Oxfam: Now more than ever a fair trade deal is needed

“Delivering on long-overdue promises could make a massive difference to people living in poverty.”
Jeremy Hobbs
Executive Director, Oxfam International
Published: 21 July 2008

Trade reform that puts poor countries first is desperately needed in the face of rising food and fuel prices and global economic insecurity. But current offers at the World Trade Organization (WTO) would make the situation worse and undermine development, warned international agency Oxfam today at the beginning of a week of talks in Geneva.

“Now more than ever, poor countries need a fair trade deal. Rising food and fuel prices are hitting the poorest hardest and undoing progress on poverty reduction,” said Jeremy Hobbs, Executive Director of Oxfam International. “However, locking in lower tariffs will not solve the crisis but will expose poor farmers to more shocks, especially if the US and EU make only cosmetic reforms to their unfair subsidies. High prices are an opportunity for reform, but this looks set to be squandered.”

As trade ministers from around 35 countries gather at the WTO in another attempt to forge a trade deal, Oxfam is calling for a clear and transparent process that involves all members and gives each a formal opportunity to respond to proposals.

If current offers are accepted, the US may not have to cut a penny from current spending on agriculture and the EU will only have to cut around €2.6bn ($4.1bn), from a total of €30bn ($48bn), according to Oxfam. The proposals on non-agricultural trade will lock poor countries into low-value economies by preventing them from building up infant industries through strategic trade policy.

“Delivering on long-overdue promises could make a massive difference to people living in poverty, but the latest proposals fall far short of what is needed and continue to prioritize the interests of rich countries,” said Hobbs. “A deal that shores up political reputations and accommodates vested interests will not help promote development or reduce poverty.”

The recently passed US Farm Bill has landed like an unwelcome guest at the negotiating table. In a new analysis released today, Oxfam outlines how the Farm Bill undermines the potential for progressive reform. Despite the fact that US farmers are enjoying very high prices and record farm income – an average of $89,000 per farm – the US Congress actually expanded government farm subsidies in the 2008 Farm Bill and reinstated cotton subsidies previously ruled illegal at the WTO.

“Not only does the 2008 Farm Bill contradict existing obligations at the WTO, it also defies the objectives of the talks by maintaining or even increasing precisely the agricultural subsidies and market protections that developing countries entered these negotiations to stop,” said Hobbs.

Meanwhile, Europe continues to insist on exemptions for its sugar, beef and dairy farmers, while simultaneously denying poor countries the space to safeguard their own farmers’ livelihoods. The EU is also demanding big concessions on non-agricultural market access, while failing to acknowledge the development needs of developing countries’ industry.

Hobbs: “A good trade deal would cut trade distorting subsidies, allow flexibility for poor countries to promote food security, livelihoods and rural development, and address the major obstacles holding poor countries back. Instead, we see offers that will entrench rich countries’ advantages and increase poor countries’ vulnerability. Until this changes, there is no good reason to sign on.”