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Signing away the future:
How trade and investment agreements between rich and poor countries undermine development


March 2007

SARPN acknowledges Oxfam as the source of this document:
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The quiet advance of trade and investment agreements between rich and poor countries threatens to deny developing countries a favourable foothold in the global economy.

Powerful countries, led by the USA and the European Union (EU), are pursuing regional and bilateral free trade agreements with unprecedented vigour. This is happening without the fanfare of global summitry and international press coverage. Around 25 developing countries have now signed free trade agreements with developed countries, and more than 100 are engaged in negotiations. An average of two bilateral investment treaties are signed every week. Virtually no country, however poor, has been left out.

Rich countries are using these bilateral and regional ‘free trade agreements’ (FTAs) and investment treaties to win concessions that they are unable to obtain at the World Trade Organization (WTO), where developing countries can band together and hold out for more favourable rules. The USA has called its approach ‘competitive liberalisation’, and the EU declared its intention to use bilateral deals as ‘stepping stones to future multilateral agreements’.

The EU argues that this new generation of bilateral and regional agreements is vital in order for developing countries in Africa, the Caribbean and the Pacific to maintain their access to European markets in a form that is compatible with WTO rules. It has also repeatedly told poor countries that it has no commercial ‘offensive interests’ in the negotiations and that there will be long periods for implementation. Yet its far-reaching proposals and aggressive approach appear to contradict these statements.

The inexorable advance of such trade and investment agreements, negotiated largely behind closed doors, threatens to undermine the promise of trade and globalisation as forces to reduce poverty. 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.

The worst of the agreements strip developing countries of the capacity to effectively govern their economies and to protect their poorest people. Going beyond the provisions negotiated at a multilateral level, they impose far-reaching, hard-to-reverse rules that systematically dismantle national policies designed to promote development.

The USA and 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 proposed trade deal between the USA and Colombia, for example, would increase medicine costs by $919m by the year 2020, enough to provide health care for 5.2 million people under the public-health system. Under the US–Dominican Republic–Central America Free Trade Agreement (DR-CAFTA ) the prices of agrochemicals are expected to rise several-fold.

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