Free trade with EU comes at a price

The European Union (EU) has announced that it will allow free trade with the developing world so long as those nations adopt 27 international conventions on sustainable development as well as labour and environmental standards. But this attempt to impose a regulatory burden on poor nations will only perpetuate poverty, says Marian Tupy of the Cato Institute.

While free trade is a path to stronger economic growth, forcing low-income nations to adopt costly standards that inhibit competitiveness is counterproductive:

  • Citizens in poor countries require cheap, rather than renewable energy because it is all they can afford.

  • Likewise, poor countries understand that less-than-ideal jobs are better than no jobs at all.

  • Environmental quality is unlikely to be a top priority for people who are struggling to feed themselves.

    After all, the European industrial revolution did not have to contend with stringent environmental and labour regulations. It was only after their standard of living increased that many people became willing to pay a premium for goods produced in an environmentally friendly way.

    Tupy says the best way to end poverty in the developing world is for richer nations to unconditionally open up their markets.

    Source: Marian L. Tupy, EU Tries To Tie Free Trade To Vast Regulatory Agenda, Investor's Business Daily, November 26, 2004.

    For more on Case Against Protectionism

    FMF Policy Bulletin/ 14 December 2004
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