November 29, 2005

Hong Kong Summit To Form Trade Agreement

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Next month in Hong Kong, the World Trade Organization’s highest rule-making body, consisting of trade ministers from member nations, will meet and attempt to hammer out a new international trade agreement that will have far-reaching ramifications for the economies of both developing and developed nations.

Ray Offenheiser, president of Oxfam America, the US arm of a large, non-profit organization tackling issues of international poverty, spoke last evening at Uris Hall auditorium on the upcoming WTO negotiation. His lecture was entitled “High Noon at Hong Kong: An Oxfam Perspective on the Trade Summit.”

“Imagine the set of a Hollywood western – The stakes are high. The big guns arrive in town from the US, Europe and Japan – Now however, there are some new gunslingers in town. The fearsome trio of China, Brazil and India ride into town with a large posse of developing country friends,” he said.

Putting the upcoming summit in context, Offenheiser said that the Hong Kong talks have its roots in the 2001 Doha, Qatar summit, during which trade ministers agreed on the need to ‘”place the needs and interests of the developing nations at the heart of negotiations.”‘

Traditionally, WTO trade summits have been skewed in favor of rich nations, which have the economic clout to exercise their veto power and cast aside terms unfavorable to them, he said. The Cancun, Mexico negotiation in 2003 challenged this “rigged” power balance. At that summit, a coalition of developing nations banded together to veto an agreement pushed by the US, the European Union and Japan.

“And now that developing countries have become more assertive themselves, the negotiation process is much more difficult,” he added.

However, the emerging power of developing nations is still difficult to ascertain, Offenheiser noted, because diverse trade interests often prevent these nations from forming a united coalition. In addition, developed nations appear to expect major concessions from their poorer counterparts while conceding themselves on only minor issues.

“Unfortunately, there is little demonstrated commitment to the ‘what’s right to fight poverty’ logic that they promised and that Oxford promotes,” he said.

Offenheiser went on to discuss several key poverty-related issues that the trade ministers will battle at the summit.

Agriculture, which is the livelihood of 70 percent of the world’s poorest people, is a sore point of contention between developing and developed nations. Offenheiser said that currently, the European Union and the US offer government subsidies to their farmers that encourage overproduction and depress world crop prices. These subsidies cut into the pockets of farmers in developing nations, where government subsidies do not exist. What’s more, developing nations must also pay tariffs on some agricultural imports.

“If you believe in helping the poor help themselves, you would encourage poor countries to invest in agriculture. The current WTO trade rules do just the opposite,” Offenheiser said, citing statistics about agriculture’s importance in developing nations and the effects of “dumping” on world prices. Tariffs on non-agricultural goods, such as on garments, footwear and value added food production, also hurt developing countries, because their rich counterparts tend to place the highest tariffs on products produced by poor nations, Offenheiser said.

“Let’s take Bangladesh as an example. It pays more tariffs on exports to the US than France does, despite the fact that France exports 15 times more to the US than Bangladesh,” he said.

He criticized a US proposal to reduce tariffs and subsidies if developed and developing nations offer reciprocal concessions. “- Rich countries ought to agree to what’s right for development, and not insist on maximizing their own vested interests,” he said.

At the upcoming negotiation, developed nations will also push for foreign investment in the services industry of developing nations, maintaining patents on pharmaceutical drugs and weakening the “special and differential treatment” accorded in the past to some of the poorer nations, Offenheiser said.

Anticipating the conflicting web of interests, US and European leaders have already issued statements cautioning moderate expectations for the summit, he said, noting that the worst case scenario would be “a total failure at Hong Kong.” If negotiations are completely at an impasse, the US will pursue more regional trade agreements such as NAFTA and CAFTA.

Offenheiser ended by urging Cornell students, “take seriously your role as global citizens-.”. “Deep within the small black print of the 30,000 pages of legal documents, the future of whole nations and peoples is being shaped and defined, very often far from their view and way beyond their reach,” he said.

Earlier in his speech, Offenheiser noted that Oxfam, unlike some other organizations that push for dismantling the WTO, would rather propose new rules and alternatives within the framework of the international trade organization.

Joanna Green, an extension associate at Cornell’s small farms program, called Offenheiser’s talk “the first good case I’ve heard for keeping the WTO.” She cautioned, however, that the changes necessary to reform the WTO might not be possible “given the power dynamics.”

“I think that’s realistic,” said David Rand ’04 about the lecturer’s sentiment towards the WTO. Rand classified the split in attitude towards the WTO as “revolution versus reform.”

“I’m definitely a reformist as opposed to a revolutionist,” he said.

Some in the audience, however, disagreed with Offenheiser. During the question and answer session, an audience member criticized his view, calling WTO a “greedy” organization that “shoved free trade” down the throats of developing nations. The audience member said she did not understand how Oxfam could support the WTO.

Offenheiser’s lecture was sponsored by the Cornell Coalition for Trade Justice, Sustainable Enterprise Association, Cornell Institute for Public Affairs, Cornell International Institute for Food, Agriculture and Development, the department of Applied Economics and Management, the department of Developmental Sociology, the Mario Einaudi Center for International Studies and the SAFC.

Archived article by Xiaowei Cathy Tany
Sun Senior Editor