Oxfam report warns poor countries against signing bad trade deal

“Rich countries are making hugely inadequate offers and at the same time demanding concessions from poor countries that could be devastating”
Jeremy Hobbs
Oxfam International
Published: 25 April 2006

The chances of a trade deal being done this year that helps reduce poverty are looking increasingly slim, according to a new report released today by international agency Oxfam.

Following the failure by WTO members to make significant progress this week in Geneva, Oxfam says that EU and US brinkmanship has sidelined development concerns. Unless offers change significantly in the next three months, poor countries would be better off continuing to negotiate, rather than signing a deal this year.

WTO members must agree details and schedules for reform by the middle of this year in order to get a deal before the US Trade Promotion Authority (TPA) expires in mid-2007. At the Hong Kong Ministerial in December, members named April 30 as the deadline for new proposals, but this week they acknowledged they would miss the deadline, and cancelled a planned Ministerial level meeting. Members are now looking get agreement by July.

“Progress in these talks is glacial,” said Jeremy Hobbs, Director of Oxfam International. “Rich countries are making hugely inadequate offers and at the same time demanding concessions from poor countries that could be devastating. The hopes of a new development-friendly trade deal are dwindling and damage limitation is the order of the day.”

Oxfam’s report, "A Recipe for Disaster," says that while a new deal is badly needed, current offers are not good enough and poor countries would be better off missing the 2006 deadline and holding out for better offers. This is despite the fact that once TPA expires and the US administration loses its authority to negotiate trade deals without the involvement of Congress a new deal could take years to agree.

“It is profoundly disappointing to reach the stage of saying poor countries might be better off not signing this year,” said Hobbs. “Oxfam has always said that a new trade deal with development at its centre could make an enormous difference for millions of poor people struggling to make a living around the world. But claims by rich countries that what is on offer now is pro-poor are entirely false: current proposals would hurt rather than help developing countries.”

Oxfam’s report shows that the combination of disappointing offers on agriculture, and aggressive demands on industrial liberalisation and services, could make many developing countries worse off. By limiting the flexibility necessary for countries to use trade policy as a tool for development, the new WTO deal could destroy livelihoods, prevent industrialisation and lock people into poverty.

Reforms agreed in Hong Kong as part of a so called ‘development package’ are not sufficient to cancel out the damage in other areas. Export subsidies will be stopped in 2013 but they only represent 3.6% of EU spending on agriculture and should have been eliminated earlier. Duty and quota free market access for the poorest countries is too restricted and ‘aid-for-trade’ offers are largely made up of recycled pledges.

Oxfam’s report acknowledges that a slow trade round, rather than one that concludes in line with current deadlines, has its downsides. It will allow unfair trade rules to endure and poor people will continue to suffer. There is a danger that rich countries will turn their attention to regional trade deals.

Hobbs: “A slow round is far from ideal, but when it is a choice between collapse, a slow round and a bad deal then going slow is the best option. The WTO is the best place to negotiate a new trade deal and the most desirable outcome remains a multilateral agreement that radically reforms trade rules so that they work for poor countries. But the second–best option is not to accept a deal like the one on the table, which would cause significant harm to the development prospects of poor countries.”

Oxfam’s report says that for a deal to be acceptable it must include deeper cuts to rich countries’ trade-distorting agricultural subsidies and better market access offers. Developing countries must have the right to regulate, to preserve policy space, and to sequence liberalization in a way that serves development objectives. Unreasonable demands on NAMA and services must be removed and the principles of special and differential treatment and less than full reciprocity must be observed.

Poor countries also need adequate aid for trade that is not linked to market opening, patent laws that ensure access to affordable medicines, and action to address preference erosion.

The report is available in these languages:

English

Spanish

French

Portuguese

Contact Information

For more information or to receive a copy of the report, please contact Amy Barry, Oxfam Press Officer, on +44 (0)7980 664397