Vision Group Report: Invigorating the Indonesia-EU Partnership

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1. WHAT IS AID FOR TRADE
“Aid for Trade” (AfT) is development assistance provided in support of the efforts of developing countries to
develop the basic economic infrastructure and tools they need to expand their trade. The intention behind the AfT
Initiative is not to create a new global development fund for trade, but rather to expand financial resources devoted
to trade as part of existing development strategies. AfT has a broad scope, encompassing both aid directly helping
beneficiaries formulate and implement trade policies and practice (“Trade Related Assistance”), and aid supporting
developing beneficiaries’ wider economic capacity to trade, e.g. invest in infrastructure and productive sectors
(“wider AfT”).
The EU is one of the leading providers of Aid for Trade. On 15 October 2007, the EU Council adopted the EU AfT
Strategy aimed at supporting developing countries to further integrate into the global trading system. The strategy
is a joint EU policy initiative, providing for a double and complementary focus on more resources to AfT and better
impact on development objectives, especially with a view to poverty reduction. Total AfT commitments of the EU
have constantly increased over the period 2004-2007, to reach €7.2 billion in 2007.
EU AfT is delivered as other EU aid, following agreed Aid Effectiveness principles. This means going through
policy dialogue, needs assessments, inclusion of priorities into national and regional development strategies (such
as Poverty Reduction Strategy Papers), and formulation of response strategies on this basis. This is the only way to
ensure ownership, coherent programmes and sustainability.
2. SUPPORT TO INDONESIA
2.1. EU Delegation
V AID FOR TRADE
EU cooperation with Indonesia is focused on trade policy issues and improvement of infrastructure for Indonesian
exports, in sectors where needs have been identified by the Government of Indonesia. Future co-operation will also
focus on export quality infrastructure issues and supporting improvement in regulatory issues affecting the trade
and investment climate.
The EU Delegation support to improvement of trade and economic conditions has been a constant priority area
of cooperation for the EU with Indonesia and total disbursements of assistance has amounted to EUR 20 million
during the period 2006-2009. EUR 9.3 million is allocated to improve Indonesia’s public financial management
systems and is implemented through a Multi-Donor Trust Fund. In addition, major cooperation initiatives, such
as the EU-Indonesia Trade Support Programme II (EUR 15 million) address the need to strengthen the quality
infrastructure that ensures compliance of Indonesian exports to international standards. Finally, the upcoming EU-
Indonesia Trade Cooperation Facility (EUR 12.5 million) will support the reform programmes of the government to
improve trade and investment climate, covering important topics such as trade and investment policy, technology
transfer and intellectual property rights.
The EU has also supported the Indonesian business associations and chambers of commerce, which are key actors
in the improvement of trade and investment climate in the country. This support has been channelled through
grant programmes such as the Small Projects Facility, which will be continued in 2011 with a similar scheme
directed to the civil society organisations involved in the trade and investment sector (EUR 2.5 million).
There is also an important EU-ASEAN cooperation programme that aims at supporting ASEAN Economic
Integration. There are six on-going or about to start projects, amounting to EUR 38.7 million, covering areas such
as customs, standards, IPR, single civil aviation market, statistics for trade and investment and other trade-related
aspects. New programmes which will start in 2011 support ASEAN FTA negotiating process (EUR 2.5 million) and
the ASEAN Economic Integration Support Programme (EUR 15 million).