Spain and the European Union: Membership, Funds, and Impact

Introduction: The European Union's Trade and Development Goals

Why did Spain join the European Union? What criteria did Spain possess that the European Union found sufficient to allow Spain's entry? To answer these questions, an overview of the European Union's functions and aims must first be established. The European Union has recognized that trade is the primary method by which poorer countries of the world can improve their circumstances, and it does all it can to encourage trade and exports among developing nations.

The European Union also offers aid to poorer and developing countries all over the world, helping them boost their economies and productive capacity, fight poverty and other debilitating conditions, and ultimately join the global economy and prosper as developed countries do. To encourage trade and economic growth in developing countries, the European Union created a "Generalized System of Preferences" (GSP) in 1971, removing not only tariffs but also quotas on imports from those developing countries with which it has trade relations. From 2001 onward, the EU also removed tariffs on all exports from the 49 least-developed countries worldwide, with arms exempted under this policy. (Overview of the European Union Activities: Development)

The European Union enjoys a strong trading relationship with the 78 countries that form the African, Caribbean and Pacific (ACP) Group. If all rich countries were to follow this model, it would be a definite boon to the developing world. However, the ACP Group's share of the EU trade market has been on a steady decline, leaving it increasingly marginalized in world trade. This is a key reason why the EU focuses heavily on providing financial aid and technical assistance to developing countries, helping them build production capabilities, strengthen administrative capacities, improve physical and social infrastructure, attract inward investment, and take fuller advantage of international trade opportunities. (Overview of the European Union Activities: Development)

For this reason, the EU combines trade and aid for developing countries in ways designed to maximize usefulness. It has been negotiating with ACP countries on a set of integrated plans intended to be in place by 2008, under which these countries would integrate with their neighbors in preparation for global integration — building good governance principles and institutional capacities in the process. As long as the EU keeps its markets open and removes barriers to exports from these countries, the ACP nations can grow and develop at a faster rate.

The EU and its member countries together pay approximately $30 billion in public aid annually, mostly in the form of non-repayable grants to developing countries, with about $6 billion channeled through the EU itself. The Union hoped to raise this figure to $39 billion by the end of 2006. The EU's target is to allocate approximately 0.7% of GNP annually for development aid; however, only Denmark, Sweden, the Netherlands, and Luxembourg have achieved this target. Most EU aid takes the form of non-repayable grants, though soft loans and investment capital are also provided through the European Investment Bank (EIB). (Overview of the European Union Activities: Development)

The EU has funded numerous projects in developing countries, and even small amounts of aid can yield tremendous benefits. For example, silk weavers in Cambodia were trained and provided basic equipment to start small-scale industries. Traders in Peru were helped to export more goods, farmers in Namibia were granted aid to start businesses, a business venture in Senegal received financing to improve the quality of its products, and farmers in Egypt received technical expertise to combat a pest threatening their potato crops. These examples illustrate how EU grants to developing countries have meaningfully improved the lives of the poor. (Overview of the European Union Activities: Development)