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Rich country greed diminishes prospect of WTO deal

Media Release

Rich country greed and selfishness diminish prospects of a WTO deal:

Oxfam calls on the New Zealand government to help revive the Doha Development Round

The chances of a trade deal being done 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 says that EU and US brinkmanship has sidelined development concerns. Unless offers change significantly in the next three months, poor countries would be better off continuing to negotiate, rather than signing a deal this year.

WTO members must agree details and schedules for reform by the middle of this year in order to get a deal before the US Trade Promotion Authority (TPA) expires in mid-2007. At the Hong Kong Ministerial in December, members named 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 looking get agreement by July.

Barry Coates, Executive Director of Oxfam New Zealand, said on releasing Oxfam’s new report: “New Zealand has been right in the thick of the negotiations since well before Hong Kong. It is hugely disappointing that our negotiators have been content to play along with other rich countries making inadequate offers while demanding concessions from poor countries that could be devastating. This is meant to be a “development Round”, so New Zealand and other rich countries should not demand that developing countries make concessions that inhibit their development options. The irony is that they are being asked to pay for agricultural reforms that were meant to have been undertaken during the last trade Round.”

Oxfam’s report, A Recipe for Disaster, says that while a new deal is badly needed, current offers are not good enough and poor countries would be better off missing the 2006 deadline and holding out for better offers. This is despite the fact that once TPA expires and the US administration loses its authority to negotiate trade deals without the involvement of Congress a new deal could take years to agree.

“These trade talks have been manipulated that they now reflect more of the interests of the rich and powerful countries. It is a bitter disappointment that Oxfam’s report is forced to conclude that developing countries may be better off by not pressing for an agreement this year,” said Coates. “Oxfam has always said that a new trade deal with development at its centre could make an enormous difference for millions of poor people struggling to make a living around the world. But claims of this being a pro-poor deal have now been shown to be empty rhetoric. Current proposals would hurt rather than help developing countries.”

Oxfam’s report shows that the combination of disappointing offers on agriculture and aggressive demands on industrial liberalisation and services could make many developing countries worse off. By limiting the opportunities for poor countries to use trade policy as a tool for development, the new WTO deal could destroy livelihoods, prevent industrialisation and lock people into poverty.

Reforms agreed in Hong Kong as part of a so called ‘development package’ are not sufficient to cancel out the damage in other areas. Export subsidies will be stopped in 2013 but they only represent 3.6% of EU spending on agriculture and should have been eliminated far earlier. Duty and quota free market access for the poorest countries is too restricted and ‘aid-for-trade’ offers are largely made up of recycled pledges.

Oxfam’s report acknowledges that a slow trade round, rather than one that concludes in line with current deadlines, has its downsides. It will allow unfair trade rules to endure and poor people will continue to suffer. There is a danger that rich countries will turn their attention to regional trade deals.

Coates: “A slow round is far from ideal, but when the choices are collapse, a slow round or a bad deal, then going slow is the best option. The WTO remains the best place to negotiate a new trade deal and the most desirable outcome remains a multilateral agreement that radically reforms trade rules so that they work for poor countries. But this is not the deal that is currently on offer. Developing countries should avoid signing up to restrictive obligations that would cause significant harm to their development prospects.”

Oxfam’s report says that an acceptable trade deal must include deeper cuts to the massive agricultural subsidies of countries such as the US and the EU, and better market access offers.

Developing countries must have the right to regulate their economies to meet social and development aims, the right to use policies to develop their economies that almost all rich countries used during their own development, and to sequence the steps they take to open up their markets in a way that serves development objectives.

Unreasonable demands for developing countries to rapidly open up trade in industrial goods and services must be dropped, and the principles of special and differential treatment and less than full reciprocity for developing countries must be observed.

Poor countries also need adequate aid for trade that is not linked to market opening, patent laws that ensure access to affordable medicines, and action to address preference erosion.

Barry Coates concludes: “It is not too late for New Zealand to play a leading role amongst the rich countries by breaking ranks and insisting that the spirit of the ‘Development Round’ be revived. It is strongly in New Zealand’s interests to see a good deal in the WTO, as well as being consistent with New Zealand’s support for development. But time is running out. Over the past few days, it has become evident that another deadline to agree on agricultural reform has been missed. It is time for Phil Goff, the new Trade Minister, to call for a new approach.”



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