EU Trade Policy and Conflict

This 2005 IISD report analyzes the impact of EU trade policy on conflict in the developing world. It highlights a contradiction: while the EU uses 'soft power' initiatives (like FLEGT and the Kimberley Process) to curb conflict resources and 'carrots' (preferential access) to encourage good governance, its structural policies—such as massive agricultural subsidies and the push for reciprocal Economic Partnership Agreements (EPAs)—can undermine economic stability and fuel conflict. The report warns that commodity price volatility and the 'resource curse' further destabilize low-income countries, and recommends that the EU conduct conflict assessments of trade agreements and reduce agricultural subsidies to promote global peace and sustainable development.

• The EU has implemented specific initiatives to combat the trade of resources that fuel conflict, including the Forest Law, Enforcement, Governance and Trade (FLEGT) initiative to identify legal timber and the Kimberley Process to certify conflict-free diamonds.
• The 'Everything but Arms' (EBA) initiative, adopted in February 2001, provides duty-free and quota-free access to EU markets for almost all products from Least Developed Countries (LDCs), excluding arms and munitions. However, its impact has been limited by exceptions for rice, sugar, and bananas, as well as strict rules of origin.
• EU agricultural subsidies create an unfair playing field for developing countries, leading to export dumping and lost revenue. In 2003, the EU spent $41 billion on agricultural subsidies; for example, EU sugar subsidies totaled €2.7 billion in 2003, which cost Mozambique $38 million and Malawi $32 million in 2004.
• High volatility and declining prices of primary commodities increase the risk of civil war in low-income countries. If 25 percent of GDP comes from primary commodity exports, the risk of civil war rises to approximately 30 percent. The report suggests the falling price of coffee in the early 1990s contributed to the 1994 Rwandan genocide.
• The transition from the Cotonou agreement to Economic Partnership Agreements (EPAs) is viewed as potentially destabilizing for ACP (African, Caribbean and Pacific) countries. The EU requires reciprocity for 'substantially all trade' (interpreted as at least 90 percent), which could slash government revenues from import taxes in countries like Ivory Coast, Sierra Leone, and Uganda.
• The EU uses trade as a tool of 'soft power' through 'carrots' (preferential access linked to human rights, democracy, and the rule of law) and 'sticks' (trade sanctions). While sanctions were used against the Federal Republic of Yugoslavia (1998-2000), they are often blunt instruments that affect the poorest citizens and are difficult to maintain, as seen in the case of Myanmar.
• The European Neighbourhood Policy (ENP), launched in May 2004, aims to secure EU borders by establishing privileged relationships with 16 neighbors, including Ukraine, Belarus, Moldova, and countries around the Mediterranean, using trade incentives to promote common values and stability.

APA

Brown, O. (2005). EU Trade Policy and Conflict. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/security_eu_trade_policy.pdf

Chicago

Brown, Oli. EU Trade Policy and Conflict. International Institute for Sustainable Development, 2005. https://www.iisd.org/system/files/publications/security_eu_trade_policy.pdf.

Wikipedia

{{cite report |last1=Brown |first1=Oli |title=EU Trade Policy and Conflict |publisher=International Institute for Sustainable Development |date=March 2005 |url=https://www.iisd.org/system/files/publications/security_eu_trade_policy.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{brown2005trade, author = {Brown, Oli}, title = {{EU Trade Policy and Conflict}}, institution = {International Institute for Sustainable Development}, year = {2005}, month = mar, url = {https://www.iisd.org/system/files/publications/security_eu_trade_policy.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }