This article is the translation of the script of my radio column for Radio 100.7 in Luxembourg, which can be found here.
The United Kingdom’s protectionist Corn Laws of the 19th century were a disaster for the local industry, despite have the exact opposite intention. Europe is walking its footsteps.
This 31st of January marks the 168th anniversary of the end of the British Corn Laws. Unexciting and insignificant you say? Mind you, you might find more similarities than you think.
The Corn Laws were a perfect example of pure protectionism during the 19th century: the conservative large landowners in Westminster decided that the United Kingdom should highly tax grain coming from abroad, with the intent to provide an advantage to local producers. The result of this isolated trade policy seems self-evident: while the British producers profited, the price of grain exploded in the 1830’s. As soon as their competition was neutralised, large landowners were able to increase prices, which especially hurt working classes. On the 31st of January 1849, via a law which was voted in 1846, the economically catastrophic results of the Corn Laws were finally recognised, they were repealed and the import taxes disappeared.
150 year-old economic experience doesn’t seem to have any effect on the leaders of the European Union. In contrary, even if the EU considers free trade as an essential asset INSIDE its own borders, it practices protectionism which is considerable worse than the British one during the 19th century. Not only are there import taxes, but also means such as food standards and farming subsidies. Think about what this actually means: a farmer from Central Africa can’t sell his products in Europe because he’ll never be able to comply with the European standards, and even if he could, the French, German or Slovenian farmers would still sell below his price because they’re being subsidised by government. The result is impoverished African farmers and European consumers who’ll pay increasingly more for their goods in the long run.
At the same time, Australia has announced that they want to agree with the United Kingdom “as soon as possible” on a free trade deal after Brexit. The European Union on the other hand never made any advances to conclude a trade deal with Australia, let alone a multilateral agreement with countries from the African continent.
These protective measures might help the farmer in your neighbourhood, but in the long run this policy implies very negative externalities for both him and yourself.
This March marks the beginning of the Brexit negotiations. We need to hope that the European Union and Jean-Claude Juncker don’t repeat the British mistakes made in 1815. It’s time that history doesn’t repeat itself and that Europe makes a clear step towards free trade. Only unregulated free trade means economic opportunities for the future.