23 January 2007

As 30 trade ministers arrive at the World Economic Forum in Davos for talks aimed at jumpstarting the WTO trade deal suspended last July, ActionAid says there is next to nothing on the table that will help reduce global poverty.

The US and EU are rumoured to be closer to agreeing a contentious farm deal, with the US said to be willing to cap its domestic farm subsidy payments to $15-17billion a year and the EU to cutting tariffs on agricultural goods by 54-58%.

In return, developing countries such as Brazil, India and China will be expected to reciprocate with concessions on lowering barriers to trade in manufactured goods and services.

Rich countries and the World Bank are also pressuring poor countries to withdraw their efforts to protect poor farmers through tariff cut exemptions on specific crops known as ‘special products’.

Aftab Alam Khan, head of ActionAid’s Trade Justice Campaign, says that the expected US and EU concessions are largely illusory and will not dramatically cut farm subsidies or break down unfair EU trade barriers.

“Poor countries shouldn’t be conned by false offers that will be dangled about in Davos. Rich nations are trying to rush a bad deal through at the WTO in the next two months, which will only push poor countries further into poverty.

“The concessions that have been offered are of limited value for emerging economies like Brazil and India and the deal that is currently under discussion offers practically nothing at all for Africa.”

The UN trade body UNCTAD estimates poor countries could lose $63 billion in trade revenues by dramatically reducing their industrial tariffs under the proposed WTO deal and warns hundreds of thousands of jobs are threatened in the motor, electronic and machinery sectors in developing countries.

ActionAid calculates that in the automobile sector alone, job losses could be as high as 10,000 in Brazil, 16,000 in India and 180,000 in China.

“The interests of the poorest African countries are not on the table as this WTO deal is hatched in Davos,” said Khan. “The ‘Doha round’ of global trade talks were championed as the key to tackling trade injustice, but a smokescreen of political wrangling has driven development off the agenda in the rush to get a deal.”