Oxfam warns of threat of regional trade deals for poor countries

With negotiations at the World Trade Organization (WTO) suspended indefinitely, international agency Oxfam today warned of the danger posed to developing countries by the proliferation of regional and bilateral free trade agreements.

“Free trade deals in the form favored by the EU and US pose a considerable threat to developing countries. Having caused the breakdown of Doha, rich countries are now competing to gain better access to developing country markets through regional deals that only serve their interests,” said Celine Charveriat, Head of Oxfam International’s Make Trade Fair Campaign.

“Developing countries have less bargaining power in regional negotiations and are more susceptible to bullying. They are not guaranteed special treatment as they are at the WTO, and some of the issues most important for poverty reduction, like the reduction of agricultural subsidies are not addressed. Free trade deals deprive developing countries of the space they need to use trade policies as a tool for development,” she added.

Rich countries have made clear their intention to pursue regional deals more aggressively following the suspension of WTO talks. The US Trade Representative Susan Schwab said last week “you will see us going that way even more actively than we have” and the EU also confirmed its intention to look more closely at regional and bilateral deals.

Oxfam analysis reveals that these agreements often go way beyond what is demanded at the WTO and can have grave implications for poor people, especially in the areas of agriculture, access to medicines, and investment:

• The proposed free trade deal between Peru and the US could cause the price of medicines in Peru to rise by 10% in the first year of implementation, and 100% in ten years, as a result of strict patent protection for pharmaceutical companies.

• After signing a free trade deal with the US in 1994 (NAFTA), Mexico saw imports of subsidized US rice and wheat more than triple, with devastating results for nearly 15 million small-scale farmers and their families.

• Thousands of vulnerable workers and the environment could be put at risk in Asia, Africa and Latin America by lax investment rules allowing foreign companies to flout national regulation and ignore basic labor and environmental standards.

• EU proposals for Economic Partnership Agreements with Africa threaten countries’ chances to strengthen industry because they demand dramatic and rapid tariff cuts.

RTAs also undermine multilateralism and the web of different agreements creates complexity that does not serve anyone’s interests.

Celine Charveriat: “The outlook is bleak for developing countries in the post-Doha world. They have climbed out of the frying pan to be faced by hundreds of fires. If rich countries are serious about using trade as a way to help reduce poverty and meet the millennium development goals they must resist the temptation to push harmful free trade deals.

“Instead they should concentrate on salvaging some of the good things from the wreckage of Doha: including increased market access for the poorest countries, more aid for trade and on continued reform of their harmful trade subsidies.”

There are currently around 250 regional trade deals in force, with many more on the table for future negotiation.