WTO: Exclusive negotiating process and rich country intransigence caused trade meeting breakdown

Published: 22 June 2007

The breakdown of trade talks between India, Brazil, the EU and US yesterday was a result of non-transparent and exclusive process and the failure of the richest countries to table breakthrough offers, said international agency Oxfam today.

Attempts by the EU and US to blame Brazil and India for being inflexible were disingenuous and unconstructive, especially given rich countries’ refusal to sufficiently reduce their harmful agricultural subsidies, cut restrictive import tariffs, or guarantee developing countries the necessary flexibility to promote rural livelihoods, food security and industrial development, said Oxfam.

Jeremy Hobbs, Executive Director of Oxfam International said: “The EU and US were offering shallow concessions on agriculture, while demanding deep opening of developing countries’ markets for industrial goods. To get agreement Brazil and India would have had to give up on what they were promised and turn their back on other developing countries.”

Oxfam said it was wrong to see the breakdown of the G4 meeting as a collapse of the trade talks overall. It should signal an overdue return to the multilateral process in Geneva, with all members involved in negotiations, greater transparency and a focus on content rather than deadlines. Finger pointing at Brazil and India overlooked the fact that there are more than 100 members of the WTO who were not involved but who also had concerns.

Hobbs: “What is lacking is political will not possibility. A development deal will be done as soon as the major trading powers  – namely the EU and US – decide they want one. Up until now they have allowed short-term self-interest to rule the day.”

Responding to press reports suggesting that the US might be willing to cap its trade-distorting domestic farm support at $17bn, Oxfam said this was not enough, as it would require no real reduction in current subsidy levels.

Similarly, the reported EU offer to halve tariffs on some products would be far less meaningful than it sounds if sensitive products, where developing countries stand to gain, remain heavily protected and other trade barriers are not dealt with.

On industrial market access, the EU and US proposals would mean developing countries made much greater sacrifices – cutting their tariffs by up to 70% while rich countries cut by only 20-30%. This would be a hypocritical imposition that would severely impede future industrial development in the developing world.

“Europe and America’s trade ministers’ interpretations of ‘meaningful offers’ and ‘flexibility’ would be laughable if it wasn’t so destructive. The distance they have drifted from initial promises to transform world trade conditions to help developing countries is shameful,” said Hobbs.

“Under current proposals the US would not even cut into current subsidy spending, and dumping would continue unabated. Meanwhile, poor countries who could gain significantly from greater opportunities to export to Europe will see the door still closed for products where they have a competitive advantage,” he added.

Oxfam  said  that  other  issues  beyond subsidies and tariffs needed to be addressed  to  ensure  a pro-development outcome, including commodity price instability,   preference   erosion,   tariff  escalation,  definitions  of allowable subsidies, and flexibility for poor countries to use trade policy to promote development.

Hobbs:  “Failure  to get a deal this year would be a missed opportunity and would  leave developing countries exposed to the harmful effects of dumping and restrained by unfair barriers to trade.

“However, a deal that simply bent to accommodate the political realities of the most powerful countries, without delivering meaningful reform, would be a  disaster  that  could  leave  some  of  the  poorest  countries and most vulnerable people worse off.”

Contact Information

For more information:
Amy Barry +44 (0)1865 472313 or +44 (0)7980 664397;
Romain Benicchio: +41 (0)22 3212372 or +41 (0) 79797990