,fishing products can also play an important role. Therefore, the EU and developing countriesshare an interest in promoting sustainable fishing, including efficient systems of monitoring,control and surveillance, and the sustainable development of aquaculture. The role ofFisheries partnership agreements and regional fisheries management organisations is essentialin this respect.24.How can the EU's development policy best contribute to enhanced food securitywhile safeguarding environmental qualities? Which policies and programmes aremost conducive for smallholder and private sector investment in agriculture andfisheries?Which strategic areas should the EU engage in, particularly with respect to Africa?How can the EU stimulate agro-ecological approaches in farming and sustainableintensification of agriculture, sustainable fishing and aquaculture?