29 July 2004

Oxfam: US blocking trade deal at WTO

Geneva: International agency Oxfam today accused the United States of blocking progress on reform of global trade rules. US participation in the negotiations was characterised by intransigence and the pursuit of short term self interest, which could cause the current round to collapse, said Oxfam.

World Trade Organisation (WTO) members are meeting this week in Geneva in an attempt to move forward the talks that stalled last year in Cancun. As the end of week deadline looms, the chances of a successful outcome are dwindling.

“The US is repeatedly violating the spirit and the letter of the Doha Development Round. Their refusal to reform their harmful cotton regime – recently ruled illegal at the WTO – demonstrates a wilful disregard for multilateralism and the needs of developing countries,” said Barry Coates, Executive Director of Oxfam New Zealand.

“Their aggressive insistence on obtaining maximum access to developing country markets flies in the face of agreements that poor countries should be allowed to protect vulnerable farmers and industries,” added Coates.

Oxfam highlighted five areas in which US behaviour was threatening to derail the round:

Cotton: The US gives subsidies to its 25,000 cotton producers of up to $3.9bn annually, more than three times US foreign assistance to Africa. The WTO recently ruled that most of these payments were illegal but the US is refusing to change.

This is despite the concession made by the West Africans to include cotton in the agriculture negotiations. Subsidy definition: the US is seeking to broaden the definition of non-trade distorting subsidies – i.e. the so called “blue box”. With a broadening of the blue box, the United States could reclassify up to $10 billion in trade distorting support, including countercyclical payments, which were challenged in the US-Brazil cotton dispute because of their damaging impact for other agricultural exporters.

Rather than agreeing to reduce subsidies the US is looking for loopholes to hide export subsidies and dumping. Market Access: The US is pushing for increased access into developing country markets, both for agricultural and industrial products, and refusing to allow poor countries to protect vulnerable or fledgling industries, despite the fact that a guarantee of this protection was part of the Doha declaration. Export Credits: The US has the biggest export credit programme in the world – covering an average of $3.4bn in exports per year.

The recent cotton panel at the WTO ruled that these export credits were in fact trade distorting and should be reformed. Despite this, and despite recent EU offers to eliminate their own export subsidies, the US is refusing to reciprocate. Food Aid: The US is the world’s largest provider of food aid, accounting for some two thirds of the total and amounting to an average of $2bn a year (1992-2002).

While food aid plays a vital role in humanitarian emergencies, some US food aid is not used in this way but to break into new markets. The US sends more food to countries like Indonesia and Peru than Ethiopia. This undermines local farmers and amounts to disguised export dumping.

Coates: “It is extraordinary that the US seems ready to sacrifice its share of the benefits that would come from a multilateral deal that delivered on the promises of a development agenda. Raising the living standards of the poorest countries would create huge new markets and gains for all."

ENDS

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