GENEVA — Regional and bilateral trade deals are harmful to poor nations and allow rich countries to win more concessions than they can obtain in global trade talks, according to a report by the humanitarian advocacy group Oxfam International.
The study, titled “Signing Away the Future,” notes that 25 developing countries have signed free trade agreements with developed countries, with more being negotiated. Overall, some 250 regional or bilateral trade accords are in force, governing about 30 percent of world trade, the report said.
The Oxfam study argues that these trade deals weaken the resolve of governments toward reaching a broad accord in the Doha global trade talks aimed at reducing tariffs. The report recommends that the poor nations “band together and hold out for more favorable rules” in the World Trade Organization-sponsored discussions.
Peter Sutherland, a former WTO chief, has argued, the report said, that the focus on bilateralism “damages the rights, particularly of the poor and weak, because in a bilateral negotiation the objectivity of the global system goes out the window, and you have in effect a bullying opportunity for the major trading powers.”
The report cited the impact of the North American Free Trade Agreement on Mexico, contending that despite an expansion in trade and investment under the three-nation pact, the country has seen a decline in manufacturing employment.
A large number of jobs were initially created in manufacturing after NAFTA went into effect in 1994, especially in foreign-owned assembly plants, which helped generate an extra 800,000 jobs by 2001. The foreign-owned factories are known as maquiladoras, where imported materials are assembled for export.
However, these jobs became vulnerable to increasing competition from cheap labor in China and led to 200,000 job losses between 2001 and 2004, largely because of companies relocating to China, the report said.