Thursday, 6 June 2013

Why the EU is being hypocritical about wine dumping and solar protectionism

China's case against EU subsidies on wine seems much more firmly based than the EU's case against Chinese imports of solar panels. That does not justify the protectionism imposed by the EU or threatened by China of course, but it does shine a light on the EU's hypocrisy in its claims to support both environmental protection and free trade.

The EU pours massive quantities of subsidies into agriculture, which of course supports agricultural exports to the rest of the world. Such subsidies impoverish poor third world farmers who are not only frozen out of EU markets but also see the prices they can be paid for crops sold on their home markets depressed as heavily subsidised and often wastefully produced EU food products are dumped on world markets.

The EU spends around 40 per cent of its budget on EU food subsidies (around 20 billion euros), including over 1 billion euros a year on wine production, mainly to France Italy and Spain. This will help export wine to China.

The EU's food subsidies result in massive environmental distortions. Doubtless wine could be produced with less energy and chemical input in many places around the world apart from the EU, just as is the case with other food products. For example, massive amounts of sugar and rice are produced in the EU despite the fact that the longer growing seasons and more sunlight (yes, solar power!) mean that sugar and rice is produced in the EU with much larger amounts of non-renewable, fossil fuel, and damaging chemical inputs compared to most parts of the tropics. The EU has, of late, tried to mask these distortions by moving to a system of paying farmers 'direct payments' rather than linking it to production, but this is little more than a facade for continuing to pay inefficient farming in the EU that destroys third world farmer living standards and increases fossil fuel use.

All in all the EU subsidy policy is a significant boost to global warming. Its agricultural subsidies boost inefficient, energy wasteful, production of food, and its tariffs on solar panels reduce the numbers of solar panels installed!

Those arguing for EU (and US) solar protectionism have surprisingly little evidence for their argument that the Chinese are subsidising solar panels. It seems their strongest argument is that the Chinese are 'rationalising' production by creating larger companies to produce solar panels. See

Well, the creation of longer production lines for solar power is precisely what is needed to bring down costs. This hardly compares to the very direct subsidies that the EU commits to support its environmentally damaging agricultural sector.

For details of EU wine subsidies see:



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