Oxfam warns US-Andean trade deals will harm developing countries

Published: 14 June 2006

The US is pushing “free trade agreements” (FTAs) with the Andean countries of Peru, Colombia and Ecuador that will harm thousands of vulnerable small farmers, block access to affordable medicines and favor foreign investors, according to a new report released today by international agency Oxfam.

The report, “Song of the Sirens,” outlines the negative impacts the proposed agreements will have on millions of people in the Andean region. The US is demanding concessions that could affect the sustainability of development policies and weaken the ongoing process of integration with neighboring countries, Oxfam International says.

Although negotiations with Ecuador have been temporarily suspended, the agreement with Colombia is awaiting final executive approvals and the Peru agreement, already signed by both countries, will be considered by the Peruvian Congress in the coming days and in the US Congress in the coming months.

“Developing countries have been enchanted by the appeal of free-trade agreements, but much like the song of the Sirens, this attraction is ultimately self-destructive,” said Stephanie Weinberg, trade policy advisor for Oxfam International. “The benefits that an FTA offers Peru, Colombia and Ecuador will be far outweighed by the negative impacts of agricultural dumping, harsh patent rules and deregulated foreign investments.”

Oxfam believes that the Peru and Colombia agreements on agriculture, intellectual property and investment rules would harm the development of these countries. In agriculture, the agreements would dismantle safeguard mechanisms that are vital for food security and the livelihoods of small farmers, while making no attempt to address the unfair dumping of American overproduction.

“The livelihoods of a quarter of the population of these countries, especially the poorest in rural areas, depend on agriculture for their livelihoods,” said Weinberg. “The FTAs pry open the markets of Peru and Colombia without any consideration for the damaging effects of dumped, cheap, subsidized American products.”

On intellectual property, the US has succeeded in extending pharmaceutical patents beyond 20 years, which goes well beyond agreements made at the World Trade Organization. As a consequence, medicine prices in Peru will increase by almost 10% in the first year of the FTA and 100% after 10 years. Colombia will have to spend an extra $940 million a year to buy more expensive medicines and nearly 6 million people will lose access to medicines. The new investment rules in the agreements would also curtail the powers of Andean governments to regulate foreign investment.

“Trade could be the engine to pull millions out of poverty, but instead the winners of this agreement are American and international companies,” said Weinberg. “In the Andean countries where half the population lives in poverty, this agreement will actually reduce access to affordable medicines and stifle opportunities for development.”

The US has started concentrating on bilateral agreements because the WTO’s Doha Development Round is deadlocked and talks on the Free Trade Area of the Americas (FTAA) have stalled. Oxfam says that the US is using these new bilateral deals to force poorer countries to give up a lot more than they would at the WTO.

“The US Congress should not approve trade agreements that will harm developing countries. It should instead encourage developing countries to utilize trade as a means of achieving sustainable economic development and poverty reduction,” said Weinberg. “But with these free trade agreements, the US is locking in unfair trade rules that pull the rug from underneath Peru and Colombia."

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