Plan to ‘untie’ aid to Asia and Latin America

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Series Details Vol 7, No.7, 15.2.01, p9
Publication Date 15/02/2001
Content Type

Date: 15/02/01


Officials say a joint proposal by External Relations Commissioner Chris Patten and his development counterpart Poul Nielson, due to be approved by the full EU executive later this month, would offer procurement opportunities on all Union aid to countries in Asia and Latin America.

'Untying' such aid would allow firms based in those regions to bid for projects financed from the Union's external aid budget. The EU spends over €600 million a year on Asia and around €500 million on Latin American states from a total annual aid budget of nearly €9 billion.

But campaign groups say the Commission proposal should go further by allowing companies in developing countries with expertise to apply for contracts for aid projects in other regions.

"We hope the proposal will untie aid on a south-to-south basis as well," said Louise Hilditch of UK-based charity ActionAid. She added that the Union should also take steps to ensure that firms from developing nations get a fair chance to win lucrative contracts against well-funded competitors from industrialised countries.

ActionAid has been spearheading international efforts to stamp out tied aid, arguing that the practice amounts to a backdoor subsidy to companies in rich countries that have privileged access to contracts.

Under existing rules, tenders for aid projects are already open to the 77 African, Caribbean and Pacific countries and 15 Mediterranean states which are part of preferential trade and aid programmes with the EU. The changes proposed by Patten and Nielson would extend those rules to funding for Asia and Latin America.

The European Commission is planning to open up EUR 1-billion worth of external aid contracts to firms in Asia and Latin America as part of its bid to remove restrictions on how development money is spent.

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