Friday, 18 July 2008

EU must be joking

Just when it seemed that the EU couldn't get any stupider, the BBC publish this. Yes, the EU is actually now planning to give subsidies to African farmers as well as to those in Europe. Apparently the EU has not been able to spend all the money allocated for the CAP this year, so it now wants to give approximately one billion euros to African farmers. Rather than doing the relatively sensible thing and holding the money over until next year, the EU is now doing the equivalent of betting on both red and black simultaneously (which any gambler will tell you is ludicrous). They must get the plan past the European Parliament, but this should merely be a formality given the level of most MEP's subservience to the Commission.

If the EU actually wants to help African farmers, rather than graciously giving them the gift of dependency on a remote and distant body, it should abolish all trade barriers (tariffs, subsidies to European farmers and quotas). This way, African farmers will be able to export the crops they produce to European consumers, stimulating their local economies. Rather than spending billions of taxpayers' money to stimulate growth while simultaneously using a protectionist policy to retard the growth of less developed countries (by stopping them selling to us what they are relatively good at producing), the EU should allow the market to operate more freely. European consumers benefit from more trade. African producers and their communities benefit from a larger market. The only ones who lose out are the European farm lobbies and the bureaucrats in Brussels and Strasbourg who have made a career out of the subsidy programmes. It is quite simply immoral to pretend to be helping the poorer countries while in reality keeping them in their place for the benefit of a tiny, though influential minority of Europeans.

Even if for political reasons the EU is unwilling to open up markets to America (who of course subsidise their own farmers at least as heavily as the EU does) at the very least it should enable the poorest countries to increase exports in the areas they are most likely to have comparative advantage in. Personally, I think they should do the same with regards to American food, since the number of consumers who would benefit from lower prices is much greater than the number of farmers who lose out. If Uncle Sam is willing to subsidise my breakfast, who am I to complain?

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