Tuesday, February 27, 2007

EU trade policy: tariffs increasing, discriminating against developing countries

The World Trade Organisation’s trade policy review for the EU was released yesterday. Today’s IHT has picked up on this, and summarises the report. Average tariff rates on farm goods have increased to 18.6%, compared to a rate of 16.5% in 2004.

As the report notes, products with relatively high tariff protection are almost exclusively agricultural or processed food. These include flours and meat (427.9%); mushrooms (300.8%); frozen beef (276.9%); pineapple juices (209.8%) and live chickens (167.2%).

The WTO reiterates the fact that agricultural products being exported to the EU face far higher tariff rates relative to other goods. Non-farm goods face average applied rates of just 4.0%. Incidentally, tariffs are consistently higher on agricultural product lines where producers in developing countries have a comparative advantage over their EU competitors, meaning that their exports are hit disproportionately hard by EU trade policy.

According to the widely used GTAP database, in 2002 poor countries with a GDP per capita of under £5,000 a year faced an EU tariff of 5% on average. Countries with a GDP per capita of between £5,000 and £15,000 face an average tariff of 2.9%. But countries with a GDP per capita over £15,000 a year face a tariff of just 1.6%

1 comment:

rz said...

The European trade policies concerning agricultural products have always been a travesty. I am actually no fan of radical free trade but protecting something as non-essential as agriculture strikes me as truly idiotic.