Friday

29th Mar 2024

EU fears food price rises will lead to 'spiral of protectionism'

The European Union's trade chief has warned against governments being seduced by food export restrictions in the wake of rapid food price rises, saying such moves are the worst thing the developing world should do as they will only exacerbate scarcity.

EU trade commissioner Peter Mandelson, addressing the trade committee of the European Parliament, said he fears "a reversion to the sort of mercantilist policies of the past," calling food export bans "less beggar-thy-neighbour than starve-thy-neighbour."

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"By chasing an illusion of food security, these policies throttle domestic production, choke off supplies to others and risk leading to a spiral of protectionism and dwindling food production."

"Export taxes, quotas or bans do not make economic or development sense," said the commissioner. "In the case of basic agricultural commodities, they make even less sense," he added.

Riots caused by skyrocketing food prices have broken out in some 33 countries worldwide. In Haiti, the government fell as a result of a week of disturbances in which 40 people were killed.

In response, Argentina, China, Egypt, India, Indonesia, Kazakhstan, Malawi, Russia, Serbia, Ukraine and Vietnam have introduced export restrictions or outright bans on staple food items.

However, the commissioner believes that despite the civil unrest, food price rises can actually be "an opportunity for farmers in developing countries," rather than a food security concern, so long as their governments open their markets and developed countries open theirs in exchange.

"Giving them the means and the markets to exploit those advantages is the best way to address the issue of food supply in the long term in particular for the poorest countries," he said.

High food prices, he said, should reinforce the commitment of the developed world to reform their farm subsidies through a world trade deal.

The commissioner argued that should an agreement be reached through the World Trade Organisation Doha round of trade talks, it would be particularly valuable to developing world farmers, because it would include agreements to cut agricultural subsidies in developed countries "that distort farm trade and reduce export opportunities."

Such a deal, along with the signing of bilateral trade agreements between African, Pacific and Caribbean countries and the EU – the European Partnership Agreements - would also boost food production through the expansion of agricultural trade and opening up investment opportunities in southern agriculture.

However, many ACP countries have refused to sign the EPAs out of fear that the opening of their markets will kill off adolescent industries that cannot compete with their more advanced counterparts in Europe.

International development NGOs however, feel that it was Europe's free trade agenda that has contributed to the crisis.

Responding to the commissioner's comments, Oxfam International said the EPAs were not the solution to the price rises as they "limit" how a developing country may respond.

"In order to deal with these wild fluctuations in food prices, developing country governments need a range of policy tools in order to act," said Alexander Woollcombe.

"It's a bit rich for Europe to be lecturing developing countries on the benefits of free trade in agriculture when EU production is still heavily subsidised," he added.

Dave Tucker, trade campaigns officer at the anti-poverty charity War on Want, said: "Once again, Peter Mandelson promotes free trade deals as the solution to everything. But the pursuit of these tired and dogmatic ideas for more than 20 years has contributed to the serious problems facing developing countries."

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