Peter Mandelson, the embattled EU Trade Commissioner, has this week written in the East African defending the EU’s record on preferential trade agreements with developing countries. Specifically, he refutes the claim that the wonderful specimen that is the EU’s Common Agricultural Policy (CAP) is itself the problem. Not likely. Take, for example, Sir Digby Jones’ (Chairman of the CBI) comment that ‘the way to build lasting economic growth [in Africa] is for Europe to end the CAP’. And even Mr Blair agrees with him, putting the reduction of CAP at the forefront of the government’s so-called ‘Marshall Plan’ to Africa.
The reasoning is simple. The agricultural subsidies that make up CAP defend European producers from cheaper products outside the EU, by enabling them to sell their produce at lower prices than would otherwise be possible. Moreover the EU often makes the deal doubly difficult for developing nations by whacking tariffs on any produce from the outside. And the most criminal thing about it is that such a regime typically encourages over-production within the EU which is, more often than not, dumped on developing countries at cheap prices, destroying local producers and markets.
But CAP also tends to set the tone for EU protectionism as a whole. The EU will point to the fact that it currently gives notionally ‘duty free’ access under the ‘everything but arms’ scheme to goods from small developing countries. But this does not cover large low income countries that are equally as poor. And even for those that have been lucky enough to secure preferential trade regimes, such as Kenya, for whom at present 97% exports to the EU are entitled to duty free market access it is something of a fad. The regime comes to an end on December 31st 2007, upon which Kenya will have to migrate to the General Systems of Parity (GSP) trade regime where most agricultural products will face some import duty. This wholly contradicts Mandelson’s trump card: the EU’s ‘offer’ (French opposed of course) to eliminate all farm subsidies by 2013 at the Doha Round if others do the same.
A recent report by the Brussels-based think-tank, Centre for New Europe, estimated 6,600 people die every day in the developing world because of the trading rules of the EU, i.e. one person every thirteen seconds.
And that ignores the fact that CAP raises the cost of food even in the UK – part of the protected zone - for the average family of four in the UK by around £10 a week (against what would be paid for the same food on the open world market).
By James Gubb