Rich countries set to fail poor at world trade talks, warns Oxfam

Rich countries will get away with making no reductions to their massive agricultural subsidies – and could even increase them – if world trade negotiations do not change track, international agency Oxfam warned in a new report today .

This would have devastating consequences for the developing world and could undermine trade as the vital “third pillar” – after more aid and deeper debt relief– in the fight against global poverty.

The European Union and United States have been using creative accounting at the World Trade Organization (WTO) to keep making large payouts to their biggest farmers. This causes overproduction and export dumping, undermining poor producers overseas.

“Alongside aid and debt relief, trade reform is crucial to help end poverty in the developing world, and yet this report shows that progress at the WTO is negligible,” said Celine Charveriat, Head of Oxfam International’s Make Trade Fair campaign.

"Rich countries are dodging their commitments to reduce the subsidies that hurt poor farmers overseas. At the same time, they’re forcing poor countries to open their markets to unfairly subsidised produce. This duplicity threatens to turn this whole round of 'development' talks into a farce," Charveriat says.

According to Oxfam's report, A Round for Free, rich countries have been redefining rather than reducing subsidies at the WTO. As a result, overall farm support in developed countries has not changed since 1986 and still stands at over $250bn per year in real terms. Furthermore, WTO rules give rich countries such flexibility that in some cases they could actually increase their trade-distorting support by nearly $30 billion in the case of the EU.

The report says that despite rich country pledges to eliminate export subsidies, this will not happen until 2016 at the earliest – and large levels of disguised payments will remain. It reveals that the US pays out the equivalent of $6.6bn in hidden export support a year to its farmers – two hundred times more than it declares to the WTO. The EU pays $5.2bn – four times the reported amount.

“This is a scandalous betrayal of the developing countries that put their faith in the WTO system. As we approach the G8 the focus is on aid and debt relief, which are vitally important and could help create the circumstances in which poor countries could benefit from global trade,” Charveriat says. “But while rich countries continue to rig trade rules in their own favour, the developing world will never have the chance to work its way out of poverty.”

The report calls for an end date of 2010 for export subsidies, a reduction of other rich country payments that distort trade, and recognition of the right for poor countries to protect vulnerable sectors as long as dumping continues. The cotton and sugar panels should be implemented in good faith before the WTO Ministerial Conference in Hong Kong at the end of the year.