The tiny island Kingdom of Tonga in the South Pacific is about to make history. At 6:15 pm (11.15pm NZ time) today Tonga is to join the WTO on what are arguably the worst terms ever offered to any country, according to an analysis of leaked documents released today by international agency Oxfam.
"The terms of Tonga’s accession package are appalling," said Oxfam's Phil Bloomer. "This is one of the world's smallest and most vulnerable economies, and the extortionist demands being made on it should have no place in a "development round". Apparently, the rhetoric of development means nothing at the WTO when pitted against the commercial interests of the world’s richest countries."
As the price of joining the WTO, the remote, impoverished nation (population 100,000) will be forced to slash the tariffs on which it depends to pay for vital public services such as health and education.
"Tonga will have to fix its tariffs at levels lower than any other country in the history of the WTO, with the sole exception of Armenia," said Bloomer. Tonga will be allowed tariffs of no more than 20% on any product. In comparison, the US applies a 350% tariff on beef imports, and the EU applies an equivalent tariff of over 300% to block sugar imports. Such low tariffs threaten to wipe out Tonga’s vulnerable farmers and small businesses.
Releasing the analysis today, Oxfam's Phil Bloomer said: "Both the EU and the US were active in the negotiations which led to this atrocious deal. This highlights the grotesque double-standards in operation at the WTO. It sets a very depressing tone for the talks."
Other terms of the deal are also extremely worrying for Tonga’s development. The country is being forced to open many of its vital services to foreign companies, including all levels of education, hospitals and telecommunications, imperilling access to essential services for the poor.
On education, these commitments go well beyond those of any of the rich countries which negotiated the deal. Other commitments, a number of which exceed current WTO rules, remove Tonga's right to employ the industrial policies that rich countries and the Asian Tigers used to promote development.
Oxfam New Zealand Executive Director, Barry Coates said: "Tonga is being ganged up on by the rich and powerful. To our shame, New Zealand, as a member of the working party that negotiated Tonga's accession, has participated in this process. Tonga's future development has been put at risk, and New Zealand has acted contrary to its own policy of allowing its Pacific neighbours to use international trade to enhance their development."