Ill-timed, myopic tariffs distort potential for developing economies

IN WHAT MUST rank as one of the most spectacularly ill-timed moves in the history of international trade, the European Union chose December 31 to announce an anti-dumping duty of Euro3,480 ($35,865) a tonne on imports of cumarin from Thailand.

'Cu ... what?' you ask.

Cumarin. It is a plant extract used in perfume and happens also to be produced by specialist French chemical firm Rhodia, which objects to the competition from Asia. The EU claims the Thai stuff is not grown locally at all but is imported from China. It charges that the cumarin is diverted through Thailand to avoid a punitive tariff imposed on Chinese exports.

At any other time, it is fair to assume, nobody would have noticed. How many of us have even heard of cumarin? However, the publication of the EU decision just days after the devastating tsunami changed all that.

When the news hit some of the Sunday newspapers in Britain it caused, if not exactly an outpouring of public fury, then at least a backlash against Europe, with more than a few British readers deciding that they would vote against the new European Constitution if they were ever given the chance.

The Business reported that aid agencies and charities were furious at the EU's hypocrisy in offering aid to developing countries while raising trade barriers to protect inefficient European manufacturers. It said the tariff had been denounced as criminal. It also called on European trade commissioner Peter Mandelson, a former British member of parliament and adviser to the prime minister, to promote free trade instead of imposing barriers.