Oxfam has brilliantly exposed the EU as the worst of trade hypocrites; but it's a pity it still misreads the WTOby P L / June 20, 2002 / Leave a comment
Rigged Rules and Double Standards
Kevin Watkins and contributors
Oxfam is an antidote to claims that people do not care about politics any longer. They may not be enthused by traditional politics but they turn up in droves to Oxfam events. That is reason enough to pay attention to its new report on world trade rules, Rigged Rules and Double Standards. There is also merit in the charity’s arguments. Oxfam says that free trade can benefit rich and poor countries alike, but claims that the rules that govern international trade are rigged in favour of the rich.
Often, they are. The most glaring example is the WTO’s intellectual-property pact, known as the Trips (trade-related aspects of intellectual-property rights) agreement. This requires poor countries to enforce the same tough patent, copyright and trademark protection that rich countries do. Once Trips comes into force in the poorest countries-as it already has done in other developing countries-it will drive up their import bill and transfer huge sums from poor countries to rich countries.
It makes no sense for Mozambique to grant a legal monopoly to Microsoft, Merck, or Madonna. The point of patents is to strike a balance between encouraging innovation and spreading its benefits. Whereas rich countries do lots of research, poor countries do hardly any: nine in ten patents are owned by rich-country companies. So patent protection should be lower in poor countries than rich ones.
Trips is a drag on development since it makes it harder for companies in poor countries to copy the products and processes of those in rich ones. In a knowledge-based economy, that is a problem. In 2000, the US earned $38 billion (over half the global total) in royalties from abroad.
Oxfam is also right to highlight rich countries’ high trade barriers on agriculture and textiles, poor countries’ main exports. Rich-country subsidies to their farmers are greater than the GDP of sub-Saharan Africa. The EU’s duty on offal is 252 per cent; the US tariff on groundnuts, 121 per cent. Rich countries tax processed imports (like instant coffee) more highly than commodities (like coffee beans), which discourages higher value-added manufacturing in poor countries. Oxfam says the cost of rich countries’ import barriers to developing countries is $100 billion: twice what they receive in aid.
The most welcome aspect of the report is that it exposes the hypocrisy of the EU, which likes…