Current WTO Negotiations Make Poor Countries Vulnerable, Oxfam Report Says

Rich countries are forcing poor ones to open their markets and then dumping excess agricultural produce on them, undermining poor farmers' livelihoods, according to a new report released by international agency Oxfam.

Poor countries were promised that vital food crops would be exempt from the WTO cuts, but rich countries are now trying to water down this promise, Oxfam says. The U.S., for example, has declared that it will accept only a "very limited number" of exemptions. The world rice trade shows the grave risk to poor farmers.

Oxfam points out that each year the U.S. spends $1.3 billion in subsidies to support a rice crop that costs $1.8 billion to grow. These subsidies make possible the dumping of 4.7 metric 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 subsidize massive overproduction and dumping," says Phil Bloomer, head of Oxfam International's Make Trade Fair campaign.

If rich countries prevail at the WTO, India, China, Nicaragua and Egypt are among 13 developing countries that could be forced to cut their rice tariffs and become vulnerable to cheap imports, Oxfam warns. Meanwhile, the U.S. 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 $123 million 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 U.S. 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 imports of poultry (18 countries), milk powder (14 countries), sugar (13 countries), soybeans (13 countries), maize (7 countries) and wheat (6 countries), with potentially devastating effects for all these sectors.

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," Oxfam says. The report goes on to explain that while tariffs are being slashed, agricultural aid has been cut by more than two-thirds in the past 18 years.

"Trade could be a vital part of the plan to make poverty history in 2005 but only if poor countries are allowed to decide the policies that are right for their own development. Poor countries have been forced to liberalize trade faster and deeper than any industrial power in history. They are tired of this shock therapy and shouldn't have to endure it," says Bloomer.

"Poor countries with fledgling rice sectors can't compete against subsidizing superpowers, like the U.S., or big exporting neighbors, or other countries that are able to export rice cheaply. They need the time and space to establish themselves," he says.

"In the run up to the Hong Kong WTO ministerial 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