Trade, not aid

Long before "Trade, not aid" was introduced, the Netherlands -a trading country par excellence- set up an organization to put it into practice. . .

• In the 1970s, development aid budgets were significantly larger than they are now. Within the EU, there is still an agreement that 0.7% of gross domestic product must be spent on foreign aid and obviously the Netherlands is "best boy in class" in this respect.

• The EU follows a policy of untied aid: nothing is expected in return. This is in stark contrast to the US and China, where foreign aid is used to create business opportunities or to safeguard the economic interests of a donor country.

• Around the turn of the century, the EU also opted for a more businesslike approach: replacing traditional development aid with trade, with the following arguments:

• Wealth - to increase wealth, trade is a stronger driver than traditional aid

• Waste - economic aid leads to an increase in capital used for useless projects

• Distortion – development aid given for the wrong reasons distorts democracy

• Crowding out - development aid crowds out local incentives to develop public services, such as health care

• Long before the EU embraced this businesslike approach, the CBI, Center for the Promotion of Imports, was founded in 1974 as part of the Dutch Ministry of Foreign Affairs. 

• To emphasize its business-like approach, it was located in Rotterdam, not in The Hague. 

• In 2012, the Netherlands appointed a special Minister for Trade and Development Cooperation and the CBI moved from Foreign Affairs to Economic Affairs with a budget of around €30 million.

• The CBI works with long-term programs - three to five years - in which companies are gradually brought to European and regional markets. This against payment of a fee, which is increased during the course of the program. A brief overview of the approach:

  • Analysis of sectors by country, which have potential for export to the EU

  • Selection and audits of SMEs that have capacity and long-term commitment

  • Technical support for strict EU regulations, the biggest barrier to exports

  • Commercial support in the form of market research and marketing planning

  • Participation in trade fairs in Europe. There, sector experts provide contacts and follow-up. This is repeated two/three years later: European buyers do not like one hit wonder

  • Introduction to selected trading partners in Europe

  • Back in their country, the companies share their experiences with other companies in the trade association. 

• There are limitations to the result measurement of CBI's activities. A causal relationship between the programs and export volumes cannot be established: there are other factors that have an influence on this volume as well. Nevertheless, evaluations show that 55% of the companies that previously did not export are still exporting five years after participating in a program. A good score, given the adverse conditions.

• While the CBI is well known in its target countries, the Dutch business community hardly knows the organization. 

• That is why the CBI started with road shows in various sectors of the Dutch business community, offering a database of tens of thousands of companies that have been screened. No "competitors who take our jobs", but potential partners who in turn can open new markets for Dutch companies with their local knowledge.

Usually the response was "Why don't we know you?"

• Around 2010, for reasons of efficiency, the CBI has to shift part of its activities from companies to industry associations, chambers of commerce and local authorities. 

• A large part of CBI's budget goes into support of these institutions. As a result, the results in exports and employment as a direct effect of CBI's activities become diffuse.

• Recently, a new argument has emerged in the EU: economic development through trade reduces immigration. 

• That is why the focus is now on the MENA countries, West Africa and the Sahel - the "ring of fire" around Europe.

• A long shot and a big gamble, because the chances of export from these countries are slim.