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The EU's development policy


From the outset, EU development policy has been an important EU activity. At first it was largely designed to allow former French and other colonies to be supported by the European Communities. The accession of the UK in 1973 and the pressure from other countries led the EC both collectively and as Member States to do more in promoting world development generally.

Today, development has expanded considerably to be a major issue for the EU and one linked to wider policy questions, including trade, foreign and security policy and the development of human rights and democracy around the world. The EU is now the world’s biggest provider of development aid.

This paper covers development and humanitarian aid; it does not cover those programmes that affect the EU’s near neighbours, which are covered by the separate European Neighbourhood Policy, nor does it cover pre-accession aid (e.g. to Turkey).


Part Four of the Treaty of Rome laid down the arrangements for the "Association of the Overseas Countries & Territories". It specifically referred t to the "non-European countries and territories which have special relations with Belgium, France, Italy and the Netherlands". Association was to enable these countries and territories to trade freely with the EC countries, with the EC contributing to the development of these countries and territories but without the requirement for them to abolish all tariffs on goods from the EC immediately.

The very particular circumstances of the French colonies and territories, which was the main reason for the inclusion of association status in the Treaty of Rome and lead on to the Yaoundé Convention in 1963, gave way to wider issues about development. The accession of the UK changed the situation because it had many more former colonies with which it maintained close economic and political ties and it also had a number of overseas territories. Growing international concern about the gap between the northern and southern hemispheres also contributed to policy change.

The EC of nine accordingly replaced the original Yaoundé Convention with a partnership with 46 countries in Africa, the Caribbean and the Pacific (ACP), many of them former British colonies. This partnership, the Lomé Convention, lasted from 1975 to 2000. It provided for tariff free access to EC markets for goods from the ACP states, a stabilising mechanism for commodity export prices for these countries and for development and technical assistance and special arrangements for trade with the ACP countries to cover bananas and sugar. The agreement was overseen by a ACP-EC Council and an ACP-EC Assembly of parliamentarians. By the time the Convention came to an end, 79 countries had joined.

The success of the ACP Convention lay partly in its pioneering partnership approach at a time when the usual relationship between wealthy countries and the developing world was one of donor and recipient. The trade provisions benefited a number of the ACP states, giving them preferential access to European markets. A wide range of development projects brought benefits too.

By the mid-1990s the Convention, despite five-yearly renegotiations, had become more controversial. The agreement was criticised on development grounds, as being out of date and the negotiations during the Uruguay Development round of world trade talks also raised questions about the preferential trade treatment given to ACP countries (e.g. for bananas and sugar) over other developing country exporters, eventually (in the case of bananas) found to be discriminatory and in breach of WTO rules. EU countries had also become increasingly insistent on the importance of human rights and democracy in raising standards of living and improving quality of life in developing countries and placed greater emphasis on this. By 1998 ACP countries’ share of the EU market had declined from 6.7 per cent in 1976 to 3 per cent. Global developments, such as the rise in direct private investment, had not benefited the ACP countries, many of whom were amongst the world’s least developed countries.

A new agreement was needed and after two years of negotiation the Cotonou Agreement, named after the capital of Benin where it was signed in June 2000, was reached. It provides for €13.5 billion of aid over the first five years of the 20 year period of the Agreement but it also provides a new structure which is intended to ensure better delivery. The first review of the Agreement, in 2005, made only relatively minor changes. The Cotonou Agreement called for ACP countries to sign up to Economic Partnership Agreements with the EU but the ACP, encouraged by development NGO, have been highly critical of the EU's approach which they feel asks too much of them by way of reciprocity, especially in non-trade issues like investment, public procurement and competition policy. Some ACP countries have reluctantly signed up but others are holding out and the deadline of December 2007 has been allowed to slip.

The Cotonou Agreement makes greater provision for political relations between the EU and the ACP countries and lays new emphasis on supporting the development of civil society. It addresses issues that have developed in the post-Cold War era, notably peace-building, conflict prevention and the improvement of human rights. It also enshrines a new commitment to good governance and makes provision for a better system to tackle corruption involving EU funds.

EU development aid of course goes beyond the ACP countries. The development partnership across the EU institutions, agreed in 2005, sets out the goals of EU development policy. These focus on reducing poverty – including meeting the Millennium Development Goals; development based on democratic values, including human rights and the rule of law; and on developing countries taking the lead in their own development.

Financial Resources

The EU and its Member States provide over half of all development aid worldwide. This large-scale commitment reflects the EU’s ambition collectively to meet the target of its aid equalling 0.56 per cent of EU gross national income by 2010 and the larger UN target of 0.7 per cent of GNP by 2015. The EU’s development policy has meant aid come from countries that did not have aid policies prior to their joining the EU – mostly states in eastern central and southern Europe.

EU resources for development are therefore large - €2.3 billion in 2008 from the EU budget, with a further €2.9 of national contributions from the separately administered European Development Fund. In addition to these contributions, there are bilateral programmes from some Member States. Further funds are provided by the European Investment Bank in the form of loans.

The separation of the budget into resources provided directly from the EU budget and those provided through the Development Fund has been a source of difficulty. The EDF was established by the Treaty of Rome as the vehicle to provide assistance to the associated countries and territories; it is also used for providing assistance to the ACP states. There have been criticisms of its ability to manage funds effectively. In recent years more authority has been given to local EC delegations in ACP countries to manage spending programmes and this has improved the management of programmes although further progress needs to be made. There remains the issue of the ability of ACP countries to absorb the funds that are made available.

Development Programmes

There are six themed development programmes:

• investing in people – covering issues such as health and education;

• civil society and local authorities;

• environment – including helping developing countries to make sustainable development part of their decision-making processes;

• food security;

• migration and asylum;

• help for ACP sugar protocol countries, and also banana producers, as both are losing their privileged access to EU markets.

As can be seen from this list, the development work of the EU is linked to other policy areas, including trade, reform of the CAP and the promotion of democracy and human rights around the world.

A key part of EU development work today is to support fragile states and those affected by conflict as the collapse of such countries not only invariably brings with it poverty and hunger but also adverse political and security consequences for neighbouring states and potentially the EU itself. For example, the on-going conflicts of sub-Saharan Africa are a major cause of the attempts by refugees to enter the EU through its southern border.

Part of the EU’s development work is in the form of debt relief where the EU has given an important lead to the world, encouraged by the UK. The EU is a significant contributor to the Heavily Indebted Poor Countries Initiative of the IMF and the World Bank. The EU has granted €680 million in relief of its own claims and donated €934 million to the HIPC trust fund.

Humanitarian Aid

Humanitarian aid accounted for €769 million of the EU’s budget in 2007. Most of this came from the EU’s general budget with a far smaller amount coming from the European Development Fund. In 2007, 55 per cent of the budget went to ACP countries, the largest individual recipients being Sudan with €110 million and the Democratic Republic of Congo (€50 million). Substantial sums were also spent in Chad, Uganda and Ethiopia.

The EU is increasing the amount of resources it devotes to disaster preparedness. Six disaster prone areas receive resources to support measures that improve the community’s ability to cope with disaster. These cover such things as contingency planning and introducing or improving local early-warning mechanisms.

Relationship to Trade

There has been a greater emphasis over the last 20 years on helping developing countries to grow their way out of poverty through improved economic policies, including trade. Although the EU has largely been a force for free trade throughout the world, its agricultural policies have often worked against developing countries. The Doha Round has led to the EU offering to cut or scrap external tariffs for agricultural goods from developing countries to a greater extent than in the past but this was not entirely reciprocated by the United States. The EU made commitments to open up markets in the Doha Round talks which may not go ahead following the collapse of the talks (a result of disputes between India and the United States and not the EU). Reviving the Doha round would not only boost a global economy heading for recession but it would be of immense benefit to developing countries.

Future Developments

The EU’s development policies have made a considerable contribution to alleviating poverty and hunger. It is now the biggest player in global development as the largest contributor to aid budgets.

Inevitably there have been complaints about the effectiveness of the EU’s programmes because of the difficulty of working in often challenging environments, politically as well as physically. Concern has been expressed about corruption in some programmes (in the receiving countries) and about the mismatch between the EU’s generosity with aid compared to its agricultural policies. But improvements have been made in the delivery of programmes in developing countries in recent years and increased resources for external relations in the Commission should help to make programmes more effective. The Lisbon Treaty would create a more effective external relations mechanism by bringing together the EU’s various overseas offices and personnel into a single external action service.

Nonetheless, if the EU is to maintain support in the Member States for its development programmes it will have to continue to raise standards of delivery and demonstrate that they achieve positive change.

November 2008

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