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EU to Africa: don’t develop, we’ll give you hand-outs instead

January 19th, 2010 Posted in International Development by

coffeeAccording to its website: “The EU provides over half of worldwide aid for development. It has committed to increasing this amount and ensuring it is efficient and effective.”

This all sounds very well and good, and certainly attempts to justify why the EU spends an amount equivalent to the total GDP of Croatia on aid every year. However, the Commission fails to document the many harmful measures it imposes on developing nations which perpetuate the impoverishment in the first place. Two of the more egregious examples I’ve come across this week:

  1. Tariff escalation means that the more processed a product becomes, the higher the import tariff. This is designed to ensure that most imports into the EU are raw products like coffee or cocoa and most of the value-adding processes take place within the Union. If Arabica coffee is roasted in Africa, the import tariffs would be 100 or 120 percent. Great for European coffee roasting companies and confectioners who demand to be protected–not so great for developing world producers!
  2. Secondly, EU countries refuse to allow African producers struggling with low yields to genetically modify their crops. Dr Sylvester Oikeh, manager of a drought-tolerant maize project for Africa, told a recent science workshop that EU countries opposed use of gene transfer technology to improve food production in Africa because Europe had enough food. “They (EU) tell African countries that export cotton to them that ‘if you grow genetically enhanced cotton, we will not buy [it]’.” Hardly seems fair, seeing as EU members are quick to adopt genetically modified medicines to help their aging populations.

EU trade policy is hugely damaging for markets in developing countries. From CAP subsidies to import tariffs and hypocritical production restrictions, the EU needs to get serious about allowing developing countries to develop–and not by giving money with one hand, and taking away trade with the other.

10 Responses to “EU to Africa: don’t develop, we’ll give you hand-outs instead”

  1. Philip Walker Says:

    It’s stuff like this which really makes me see red. We need a government which is willing to fight Brussels on trade barriers and subsidies; and to be honest, it’s an issue on which I’d be willing to the take the ball home. The whole point of the EU was to be a free trade and free movement area: if we can’t agree that free trade will be good for others as well as ourselves, then what’s the point?

  2. Julian H Says:

    Philip, if you’d like a bit of extra red mist to make your evening more fun, I recommend:

  3. Philip Walker Says:

    Oh, tariff escalation is enough to keep me going for years. Industry is how countries get richer, so what does the EU do? Makes it difficult for poor countries to industrialise by slapping progressive tariffs on processed goods and making it better for them to export raw materials than finished goods. It’s mercantilist, it’s colonial economics 17th-century style and it’s killing people.

    Sorry, I always get like this on development economics. My sense of moral indignation becomes very hard to stop.

  4. Julian H Says:

    I concur, but arguably non-tariff barriers are more sinister, particularly between poor countries.

  5. Philip Walker Says:

    You mean food standards, stuff like that? That’s the West’s subtle protectionism, for sure.

    Barriers within the developing world are tragic, but there’s not a lot we can really do about that. The best thing is to act as a beacon of free trade and hope other countries see the benefits and follow our example.

  6. Tom Papworth Says:

    Regulations are one way of surruptitiously undermining trade. Another is place-patenting (no rival Parma Ham or Sherry).

    Then there are subsidies, of course.

    Philip’s general point is the most germane, however: “if we can’t agree that free trade will be good for others as well as ourselves, then what’s the point?” Or, to put it another way, if we accept that both Germany and Greece benefit from trading freely with one another, why do we struggle with the fact that free trade between Greece and Ghana would also benefit both.

    (Ironically, Ricardo’s original example for proving Comparative Advantage was between two EU countries)

  7. Pat Says:

    It also has the effect that we pay more for our coffee (etc). So the EU is cutting off our noses to spite their faces- and taking a substantial wedge for doing so.

  8. Tom Papworth Says:

    Indeed. The simple (?) way of putting it is that the CAP acts as a tax on consumers for the benfit of farmers, and employs a lot of bureaucrats while keeping a lot of people in the Third World poor.

    We should all feel very proud!

  9. isomac Says:

    The text looks garbled, maybe its my browser…

  10. Tom Papworth Says:

    Okay. Either I’ve been posting in my sleep or I have a namesake, because neither of the Tom Papworth’s above is me!