Public Money for Public Goods: Winners and Losers from CAP Reform
The EU spends more than 40% of its budget on the Common Agricultural Policy (CAP). How these € 55 billion are distributed to the member states has surprisingly nothing to do with the CAP’s objectives – subsidies do not go where the need to help poor farmers or to protect the environment is greatest. As disadvantaged (new) member states complain about arbitrarily disparate subsidy levels, redistribution becomes unavoidable. In a recent working paper, Valentin Zahrnt considers criteria that are likely to guide the future distribution of CAP payments (e.g. fighting climate change), and he estimates member states’ future subsidy receipts. This reveals astonishing differences between the negotiating positions that some countries traditionally adopt and the subsidy levels they can expect from reform.
In FocusRussia’s WTO Blues Russia appears to be set to withdraw its own application to join the World Trade Organisation in favour of a joint application with Belarus and Kazakhstan, with whom Russia plans to enter a customs union. Such a move would delay WTO accession for Russia as well as Kazakhstan, but it is not surprising. A recent paper by Iana Dreyer and Brian Hindley outlined the state of play in Russia’s WTO accession and pointed to several remaining obstacles. As Fredrik Erixon recently argued in Wall Street Journal oped, Russia is currently entrenching protectionist features in its trade policy and gives many indications of not wanting to join the premier body for world trade rules. Rather than deepening economic integration with Russia, Kazakhstan should move closer to the European economy. As shown by Arastou Khatibi, it already overtrades with FSU countries and undertrades with Europe.
EU anti-dumping duties depress trade Anti-dumping is a favoured policy for protecting import-competing industries by raising import duties on specific foreign goods. But it is a complex and un-transparent tool and its real trade effects are not always easy to understand. In this new paper, Arastou Khatibi asks whether it really is the whole European market that benefits from anti-dumping duties. His results show that anti-dumping depresses trade overall, but allows greater trade between globally uncompetitive European firms. The result is inefficiency and price increases for consumers and importers.
Globalisation and Emerging Economies The OECD has just published a new book analysing the integration into the world economy of six major emerging economies, the so-called BRIICS (Brazil, Russia, India, Indonesia, China and South Africa). An overview of the main findings is available in this OECD Policy Brief. Razeen Sally provided the introductory chapter on the political economy of trade liberalisation in the BRIICS. The book finds that these countries have substantially benefited from opening their economies to the world economy in the last decades and thus reduced poverty significantly. Their challenges lie now with tackling so-called “second-generation reforms”, i.e. regulatory and institutional changes that go beyond reducing tariffs and eliminating other barriers to trade at customs. Aimed at tackling barriers to business, investment and trade, these should provide the backbone for these countries’ next stage of growth and integration with the world economy.
Transparency as an antidote to hidden protectionism As the economic crisis hits the job market, countries around the globe are shoring up trade barriers to protect domestic producers. Since the WTO and public opinion impose limits on tariff increases, governments are tempted to resort to less visible regulatory measures. In his new working paper, Valentin Zahrnt examines how the WTO could shed more light on food safety regulation, so that health objectives are not abused to shield the home market. For analysis of creeping protectionism – and measures against this threat – you can also read a recent policy brief by Fredrik Erixon or listen to a podcast from Razeen Sally.
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Latest Publications
ECIPE Working Paper No. 08/2009
ECIPE Working Paper No. 07/2009
ECIPE Working Paper No. 06/2009
ECIPE Working Paper • No. 05/2009
ECIPE Policy Brief No. 02/2009
ECIPE Policy Brief No. 1, 2009 Articles, Opinion and Commentary
2009-06-18
2009-06-02
2009-05-26
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2009-05-04
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