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Liberty: -- Issues -- Deadly Protection

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  • Marc Brands Liberty
    Deadly Protection By Johan Norberg On my way back from a recent vacation, I passed by three big sugar mills. There is nothing strange with that -- except for
    Message 1 of 1 , Oct 25, 2003
      Deadly Protection

      By Johan Norberg

      On my way back from a recent vacation, I passed by three big sugar
      mills. There is nothing strange with that -- except for the fact that
      I spent the vacation in southern Sweden. That's about as far north as
      Alaska. Sweden has a very short summer, the soil is frozen for several
      months, and the cattle have to be indoors most of the time. Not your
      ideal place for agriculture, you would think.

      Yet Swedish farmers -- as well as others who live within the European
      Union's boundaries -- enjoy a comfortable lifestyle, at the expense of
      poor countries in Eastern Europe, Africa and Latin America. That's
      because of the EU's Common Agricultural Policy (CAP), which is
      designed to protect European farmers from competitors in the
      developing world and elsewhere. (And America plays a similar game.)

      The CAP uses quotas and tariffs of several hundred percent to
      effectively block the importation of foreign foodstuffs. The result is
      a huge surplus of foodstuffs piling up around Europe that must be
      either used or destroyed. So the EU dumps the stuff in poor countries
      with the help of export subsidies, further undermining the livelihood
      of competitors abroad.

      To cite an example, the caddish CAP and subsidies for domestic
      production make it profitable for Swedish companies to make sugar from
      sugar beets. The lump in the Swedish coffee cup then costs more than
      twice as much as the sweetener squeezed out of sugar cane. But we dump
      it abroad for only a quarter of the real cost.

      The EU's protectionism isn't unique; most rich countries have similar
      systems. And the barriers to imports are especially cruel to
      developing countries. Western duties (i.e., taxes) on manufactured
      goods are 30 percent above the global average.

      The tariffs are not uniform but rise in proportion to how processed
      the product is. Partially processed products face, on average, 20
      percent higher tariffs than raw resources. Finished products face
      almost 50 percent higher tariffs. To put it simply, developing
      countries can export fruits, but not the jam they make from those

      Western politicians have come to understand that high marginal taxes
      are bad for their economies; when will they realize that the same goes
      for developing countries?

      For a long time there have been calls for change, especially with the
      Cairns group of big agricultural exporters (such as Brazil, Argentina,
      and Canada) and the United States pressing for free trade reforms. The
      problem is that the United States is strikingly short on credibility
      when America slaps tariffs on foreign steel. All that free trade
      rhetoric is not taken seriously. The EU's protectionism is the most
      destructive for developing countries, but U.S. protectionism is
      catching up quickly, which gives the EU an excuse not to change
      anything. With the U.S. Congress' passage of the latest, multi-billion
      dollar protectionist farm bill and the dumping of food aid in
      countries without food shortages, American agricultural policies look
      a lot like the CAP.

      According to the United Nations Conference on Trade and Development,
      EU protectionism deprives developing countries of nearly $700 billion
      in export income a year. That's almost 14 times more than poor
      countries receive in foreign aid. EU protectionism is a continuing
      tragedy, causing unnecessary hunger and disease. The Cold War "iron
      curtain" between East and West has been replaced with a customs
      curtain between North and South.

      EU protectionism takes a toll on Europeans, too. The rich countries'
      protectionism costs their citizens almost $1 billion every day. At
      that rate, you could fly all the cows in the OECD, 60 million of them,
      around the world every year in business class. In addition, the cows
      could be given almost $3,000 each in pocket money to spend in tax-free
      shops during their stopovers.

      Our protectionism may lead to greater problems in the future. We in
      the West used to tell the developing countries about the benefits of
      the free market. And we promised wealth and progress would certainly
      come if they changed and adopted our ways. Many did, only to find that
      our markets are closed to them. No wonder, then, that Western
      countries are seen as hypocrites, producing resentment and a fertile
      ground for anti-American and anti-liberal ideas in many regions at a
      time when the West needs friends more than ever.

      The recently signed American-European plan on agricultural trade
      contains a lot of nice phrases, but no commitments. With no prospect
      of real reforms at the WTO meeting in September, the poor countries
      will refuse to take part in a fake "development round." The
      multilateral trade system will face a collapse. American and European
      companies will face obstacles to their exports. Many developing
      countries will give up on globalization.

      Now is the time for bold free trade initiatives-and sincerity. Perhaps
      America needs a presidential candidate like the one who in 2000, said,
      "I intend to work to end barriers and tariffs everywhere so that the
      entire world trades in freedom. It is the fearful who build walls. It
      is the confident who tear them down." That candidate was George W.
      Bush. Where did he go?

      Source: http://www.techcentralstation.com/090403E.html

      Archive: http://www.liberty-news.com/newsletter.html
      - The great virtue of a free market system is that it does not care
      what color people are; it does not care what their religion is; it
      only cares whether they can produce something you want to buy. It is
      the most effective system we have discovered to enable people who hate
      one another to deal with one another and help one another.
      -- Milton Friedman

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