1. Tied aid and tied food aid within the framework of international law
Dr Annamaria La Chimia
School of Law,
University of Nottingham
Tied aid and tied food aid within the framework of international law

2. Aid in the context of international cooperation What is tied aid?
© Dr Annamaria La Chimia,
Today we will look at:
Aid in the context of international cooperation
What is tied aid?
Effects of tied aid
Data
Rationales
International steps to untie aid
Legal perspectives:
International trade rules: WTO and FAO
Regional trade rules: the European Union

3. The challenge of the century: development for all!!!
© Dr Annamaria La Chimia
The challenge of the century: development for all!!!
In Monterrey Donors committed to:
1) Increase the level of aid granted to poor
countries and, above all
2) To enhance the effectiveness of aid

4. © Dr Annamaria La Chimia
What is tied aid?
Aid provided on condition that goods and services for the aid financed projects are purchased from the donor country only.
The recipient country MUST ACCEPT the tied aid condition if it wants the aid

5. © Dr Annamaria La Chimia
Tied aid is
One of the most discussed cases of policy incoherence in donors’ development aid projects
“if we are serious about effectiveness we must call tied aid what it is- designed more for domestic constituencies at home than developing countries, and end it” Mr Wolfensohn, World Bank President

6. © Dr Annamaria La Chimia
Effects of tied aid
Increases prices of between 15-30%
Increases administrative costs
Distorts the nature of the aid

7. © Dr Annamaria La Chimia
DATA
Donors still tie a considerable percentage of their aid –although recent data show donors are untying aid
The economic crises has brought tied aid back!
and change the definition of aid?

8. © Dr Annamaria La Chimia Critique of current data system
Uncertain what donors include in their data Often unilaterally change description Is there the need to strengthen monitoring

9. © Dr Annamaria La Chimia,
Tied food aid
According to the DAC food aid continues to be overwhelmingly tied –up to 90% for some donors

10. © Dr Annamaria La Chimia
Effects of tied food aid
costs to the donor of providing tied food aid instead of financing commercial imports to be at least 30%.
the actual cost of tied direct food aid transfers is, approximately 50% more than local food purchases and 33% more costly than procurement of food in third countries.

11. © Dr Annamaria La Chimia, School of Law, University of Nottingham
RATIONALES FOR TYING
POLITICAL
ECONOMIC
Prisoner’ s dilemma

12. © Dr Annamaria La Chimia International Steps towards untying aid
DAC Recommendation on untying aid to least developed countries (entered into force on January 2002)
European Commission Communication
Untying: Enhancing the effectiveness of aid COM(2002) 639 final
Food Assistance Convention

13. How far, if at all, is the practice of tying aid contrary to
© Dr Annamaria La Chimia
Legal question:
How far, if at all, is the practice of tying aid contrary to
international and regional free trade rules?
The WTO Agreements
The EC’s internal regime

14. Annamaria La Chimia, School of law University of Nottingham
Tied aid does not violate the GATT since it relates to Government Procurement
Art. III.8 excludes government procurement from the NT obligation
The GP exemptions applies, arguably, also to MFN

15. Government Procurement Agreement (GPA)
© Annamaria La Chimia,
Government Procurement Agreement (GPA)
Tied aid does not violate the GPA because of an exception for procurement funded by international assistance, including development aid, and procurement funded by grants, loans and other assistance. (Art. II(3)(e)(i) and (iii)
Increase of negotiation power for developing countries if exception were abolished
A more ‘development oriented’ WTO

16. Annamaria La Chimia, School of law University of Nottingham
Tied food aid – legal perspective
ART 10 of the WTO AoA
Art. 9 of the FAC/Art 3 of the 2012 Food assistance Convention

17. Tied aid and regional trade agreements
© Annamaria La Chimia
Tied aid and regional trade agreements
The Single Market and tied aid
TIED AID VIOLATES THE TREATY on the Functioning of the EU
setting up of the tied condition:
ECJ in Open Skies Case C-476/98 esp. para. 154
implementation of the tied condition by MS
Art. 34 TFEU applies to public procurement Du Pont de Nemours Case C-31/88