On Thu, 28 Feb 2002, [EMAIL PROTECTED] (Christoph Reuss) wrote:
>On the contrary, the EU would be crazy to follow Keith's advice, because >then the EU's domestic producers would sit on their products and need >even higher subsidies (or lay off workers which then cost unemployment >"subsidies"). It occurred to me reading Keith's note, that if the EU was really perverse, and wanted to get the US's attention in the event they did not respond to the WTO, they could levy the tax, and use the proceeds to fund a matching subsidy for their goods. I don't know what the long term result would be for the US or the EU, but while this went on, all third party buyers would get a windfall on prices. Of course, this is exactly what's been going on with grain prices (minus the EU tax), and the result has been to impoverish grain producers in third party countries, while consumers everywhere get cheap bread. This has led to consolidation of huge factory grain farms to maintain competitiveness... -PV >Keith Hudson wrote: >> it means that the EU, under WTO >> rules, would then be entitled to retaliate by raising tariffs by $4 >> billion against American goods from May onwards. It seems that the EU >fully >> intends to do this. >> >> But such a gut response by the EU would be crazy. It would mean that EU >> consumers would then have to pay more for American goods. It would be >much >> more sensible for the EU to play dumb -- even if the US Treasury don't >act >> as required -- because it would mean that the cheaper goods for the EU >> customer would continue to be subsidised by the American taxpayer. >> >> This tit-for-tat response demeans the considerable benefits that are >> obtained by lowering tariffs -- even if no-one else does. For example, >if >> only the EU would scrap tariffs on imported foodstuffs (now 30%), and >> forget about African countries' tariffs against EU's goods for the time >> being, then it would not only give a boost to poor African farmers, but >it >> would also reduce the average family's expenditure on food by about >$1500 >> per year.