Toward New European Trade Policies

Toward New European Trade Policies

by Future Planet Europe

While the EU has maintained a common market, it has also pushed other countries to adapt free trade policies and not to impose tariffs on exports from the EU. If countries would impose tariffs on EU exports, it would make those goods more costly and less competitive. Therefore, the EU has argued, is in the best interest of the Union to always insist on free trade.

However, these policies are not totally consistent, but rather an expression  of political expediency. In areas where the EU has a comparative advantage, they push for free trade. In areas where the EU cannot compete, it imposes sever import restrictions on other countries. In particular, agricultural products are heavily restricted. Some examples:

  • For key agricultural exports like sugar, rice and dairy products, the EU maintain tariffs of 350-900%.
  • The European Union pays tomato farmers a minimum price that is higher than the world price while the processors are also subsidized. As a result EU tomatoes ‘dumped’ into West Africa now make up 80% of the local supply and have nearly destroyed the domestic industry.

Due to the skewed policy of stopping imports of all products developing countries could actually compete in, with the exception of East Asia and Central America, developing country exports have not increased significantly over the past 40 years. The share of South America, Central and Eastern Europe and Africa in total world exports was actually lower in 2002 than in 1960.[1]

In other words, free trade conducted by the EU or the US with the help of the World Bank and the World Trade Organization in poor countries is often applied selectively and only when it benefits the powerful industrial nations.

 A few years ago, the EU reformed its Common Agricultural Policy (CAP) to discourage over-production by big farms and instead encourage “preservation of traditional rural landscapes, and bird and wildlife conservation”. This policy sounds nice on paper, but in the real world, the Four Freedoms underlying the EU charter will make capital strong farmers from foreign countries compete with local cheese makers on small milk farms in Romania. Hence, free trade in the form of free movement of people, capital and goods now come in droves to the Romanian countryside— from England, Denmark, and Germany to start mega-farms raise crops for export.

In Transylvania, Romania, cheese farmer Ion Duculesu operates a small dairy farm that is unlikely to meet EU health and safety standards. He tells BBC reporter Mark Mardell that they will eventually have to buy machinery in order to compete with foreign companies, but he wants to carry on milking by hand as he has always done. “They’ll fine us,” he says, “and we’ll go out of business so I will be out of a job. But I’ve always worked with animals since I was a child so I will still raise them.” In this way, the local economy’s interests are often pitted against more powerful economic interests from abroad.

Would it not have been better if Brussels could help Ion Duculesu and other small Romanian farmers expand and modernize their own production while maintaining their jobs and traditions? But that is not Brussels job. Instead, Brussels’ policies, in the name of market freedom let farmers from England, Denmark and Germany invade the Romanian countryside, thus making sure the future of Romania’s agricultural economy is becoming an uneven and unfair playing field.  

Toward New European Trade Policies

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