New numbers on agriculture inch in right direction, but WTO development deal remains a long way off

Geneva, 17 July – Today’s proposal at the WTO to unblock global trade negotiations continues to offer too little and cost too much to developing countries to constitute the basis for a development deal, says international agency Oxfam.

"We acknowledge progress in the agricultural text, which goes further than what the EU and US have proposed so far, though as always the devil will be in the detail of negotiations still to come,” said Celine Charveriat of Oxfam’s Make Trade Fair campaign."

Oxfam believes that the overall cost to developing countries of opening their agricultural and industrial markets remains far too high in return for the modest reforms in agriculture in rich countries.

These new numbers would leave rich countries’ trade protections largely intact, while forcing many developing countries to face severe adjustments costs and failing to create for them new opportunities. “To put this in perspective, there are 3 billion rural people in the developing world, most of them trying to survive on farms of less than 2 hectares. In addition, one billion new jobs must be created over the next decade, most of them in developing countries, which is more than double what the global economy currently produces,” said Charveriat.
 

The key features of today’s texts include:

• Domestic support: The text proposes caps on trade-distorting agricultural support of $13-16.4 billion for the US and Eur 16.5- 27.6 billion for the EU.  “This is a step in the right direction, but this is very unlikely to bite into actual spending. On average, the US spent $15.4 billion between 1995 and 2005 (1). Unless severe caps are put on specific products, these new figures would mean that dumping of cheap produce, which is so damaging to developing countries, will not be eliminated,” Charveriat said.
• Agricultural tariff cuts: “Developing countries, with very large agricultural populations, will have to make deeper cuts to their farm tariffs than rich countries did during the previous round. The only silver lining is that some countries will be partly exempted,” Charveriat said.
• Special Products and Special Safeguard Mechanism: While the text tries to accommodate developing countries demands, there is a great risk that these instruments will become wrapped in red tape and unworkable, given how discussions have progressed.
• NAMA: “The NAMA text turns the negotiating mandate on its head, requiring a developing country such as Brazil to make more than twice the cut in tariffs than the US.  This proposal forces a handful of developing countries, with large and growing population, to carry the burden of a WTO deal. It would lead to significant job losses and would stifle efforts by developing countries to move into higher value-added sectors,” said Charveriat.
• Cotton: The text provides the basis for faster and deeper mandatory reductions of US cotton subsidies which constitutes welcome progress.

(1) Data from “Agriculture Domestic support simulations”, Job(06)/151, May 22 2006