'Free Trade' Enslaving Poor Countries

DEVELOPMENT:
Free Trade Enslaving Poor Countries

Sanjay Suri

LONDON, Mar 20 (IPS) - ? The new free trade agreements being signed up between rich and poor countries are proving far more damaging to the poor than anything envisaged within WTO talks, Oxfam said in a report Tuesday.

"Poor countries are being forced into very deep tariff cuts," Emily Jones, author of the Oxfam report 'Signing Away the Future' told IPS. "These are often being reduced to zero under reciprocal so-called free trade agreements they are being forced to sign with rich countries."

That means poor countries are having to open up their markets to subsidised agricultural products from places like the EU, she said.

There are already more than 250 regional and bilateral agreements in existence and more under negotiation, the report says. Regional and bilateral trade deals now govern more than 30 percent of world trade, and 25 developing countries have now signed free trade agreements with developed countries.

"An average of two bilateral investment treaties are signed every week, the report says. "Virtually no country, however poor, has been left out."

The agreements undermine moves to development, the report says.

"In an increasingly globalised world, these agreements seek to benefit rich-country exporters and firms at the expense of poor farmers and workers, with grave implications for the environment and development," it says.

The United States and the EU are pushing through rules on intellectual property that reduce poor people's access to life-saving medicines, increase the prices of seeds and other farming inputs beyond the reach of small farmers, and make it harder for developing-country firms to access new technology, the report says.

Governments are sometimes showing themselves powerless against such moves.

"Some developing countries find themselves between a rock and a hard place," said Jones. "Many are signing up to these so-called economic partnership agreements for fear of losing preferences," Jones said. Many of these countries have been offered export preferences in return for dropping tariffs against imports from developed countries.

The North America Free Trade Agreement (NAFTA) has brought 1.3 million job losses in Mexico in ten years, Jones said. Increased exports to the United States have failed to generate growth, and some studies show that the real wages in 2004 were less than in 1994, Jones said.

The rules on liberalisation of services in such agreements threaten to drive local firms out of business, reduce competition, and extend the monopoly power of large companies, the report says.

"When Mexico liberalised financial services in 1993 in preparation for NAFTA, foreign ownership of the banking system increased to 85 percent in seven years, but lending to Mexican businesses dropped from 10 percent of gross domestic product (GDP) to 0.3 per cent, depriving poor people living in rural areas of vital sources of credit."

Governments in developing countries usually come under strong political pressure to sign up to such deals, Simon Ticehurst from Oxfam in Bolivia told IPS. "But a lot depends also on the type of development models that governments present to their people," he said.

"Colombia and Peru have been signing up to these agreements. Others are more reluctant. "You now have a small country like Bolivia and many new governments across Latin America beginning to challenge the logic of free trade agreements."

Oxfam has demanded the following:

- Recognise the special and differential treatment that developing countries require in order to move up the development ladder.

- Enable developing countries to adopt flexible intellectual-property legislation to ensure the primacy of public health and agricultural livelihoods and protect traditional knowledge and biodiversity.

- Exclude essential public services such as education, health, water and sanitation from liberalisation commitments.

- Recognise the right of governments to regulate the entry of foreign investors to promote development and the creation of decent employment, and include commitments to enforce core labour standards for all workers.

- Ensure mechanisms for extensive participation of all stakeholders in the negotiating process, with full disclosure of information to the public, including the findings of independent impact assessments.