Report Warns Poor Countries On Bad Trade Deal

By Oxfam

The chances of a trade deal this year that helps reduce poverty are looking increasingly slim, according to a new report released today by international agency Oxfam. Following the failure by WTO members to make significant progress this week in Geneva, Oxfam warned that developing countries would be better off delaying an agreement rather than rushing to sign a bad deal this year.

Oxfam’s report, A Recipe for Disaster, asserts that while reform is urgently needed, current offers are not good enough and developing countries should hold out for better offers. This is despite the fact that once the US Trade Promotion Authority (TPA) expires next year, making negotiations and passage of trade deals in the US Congress infinitely more difficult.

“A new deal with development at its center could make an enormous difference for millions of poor people struggling to make a living around the world and is the reason the Doha round was launched in the first place,” said Raymond C. Offenheiser, President of Oxfam America. “But hopes of a development-friendly trade deal are fading fast and damage limitation seems to be the order of the day.”

WTO members must agree on modalities by the middle of this year in order to get a deal before the expiration of the TPA. At the Hong Kong Ministerial in December, members set April 30 as the deadline for new proposals, but this week they acknowledged they would miss the deadline, and cancelled a planned Ministerial-level meeting. Members are now shifting the pressure to July.

“With important deadlines looming, the US and EU continue to argue over who has done more and both are ganging up on poor countries to demand dangerous concessions,” continued Offenheiser. “But what’s on the table now —disappointing offers on agriculture and aggressive demands on industrial liberalization and services— could actually make many developing countries worse off and lock in existing inequities.”

The report details how developing countries are being pressured to sign up to a deal on Non-Agricultural Market Access (NAMA) that defies the lessons of history, which dictate that countries in development must be able to raise and lower tariffs according to changing circumstances if they are to promote growth and industrialization successfully. At the same time, developing countries are increasingly being pressured in the negotiations on services to agree to open their markets.

“What’s on the table on agriculture will certainly not put a stop to export dumping, which is one of the most important threats to the livelihoods of millions of farmers around the world,” continued Offenheiser. “Offers of a ‘development package’, including aid-for-trade, are not sufficient to make up for this or compensate for concessions in NAMA and services.”

Oxfam’s report acknowledges that a slow trade round, rather than one that concludes within the current timeline certainly will allow unfair trade rules to continue. But much more needs to be done for a deal to be acceptable.

“A pro-development deal must include deeper cuts to trade-distorting agricultural subsidies, better market access offers and the policy space for developing countries to sequence liberalization in a way that serves development objectives,” continued Offenheiser. “Developing countries are better off holding out for better offers in a slower round.” 

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