Oxfam: Spread of Free Trade Agreements threatens poor countries

Published: 19 March 2007

Rich countries are using regional and bilateral trade deals to attain concessions they cannot get at the World Trade Organization (WTO), with serious implications for poor countries’ development, says a new report published by Oxfam today.

Twenty-five developing countries have now signed free trade deals with developed countries, with more under negotiation, according to the report, Signing Away the Future. In total, there are more than 250 regional or bilateral trade agreements in force, governing 30% of world trade.

“Trade is important for growth but these agreements are bad for development. They require enormous irreversible concessions from developing countries and almost nothing in return from rich countries,” said Celine Charveriat, head of Oxfam’s Make Trade Fair Campaign.
 
“These deals demand much faster liberalisation and stricter intellectual property rules than the WTO. They strip developing countries of the right to govern their economies and threaten their abilities to protect their poorest people and lift them out of poverty,” she added.
 
The report highlights a number of ways in which free trade deals can be harmful: 
  • Investment rules in free trade agreements and bilateral investment treaties deny governments the right to protect workers, the environment and the economy, and can expose them to compensation claims that reach billions
  • Stricter intellectual property provisions threaten to deny poor people access to affordable medicines, undermine traditional farming methods, and remove rights to traditional knowledge
  • Harsh tariff liberalisation threatens farmers’ livelihoods and will impede future economic development
  • The web of different agreements undermines multilateralism and diverts trade.
The implications for development are significant. In the first ten years after the NAFTA agreement, Mexico lost 1.3 million agricultural jobs. Manufacturing jobs were initially created but competition from cheap labour in China led to 200,000 job losses between 2001-4 as firms relocated. In Peru, up to 900,000 people could be left without access to medicines if the US-Peru trade agreement goes ahead.
 
Meanwhile, a study commissioned by the EU has predicted that a proposed Economic Partnership Agreement with West Africa will lead to import surges of over 15% on key commodities, such as onions, potatoes, beef and poultry, which will devastate the rural sector.
 
Charveriat: “Poor countries are being pressured to open their markets dramatically through free trade agreements, but developed countries do not even have to touch their massive agricultural subsidies that lead to overproduction and dumping. It is hugely unjust.”
 
The report recommends that all trade rules, whether multilateral, regional or bilateral: 
  • Recognize that developing countries need special and differential treatment
  • Allow developing countries to adopt flexible intellectual property legislation
  • Exclude essential services, such as health, from liberalization commitments
  • Recognize the right of governments to regulate foreign investors
  • Ensure participation of civil society and other actors in the negotiating process.

 

Contact Information

For more information, please contact:
Amy Barry on +44 (0)1865 47231, or +44 (0)798066439, abarry@oxfam.org.uk.