Immunity from Challenge at WTO Would Undermine Development Round

By Oxfam

International agency Oxfam today criticized the European Union for supporting American attempts to prevent developing countries challenging rich countries’ farm subsidies at the World Trade Organisation (WTO).

The US requested renewal of the so-called peace clause, which gives countries immunity from challenge at the WTO, in October this year. The EU said in a press briefing today - the opening day of the WTO Ministerial in Hong Kong - that the peace clause was a ‘key principle of the trade round’ but Oxfam said that its renewal would allow rich countries to continue paying illegal and harmful subsidies.

Phil Bloomer, Head of Oxfam International’s Make Trade Fair campaign said: “It would be outrageous if the peace clause were renewed. The EU and US say their subsidies are not illegal and do not distort trade, but if they are not doing anything wrong then why do they need to seek immunity from challenge? The message this sends to the world is ‘Let’s agree new trade rules, and then just keep on breaking them’.”

Last month Oxfam released a report showing that the EU and US could face challenges from developing countries on $13 billion of illegal agricultural subsidies, including rice, corn and tomatoes. Since the peace clause expired in January 2005, Brazil has won cases against the EU and US on sugar and cotton respectively. Despite the EU’s claims to the contrary, Oxfam said that recent Common Agricultural Policy (CAP) reforms would not end the damage being done by dumping to developing countries.

Also discussed today at the WTO meeting were possible increases of targeted aid to help developing countries trade. Following an announcement of an extra 2bn euros from European Finance Ministers in Brussels last night, negotiators at the WTO meeting discussed how the aid could be delivered and the US indicated that it would be announcing further aid for trade package later in the week.

Oxfam’s Phil Bloomer said: “While increased aid for trade is welcome, it must not be a substitute for reform of unfair trade rules. Rich countries must not think that they can avoid making cuts to their trade distorting farm subsidies by buying off poor countries with extra aid. Furthermore, this mustn’t be used as a bribe to force poor countries to open their markets.”

Aid for trade may be offered as part of a package of reforms aimed at the poorest countries. Oxfam said a decent development package would be the ‘minimum down-payment’ that Ministers could make at the meeting and must include an end date of 2010 or earlier for export subsidies; immediate elimination of trade distorting cotton subsidies; full duty and quota free market access for the poorest countries; and guaranteed measures to help developing countries protect vulnerable farm sectors and fledgling industries.

Bloomer: “No development package would be good enough to guarantee developing countries gain from these talks. Unless rich countries radically shift their approach, agree to further cut their harmful subsidies and tariffs, and afford developing countries protection from forced liberalization, there can be no pro-development outcome.”

Oxfam reiterated that agricultural reform was key to ending poverty and that developing countries must not be forced to make damaging concessions in other areas.

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