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Two-pronged trade attack will destroy poor farmers

Media Advisory
11 April 2005

Two-pronged trade attack will destroy poor farmers, warns Oxfam

There are particular lessons for New Zealand in a new report released today by international agency Oxfam. The report, Kicking Down the Door, analyses the dangers to poor countries from the current moves at the WTO to force them to open their markets, despite continued dumping of subsidised farm produce by rich countries. Oxfam New Zealand is calling on the New Zealand government to end its efforts to remove the tariffs that poor countries need to protect their small farmers against unfair dumping of farm products by the agriculture subsidy superpowers, the US and EU.

Oxfam’s report shows that the WTO is the new battleground where poor countries are being forced to reduce tariffs on imports. The moves could increase their vulnerability, destroy farming communities, threaten food security and plunge millions into deeper poverty.

Poor countries were promised that their vital food crops would be exempt from tariff cuts, but rich countries – including New Zealand - are now trying to water down this promise. The US, for example, has declared that it will accept only a “very limited number” of exemptions.

The world rice trade, which is the focus of the report, shows the grave risk to poor farmers. In 2003, the US ploughed a total of US$1.3bn (NZ$1.8bn) into rice sector subsidies for a crop worth US $1.8bn (NZ$2.5bn) – a subsidy of 72%. These subsidies make possible the dumping of 4.7m tonnes of rice on world markets at 34% below the cost of production, hurting poor countries like Haiti, Ghana and Honduras. Developing countries should be allowed to use policies that allow them to develop fragile farming sectors, says the report.

“This is an example of rigged rules and double standards at their baldest. Rich countries are demanding that poor countries pull down their barriers to trade, and at the same time they are continuing to subsidise massive overproduction and dumping. Their selfish motives couldn’t be clearer,” said Barry Coates, Executive Director of Oxfam New Zealand. “US rice would not be competitive without massive state subsidies. It is scandalous that poor countries are forced to compete with the US. Worse still, that they are denied the opportunity to defend themselves from dumping.”

If rich countries prevail at the WTO, countries like India are among 13 developing countries that could be forced to cut their rice tariffs and become vulnerable to cheap imports. Meanwhile, the US rice industry would gain from increased access to poor country markets.

Profits for Riceland Foods of Arkansas, USA – the world’s biggest rice mill – rose by $123m from 2002 to 2003 thanks largely to a 50% increase in exports, much of them to Haiti, which was forced in 1995 to cut its rice tariff from 35% to just 3% under pressure from the IMF. As a result, rice imports increased by 150% in nine years and today three out of every four plates of rice eaten in Haiti come from the US. Local farmers’ livelihoods have been devastated and rice-growing areas now have among the highest levels of malnutrition and poverty.

Rice is not the only commodity threatened by the WTO proposals. Oxfam estimates that developing countries also risk tariff cuts on many other imports. For example, 13 poor countries could be forced to open up their markets for milk powder, including countries like Honduras, which are also facing threats from dumped rice and poultry. Subsidised milk powder from the EU, or milk powder from extremely efficient producers like New Zealand, could devastate the livelihoods of small dairy farmers in these countries.

Beyond the WTO, rich countries continue to use the World Bank, the IMF and regional trade agreements to bully developing countries to open their markets prematurely. To make matters worse, the rich world has slashed agricultural aid by more than two-thirds in the past 18 years.

In releasing the report here today, Oxfam New Zealand Executive Director Barry Coates commented that New Zealand’s strategy at the World Trade Organisation (the WTO) is likely to help rich countries rather than the 96% of the world’s farmers who live in the developing world. New Zealand trade negotiators are trying to remove or lower the tariff barriers that developing countries use to protect themselves from dumping of farm products. This plays into the hands of the US, EU and other countries whose farmers are still using massive subsidies to compete unfairly. It looks likely that protection in the developing world will be removed before the subsidies in the rich world. This is grossly unfair and is likely to be disastrous for millions of peasant farmers worldwide.

As a member of the Cairns Group of countries at the WTO, New Zealand has recently signed up to a call for “substantial new opportunities for all products in all markets”. Coates: “New Zealand is aiding and abetting the attempts of the heavily-subsidised US agribusiness lobby to prise open the markets of developing countries. But meanwhile, the negotiations to end farm subsidies in the rich world and open their markets are seriously off-track. The major subsidy users are engaged in a process of re-labeling their subsidies. They are likely to be allowed to continue for years to come.

“The irony is that, if the US gets New Zealand’s support to open up developing country markets so that the US and EU can export more subsidised rice, wheat and other commodities, they will have fewer incentives to make genuine reforms to their agricultural policies. Once they have secured their aim of new markets, they will have little interest in reforming their own policies.

“Poor countries should not have to rely on more promises from rich countries. From past experience, the US and the EU have repeatedly promised reform, but delivered nothing other than a re-labeling of the same old subsidies. New Zealand should be using its influence at the WTO to insist that genuine reforms are actually implemented by subsidising countries before asking poor countries to make any further commitments.”

“In the run up to the December WTO Ministerial meeting in Hong Kong it is vital that rich countries demonstrate the willingness to negotiate trade policies that genuinely contribute to poverty reduction rather than continuing to pursue their own narrow agendas of self-interest and corporate profit.”

Oxfam’s report includes the following recommendations:

- Any new WTO deal must allow developing countries to regulate imports of products which threaten to undermine their farmers’ livelihoods
- Rich countries must stop negotiating bilateral trade deals to force open developing country markets
- The IMF and the World Bank must stop forcing poor governments to cut their tariffs across the board
- Developing country governments should ensure that their farm policies promote poverty reduction

Notes for editors:
- A PDF of the full report “Kicking Down the Door”, is available on request from Oxfam New Zealand and will shortly be up on the website: www.oxfam.org.nz


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