Spread of Free Trade Agreements Threatens Poor Countries

By Oxfam

WASHINGTON, DC — The US and the EU 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, said a new report published by international agency 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 today, governing 30% of world trade. The US Congress is now considering new Free Trade Agreements (FTAs) already signed with Colombia and Peru, agreements which will harm thousands of vulnerable small farmers, block access to affordable medicines and favor foreign investors, according to Oxfam.

“Trade could be an engine to lift millions out of poverty, but these agreements are simply bad for development,” said Stephanie Burgos, Trade Policy Advisor for Oxfam America. “Agreements such as the ones with Peru and Colombia will only exacerbate poverty in countries by imposing hardships on developing country farmers, making access to affordable medicines more difficult, and constraining the kinds of policies developing country governments should enact to protect their own citizens and fight poverty.”

The poorest people in developing countries often bear the brunt of FTAs, as seen in the case of Mexico and the North America Free Trade Agreement (NAFTA). In the first ten years after the agreement was enacted, Mexico lost 1.3 million agricultural jobs, according to the report. Manufacturing jobs were initially created but competition from cheap labor in China led to 200,000 job losses between 2001 and 2004 as firms relocated. In Peru, studies show that up to 900,000 people could be left without access to medicines if the US-Peru trade agreement goes ahead.

“Mexico has already suffered the initial impacts of the NAFTA—I saw it first hand when I met with small-scale producers of corn in Chiapas - and it will be worse if they fully liberalize the market for corn, beans and rice,” said Mexican actor Gael Garcia Bernal who has been working with Oxfam’s Make Trade Fair Campaign. “These agreements demonstrate the absence of political will to transform trade into a tool in the fight against poverty.”

The Oxfam 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; and
  • Ensure participation of civil society and other actors in the negotiating process.

“Here in Washington, Congress should develop a new framework of objectives and priorities for US trade policy to ensure that it is not a tool strictly for advancing mercantile US business interests, but for shared prosperity, increased integration, and cooperation,” said Burgos. “Congress should recognize the dangers of such bilateral agreements and quickly vote to reject them.”

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