French president, Jacques Chirac, decided the best form of defence is attack last week, as he came out firing on all cylinders, determined to save the EU’s unpopular Common Agriculture Policy, and attempted to turn the tables on the US and UK.
In a recent interview with Figaro he said that the US and other large countries were responsible for “impoverishing’” the world’s poorest countries by forcing them to buy U.S. food surpluses. Then on Thursday he said: “I would remind you that 85% of all farm goods exported from Africa come to the E.U.” And of course, whenever the UK talks about reducing farm subsidies, Mr Chirac immediately responds by talking about the UK’s 5.2 billion- euro annual rebate, won by Margaret Thatcher in 1984.
Mr Chirac and his fellow countrymen have good reasons to oppose further reform to CAP. France, does after all account for around a quarter of all EU agriculture production, and appropriately, therefore, gets around 25% of all proceeds from the scheme, while agriculture and related business made up 4.5% of French GDP in 2002 and was worth $34bn in exports.
The IMF and World Bank are not impressed, however. In a joint statement put out over the weekend, they said: “The sector remains riddled with trade distortions that penalize consumers everywhere and the many poor in developing countries who earn their living from it. Comprehensive and sharp reduction of tariffs in the largest countries will deliver the greatest development gains.”
Meanwhile, EU trade commissioner, Peter Mandelson, is trapped between a rock and a hard place. The Americans, the developing world, the IMF and World Bank want him to cut tariffs, and as a free trader by philosophy, Mandy wants to comply. But if he gives an inch, the EU agriculture block will bay for his blood, and will demand running him down with a combine harvester at the very least.
This weekend, Tony Blair’s friend offered to cut EU tariffs to farm goods by an average of 47%. “It’s a bold move,” he told the Today program, but US Trade Representative Rob Portman said: “From our early analysis, we are disappointed.” Meanwhile, Jacques Chirac continues to threaten to veto any further concessions, and wants clarification that Mr Mandelson hasn’t exceeded his authority.
While you can understand French resistance to further reforms of CAP, it nevertheless seems like an anachronism. The average EU cow is after all subsidised to the tune of $2.20 a day, - there are no less than 1.2bn people across this planet who earn less than that. And as long as the EU drags its heels over moving with the times and insists on maintaining the 20th century status quo, no matter the cost to its own citizens and no matter the cost to the third world, then the EU itself will inevitably be relagated to second division status.
The new world which is emerging is one in which competition from the likes of China and India will become ever fiercer. And just as China embraces the world, does the EU really want to retreat behind it own wall? - throwing money at business and industry that can’t compete, instead of throwing its resource into moving up the value chain, creating more wealth for all.
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