Trade and development cooperation

More and more low- and middle-income countries are not only recipients of aid but also trade partners. The government therefore encourages investment and trade activities in these countries.

Aims for trade and development cooperation

The combination trade and development cooperation forms the core of Dutch development cooperation policy. At international level, the Netherlands pursues 3 aims:

  1. to eradicate extreme poverty (‘getting to zero’) in a single generation;
  2. to achieve sustainable, inclusive growth all over the world, i.e. economic growth from which the poor also benefit;
  3. to ensure success for Dutch companies abroad.

You will find more information on these aims in the policy document ‘A World to Gain: a New Agenda for Aid, Trade and Investment’.

Combination of aid and trade depends on development relationship

What matters in Dutch development cooperation policy is to add value by combining aid and trade. The intention is not to substitute aid for trade or vice versa. How the policy is applied depends on the nature of the development relationship.

You can find out more about the different aid relationships on the page Partner and focus countries in development cooperation.

Instruments for linking trade and development cooperation

To link trade and development cooperation, Dutch companies and the Dutch embassies in low- and middle-income countries and have an extensive package of instruments at their disposal:

  • the Private Sector Development instruments;
  • the trade and investment instruments for Dutch companies wanting to do business in developing countries.

Examples of aid and trade in combination

A good example of an instrument at the interface between trade, investment and development cooperation is the Transition Facility. It was set up for countries such as Colombia, South Africa and Vietnam to foster the transition from an aid to a trade relationship.

Another good example of the combination of aid and trade in low- and middle-income countries is the Centre for the Promotion of Imports from Developing Countries (CBI). The CBI helps small and medium-sized enterprises in low- and middle-income countries to gain access to the European market and to emerging markets in the South.

Trade as an International Public Good

International Public Goods are issues or goods that affect everyone. Clean air is a good example: everyone needs air and is thus affected by air pollution.

The Netherlands wants developing countries to reap more benefits from the growth in world trade. Trade is therefore one of the IPGs with which the Netherlands wishes to achieve results in its development cooperation policy. It is, for example, committed to simplifying trade procedures, with the customs authorities, for instance.

The Netherlands also supports developing countries in building their knowledge of trade. An example is the establishment of the Advisory Centre on WTO Law, which gives developing countries legal advice in the event of trade conflicts.

For more information, see the policy document ‘A World to Gain: a New Agenda for Aid, Trade and Investment’.