EU trade representative Peter Mandelson penned an op-ed for today’s NY Times defending the EU’s refusal to compromise further on agricultural subsidies. I’ll have a more serious response later, but for now I just wanted to highlight this passage:
Barely a month has passed since we put forward new proposals to lower our average agricultural tariff by almost 50 percent; only two weeks ago we also radically reformed the European sugar market, lowering prices by more than a third.
It’s true that the European Union needed to reform its agriculture policies. But any farm sector can absorb only so much reform at once. Unlike the nongovernmental organizations calling so vociferously for cuts in subsidies, governments have responsibilities to the citizens who elect them. The changes we have already begun are having an extensive impact on Europe’s farm regions. As a result of the sugar reforms, producers in Ireland and Finland may well go out of business. We have seen no comparably bold action by any other major W.T.O. member, the United States included.
First of all, Mandelson doesn’t mention that the EU only reformed its sugar programs because it lost a major WTO dispute after Brazil successfully argued that the sugar programs violated the EU’s WTO obligations.
Second of all, countries with warm climates have a comparative advantage in sugar production. There is no reason Ireland or Finland should have any sugar farmers, any more than Minnesota or North Dakota should have the sugar farmers that almost derailed CAFTA this summer.
UPDATE: Yes, I know that sugar beets can be grown in cold climates. But if they were such a competitive crop, why are the U.S. and EU terrified of competition from countries in Central and South America?