Two-pronged trade attack will destroy poor farmers, warns Oxfam

Rich countries are forcing poor ones to open their markets and then dumping excess agricultural produce on them, undermining poor farmers’ livelihoods, according to a new report released today by international agency Oxfam.

The World Trade Organization (WTO) is the new battleground where poor countries are being forced to reduce tariffs on imports. The moves could increase their vulnerability, destroy farming communities, threaten food security and plunge millions into deeper poverty, says the report, Kicking Down the Door (Download the report, pdf 574 kb).

Poor countries were promised that vital food crops would be exempt from the WTO cuts, but rich countries are now trying to water down this promise. The US, for example, has declared that it will accept only a “very limited number” of exemptions. The world rice trade shows the grave risk to poor farmers.

Each year the US spends $1.3bn in subsidies to support a rice crop that costs $1.8bn to grow. These subsidies make possible the dumping of 4.7m tonnes of rice on world markets at 34% below the cost of production, hurting poor countries like Haiti, Ghana and Honduras. Developing countries should be allowed to use policies that allow them to develop fragile farming sectors, says the report.

“This is an example of rigged rules and double standards at their baldest. Rich countries are demanding that poor countries pull down their barriers to trade, and at the same time they are continuing to subsidise massive overproduction and dumping. Their selfish motives couldn’t be clearer,” said Phil Bloomer, head of Oxfam International’s Make Trade Fair campaign.

“US rice would not be competitive without massive state subsidies. It is scandalous that poor countries are forced to compete with the US. Worse still, that they are denied the opportunity to defend themselves from dumping.”

If rich countries prevail at the WTO, India, China, Nicaragua and Egypt are among 13 developing countries that could be forced to cut their rice tariffs and become vulnerable to cheap imports. Meanwhile, the US rice industry would gain from increased access to poor country markets.

Profits for Riceland Foods of Arkansas, USA – the world’s biggest rice mill – rose by $123m from 2002 to 2003 thanks largely to a 50% increase in exports, much of them to Haiti, which was forced in 1995 to cut its rice tariff from 35% to just 3% under pressure from the IMF. As a result, rice imports increased by 150% in nine years and today three out of every four plates of rice eaten in Haiti come from the US. Local farmers’ livelihoods have been devastated and rice-growing areas now have among the highest levels of malnutrition and poverty.

Rice is not the only commodity threatened by the WTO proposals. Oxfam estimates that developing countries also risk tariff cuts on imports of poultry (18 countries), milk powder (14 countries), sugar (13 countries), soybeans (13 countries), maize (7 countries) and wheat (6 countries), with potentially devastating effects for all these sectors.

Beyond the WTO, rich countries continue to use the World Bank, the IMF and regional trade agreements to bully developing countries to open their markets prematurely. To make matters worse, the rich world has slashed agricultural aid by more than two-thirds in the past 18 years.

“Trade could be a vital part of the plan to make poverty history in 2005 but only if poor countries are allowed to decide the policies that are right for their own development. Poor countries have been forced to liberalise trade faster and deeper than any industrial power in history. They are tired of this shock therapy and shouldn’t have to endure it,” said Bloomer.

“Poor countries with fledgling rice sectors can’t compete against subsidising superpowers, like the US, or big exporting neighbors, or other countries that are able to export rice cheaply. They need the time and space to establish themselves,” he said.

“In the run up to the Hong Kong WTO ministerial it is vital that rich countries demonstrate the willingness to negotiate trade policies that genuinely contribute to poverty reduction rather than continuing to pursue their own narrow agendas of self-interest and corporate profit.”

Oxfam’s report includes the following recommendations:

• Any new WTO deal must allow developing countries to regulate imports of products which threaten to undermine their farmers’ livelihoods.
• Rich countries must stop negotiating bilateral trade deals to force open developing country markets.
• The IMF and the World Bank must stop forcing poor governments to cut their tariffs across the board.
• Developing country governments should ensure that their farm policies promote poverty reduction.