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EU to facilitate financing for small businesses in Africa and the European Neighbourhood

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The European Commission makes available €4.2 million under the External Investment Plan to help banks in Africa and the European Neighbourhood to better assist underfinanced sectors such as small businesses, including young entrepreneurs and women.

Commissioner for International Cooperation and Development, Neven Mimica, is signing this support agreement today in the margins of the World Bank Spring meetings in Washington.

Ahead of the signature, Commissioner Neven Mimica said: “This new programme worth over €4 million will make a real difference for those who often struggle to access sources of financing for their business ideas: women, young entrepreneurs or small businesses in low-income countries. We expect to support some 50,000 small businesses and help to create up to 200,000 jobs. This technical assistance programme complements the EU guarantee under the European Investment Plan. This is a great example of how our External Investment Plan and our Africa-Europe Alliance for Sustainable Investment and Jobs work in practice.”

This technical assistance programme will be implemented by the International Finance Corporation (IFC). It will support concrete capacity building measures to help local banks to develop new loan and financial products better suited to support underfinanced sectors such as young entrepreneurs, women and SMEs in low-income, fragile and conflict-affected countries, who have difficulties obtaining financing from their local banks.

This technical assistance will complement the EIP’s “Small Loans and Guarantee Programme (SLGP)” worth €42 million, which aims to encourage local banks to lend to small companies, which have had difficulty accessing finance to date, including women-owned SMEs. It will also invest in high impact sectors such as health, education and agriculture in difficult emerging markets.

With the EU guarantee and accompanying expertise, local banks will be able to provide funding for operations that they would otherwise consider too risky. As a result, the guarantee and accompanying technical assistance is expected to offer access to financing for some 50,000 small businesses, including ones owned by women or engaged in green energy projects, as well as help to create up to 200,000 jobs.

Background

Forming part of the EU’s External Investment Plan (EIP), the EU guarantee “Small Loans and Guarantee Programme Risk-Sharing Facility”, will use €42 million (around $50 million) in EU funds to leverage up to around €550 million (around $660 million) of investments for entrepreneurs in Sub-Saharan Africa and the EU Neighbourhood.

The International Finance Corporation is part of the World Bank Group.

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EU trade agreements: Delivering new opportunities in time of global economic uncertainties

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Despite the difficult global economic climate, European companies have continued to make good use of the opportunities created by the European Union’s trade network – the largest in the world. In 2018 this network covered 31% of Europe’s trade exchanges, a figure that is set to rise significantly (to almost 40%) as more trade agreements enter into force, according to the European Commission’s annual report on the implementation of trade agreements released today. Overall, trade accounts for 35% of the EU’s gross domestic product (GDP).

In 2018 EU exports to and imports from trade agreement partners showed positive developments, with a continued growth of 2% and 4.6% respectively, with a strong performance of EU agri-food exports. The EU’s growing network of trade agreements is creating economic opportunities for workers across Europe, with over 36 million jobs being supported by exports to outside of the EU. The EU recorded a surplus of €84.6 billion in trade in goods with its trade agreement partners, compared to its overall trade deficit with the rest of the world of about €24.6 billion.

Commenting on the report, Commissioner for Trade Cecilia Malmström said “Trade agreements create opportunities for European businesses to grow and hire more people. Today’s report shows that overall trade is up, and more of our global trade is covered by preferential deals than ever before. Our food and drink exports in particular are flourishing thanks to lower tariffs and legal protection abroad for artisanal EU products like Champagne and Feta. The report also provides evidence of how our focus on trade and sustainable development is bearing fruit. Furthermore, we have taken a number of unprecedented steps to enforce the commitments made by our trade partners in the last year, including notably on workers’ rights. There is still work to be done, of course. But by opening up this data to the wider public we hope to launch a wider discussion about how to make sure trade agreements benefit as many citizens as possible.”

Looking at specific sectors across agreements, the 2018 report shows:

  • EU agri-food exports to trade partners continued to grow with an overall increase of 2.2% compared to the previous year. Exports of agri-food products to South Korea also gained 4.8 %. Also noteworthy are agri-food exports to Georgia, Moldova and Ukraine, which grew by 11% compared to 2017;
  • EU industrial goods exports also increased overall by 2%, with stronger growth among others for chemicals (2.5 %), mineral products (6 %) and base metals (4.4 %).

Looking for instance at one of the recent trade agreements, the report shows that in the first full calendar year (2018) of the EU-Canada trade agreement implementation:

  • bilateral trade in goods grew by 10.3% and the EU’s trade surplus with Canada increased by 60%;
  • EU goods exports to Canada rose by 15% (or €36 billion in extra export revenue), especially for sectors where import duties were previously high such as pharmaceuticals (up 29%), machinery (up 16%) or organic chemicals (up 77 %); 
  • EU Agri-food exports to Canada (accounting for 9% of total EU exports) rose by 7%.

Moreover, following intensive discussions in the joint committees created under the different trade agreements, several partner countries lifted barriers to trade, thus allowing more EU companies to benefit fully from the opportunities these agreements offer. Danish and Dutch farmers, for example, will be able to export beef to South Korea, while Poland and Spain will be able to export poultry meat to South Africa.    

The report investigates also the impact of the provisions included in the dedicated ‘Trade and Sustainable Development’ (TSD) chapters, which are part of all modern EU trade agreements. These chapters aim at engaging with trade partners to implement international rules on labour and the environment, as incorporated in multilateral environmental agreements or International Labour Organisation (ILO) conventions. Recent achievements ahead of the entry into force of the respective agreements include the ratification by Mexico and Vietnam of ILO Convention 98 on the rights to organise and collective bargaining. Additionally, the agreements with Vietnam, Japan, Singapore, Mercosur and Mexico include reinforced commitments to effectively implement the Paris Agreement on Climate Change.

In 2018 and 2019, the EU also took several enforcement actions under its trade agreements, including in relation to labour standards. Among other examples, the EU requested a panel following South Korea’s failure to ratify ILO Conventions on workers’ rights, notably freedom of association and collective bargaining.

However, the report also highlights the need to increase efforts – together with Member States and stakeholders – to raise awareness of the opportunities trade agreements offer, as well as stepping up enforcement action so the agreements deliver the intended results. 

The report will now be subject to discussion with the European Parliament and Member States’ representatives in the Council.

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How to increase green investment in the EU

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A shift to a less-polluting economy requires significant investment. The EU wants to attract more private money as public funds are insufficient.

EU investments

The EU needs about €180 billion a year of additional investment in energy efficiency and renewable energy to cut carbon emissions 40% by 2030. Even more is needed to achieve carbon neutrality by 2050.

Some investment in climate and environment projects comes from the EU budget. For example, about 20% of the 2019 budget of €165.8 billion is related to tackling climate change. The European Parliament wants to increase this share of the budget to 30%.

How does the EU attract private green investment?

Public money is not enough for the amount of green investment that is needed, which is why the EU is working to attract private investment. Billions have already been mobilised through the European Fund for Strategic Investments and European Investment Bank (EIB) loans, and the share of money earmarked for climate projects is set to increase.

The EIB’s role in financing climate-friendly projects has increased. In her speech in Parliament in July,  Ursula von der Leyen, the future president of the European Commission, said she would propose increasing it further by turning parts of the EIB into Europe’s climate bank. How to get the EIB more involved in green projects was discussed by MEPs on Wednesday 9 October.

The Parliament and the Council are also discussing new rules on sustainable investment that would act as a guide to investors, businesses and policy makers on what economic activities and investments should be considered as green.

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EU signs agreement with Montenegro on European Border and Coast Guard cooperation

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Today, the European Union signed an agreement with Montenegro on border management cooperation between Montenegro and the European Border and Coast Guard Agency (Frontex). The agreement was signed on behalf of the EU by Dimitris Avramopoulos, Commissioner for Migration, Home Affairs and Citizenship and, Maria Ohisalo, Minister of the Interior of Finland and President of the Council, and on behalf of Montenegro by Minister of the Interior, Mevludin Nuhodžić.

Dimitris Avramopoulos, Commissioner for Migration, Home Affairs and Citizenship said: “Today, we are further strengthening our border cooperation with Montenegro, taking yet one more step towards bringing the Western Balkan region closer to the EU. The migratory and security challenges we face are common and our response must be joint too.”

Maria Ohisalo, Minister of the Interior of Finland said: “The objective of this agreement is to allow Frontex to coordinate operational cooperation between EU Member states and Montenegro on the management of the borders that the European Union and Montenegro have in common. The signing of this agreement is yet another demonstration of the deepening and expanding cooperation with Montenegro. It will bring benefits for both parties, in particular in enhancing border management activities.”

This agreement allows the European Border and Coast Guard Agency to assist Montenegro in border management, carry out joint operations and deploy teams in the regions of Montenegro that border the EU, subject to Montenegro’s agreement.

These activities aim at tackling irregular migration, in particular sudden changes in migratory flows, and cross-border crime, and can involve the provision of increased technical and operational assistance at the border.

Strengthened cooperation between priority third countries and the European Border and Coast Guard will contribute to tackling irregular migration and further enhance security at the EU’s external borders.

Next steps

The draft decision on the conclusion of the agreement was sent to the European Parliament, which needs to give its consent for the agreement to be concluded.

Background

Today’s status agreement is the second such agreement to be concluded with a partner country, after a similar agreement was signed with Albania in October 2018. Negotiations with Montenegro were concluded on 5 July 2018 and the draft status agreement was initialled by Commissioner Avramopoulos and Montenegro Interior Minister Mevludin Nuhodžić in February 2019. The Council then authorised the signature of the agreement on 19 March 2019.

Similar status agreements have also been initialled with North Macedonia (July 2018), Serbia (September 2018) and Bosnia and Herzegovina (January 2019) and are pending finalisation.

The European Border and Coast Guard launched the first-ever joint operation on the territory of a neighbouring non-EU country in Albania on 22 May this year.

The European Border and Coast Guard Agency can carry out deployments and joint operations on the territory of neighbouring non-EU countries, subject to the prior conclusion of a status agreement between the European Union and the country concerned.

Earlier this year, following a proposal by the European Commission, the European Parliament and the Council agreed to reinforce the European Border and Coast Guard. This will allow for joint operations and deployments to take place in countries beyond the EU’s immediate neighbourhood.

Cooperation with third countries is an important element of the European integrated border management concept. This concept is applied through a four-tier access model which includes: measures in third countries, measures with neighbouring third countries, border control measures and measures within the Schengen area.

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