Free Trade

The intellectual bankruptcy of “gastronationalism”

Consumers should decide what food they want.

Across Europe, food protectionists are back. Using the excuse of COVID-19, they claim that international trade competition is a problem for domestic producers. In several European legislations, it is proposed to impose quotas of local products on traders, in others it is ministers who make calls for “food patriotism”. It is at such times that it is worth remembering the extent to which this gastro-nationalism is problematic.

The Corn Laws were a perfect example of protectionism in the 19th century: the great conservative landowners in Westminster decided that the UK should tax foreign grain heavily in order to benefit local producers. 

The result of this trade policy seems self-evident: while British producers benefited, grain prices soared in the 1830s. As soon as the competition was neutralised, the big landowners were able to raise prices, which mainly harmed the working classes. On 31 January 1849, the disastrous results of the Corn Laws were finally recognised by a law passed in 1846. They were repealed and the import taxes disappeared.

Replacing the word “corn” or “United Kingdom” with any other product or country will not make any difference to the reality of economic principles: protectionism does not work, it impoverishes consumers and in particular the poorest. Unfortunately, this message does not seem to impress our French neighbours. Agriculture Minister Didier Guillaume called on the French “to be patriotic about food” even if “French tomatoes cost more”, according to RTL Radio France. The minister did not mince his words in the rest of his statements on the radio channel:

“Our fellow citizens must buy French. We must develop our agriculture if we want food sovereignty, agricultural sovereignty. But as it is a bit more expensive, we must work to be more competitive. French agriculture must be competitive. The prices paid to producers must be higher than they are today.

Since March, the French government has been in talks with the country’s supermarkets to buy fresh local produce. As a result, France’s largest retail chains, such as Carrefour and E.Leclerc, have shifted almost all their supplies to local farms.

Other countries have gone further than France.

The Polish government has denounced 15 domestic processors for importing milk from other EU countries instead of buying it from Polish farmers.

“The economic patriotism of these companies raises concerns,” the government said in a circular that remained online, even after the list of dairy plants that used foreign milk was removed in the first quarter of 2020.

The opposition comes from Berlin. Ahead of the agriculture ministers’ video conference a few weeks ago, Julia Klöckner, Germany’s agriculture minister, said the Coronavirus crisis underlined the importance of the single market and that EU countries should refrain from implementing protectionist policies to help their economies recover.

“Cross-border supply chains and the free movement of goods are essential to ensure the security of supply for citizens. And that is why I warn against ‘consumer nationalism’. It is only a supposed strength that is quickly fading away. We must not jeopardise the achievements of the internal market,” the statement said.

On the EU side, it is interesting to note that Internal Market Commissioner Thierry Breton seems determined to oppose any protectionist moves (at least outside the protectionist framework already established by the EU itself).

Originally published here.

After this crisis, let’s not give in to protectionism

We don’t need more tariffs

In the wake of the COVID-19 crisis, we are hearing more and more calls for a protectionist economic policy. However, this policy has been intellectually bankrupt for centuries and is detrimental to consumer welfare.

At the political level, COVID-19 has shown us one thing: political positions are very much stuck. All political sides feel confirmed in their worldviews prior to this crisis. The socialists say that this crisis ensures that social security is not developed enough. For nationalists, it is globalisation and open borders that have caused this pandemic. European federalists believe that the COVID-19 crisis demonstrates the importance of centralised decision-making in the European Union. Finally, environmentalists find that the drastic decrease in production allows for a cleaner society and that it is possible to live with much less.

Like all these groups, the protectionists play their own political game and say that we need more tariffs and that we need to “bring production back” to Europe. 

They complain about Europe’s dependence on countries like China or India and that this crisis has shown the value of repatriating industries they consider more “essential” than others. Protectionist ideas have the particularity of being represented as much on the extreme left as on the extreme right and even in the centre of the political spectrum. It turns out that protectionism has been embedded in our political mindset for centuries.

Colbertism seems eternal

Jean-Baptiste Colbert, Minister of Finance under Louis XIV, engaged in an avalanche of granting monopolies, luxury subsidies and cartel privileges, and set up a powerful system of central bureaucracy governed by civil servants called intendants. Their role was to enforce the network of controls and regulations he had created. 

His system also relied on inspections, censuses and forms to identify citizens who might have deviated from the state’s regulations. The Quartermasters used a network of spies and informants to uncover any violations of the cartel’s restrictions and regulations. In addition, the spies monitored each other. Penalties for violations ranged from confiscation and destruction of production deemed “inferior”, to heavy fines, public ridicule and even banned from the profession.

Colbert was also convinced that international trade was a zero-sum game. Drawing on the ideas of mercantilism, he believed that state intervention was necessary to ensure that more resources were kept within the country. The reasoning is quite simple: to accumulate gold, a country must always sell more goods abroad than it buys. Colbert sought to build a French economy that sold abroad but bought at home. Jean-Baptiste Colbert’s set of economic measures was known as “Colbertism”.

Today, this system is known as “protectionism”, and is still quite common in political thinking. In Europe, we have abandoned this economic philosophy (although the European Commission accepts that some member states subsidise their local industries in times of crisis), but externally, the EU has maintained three categories of protectionist measures:

Customs duties through the common external tariff,

Production standards that impose convergence costs,

Subsidies to local producers, through the Common Agricultural Policy (CAP)

The question is whether these measures really protect the European economy. If we need to go back in time to explain the origins of protectionism, we should also draw some lessons from the past. In his 1841 Treatise on Political Economy, the French economist Jean-Baptiste Say explained:

“The importation of foreign products is favourable to the sale of indigenous products; for we can only buy foreign goods with the products of our industry, our land and our capital, for which this trade, therefore, provides an outlet. – It is in money, it will be said, that we pay for foreign goods. – When this is the case, our soil not producing money, it is necessary to buy this money with the products of our industry; thus, whether the purchases made abroad are paid for in goods or in money, they provide the national industry with similar outlets.

To view international trade, especially from a “trade deficit” perspective, as a zero-sum game is wrong. The idea that industry should be brought back to Europe, probably through trade measures, is also misleading. It turns out that liberalising trade links is beneficial to both exporting and importing countries: the incoming resources give us the opportunity to improve our economic situation. 

The act of trade benefits both actors, not just one. To believe that only the seller wins (because he or she makes money) is a serious economic misunderstanding.

Certainly, the COVID-19 crisis is very problematic, and we indeed see a shortage of certain medical materials. However, producing gloves and masks in Europe will not be economically viable and who is to say that the same tools will be needed for the next health crisis? This shows us once again the fatal error of thinking that it would be possible to organise society and its economy through central planning managed by the state.

As Jean-Baptiste Say said in his works, to (re)launch economic activity, we must remove the measures that slow us down, including excessive bureaucracy and excessive taxes. In other words, it is not a question of hindering trade but rather of allowing trade to multiply.

Originally published here.

Illicit trade is booming: what can be done

The Irish Revenue recently released their annual report for 2020.

According to the findings, there has been a 250% increase in illegal cigarettes seized since 2019. The sharp increase represents an urgent need for the Irish government to reconsider its approach towards fighting illicit trade. Contrary to popular opinion, taxes are not effective in achieving that.

Illicit trade is a consequence of restrictive policies that create valuable incentives for criminals to provide consumers with a cheaper — and less safe — alternative. Irish fiscal policies aimed at cutting down the demand for cigarettes, for example, such as a 50 cent increase of the excise duty on a pack of cigarettes, plays to the benefit of smugglers seeking quick profits. 

Smugglers exploit a regulatory disparity within Europe, in particular that concerns countries that are in close territorial proximity to the EU. In Minsk the price of a pack is around 1.40 EUR, 10 times cheaper than in Ireland. In 2020 alone, Latvian authorities confiscated 21 million illegal cigarettes from Belarus through a single border entry. It is important to keep in mind the numbers include only the detected cases, and, in reality, the scope of criminal undertakings is much greater. 

The same applies to products across the board, such as drugs. In February, in Cork, the Revenue made one of the largest seizures of cocaine valued at 12.04 million EUR. These are illicit products that can threaten consumer well-being. Some 20 per cent of Irish teenagers have consumed illegal drugs at some point in their lives, and the only way to obtain these is through the black market, where no regulations or age-restrictions apply.

Black markets exist not only because there are groups willing to take the risk of smuggling products across borders, but also because there is a demand for overregulated products. A survey conducted by iReach for the Forest Ireland in October 2020 found that 70% of adults (including 67% of non-smokers) in Ireland agree that it is “understandable” that consumers might choose not to buy cigarettes and tobacco from legitimate retailers in Ireland. 

Ireland as a tobacco high-cost country is, therefore, especially vulnerable to criminal activities, and while detection efforts should be extended, decisive steps in the form of tax cuts or commitment to abstain from further tax increases should be taken. 

A 2010 study on the impact of cigarette tax reduction on consumption behaviour in Canada published by CIRANO (Centre interuniversitaire de recherche en analyse des organisations) in Montreal found that each additional dollar in final applicable taxes raises the incentive to resort to consuming contraband cigarettes by 5.1 per cent, while each additional dollar in tax cuts decreased it by 5.9%. Therefore, higher taxes increase the attractiveness of the black market, and the deeper the tax cuts, the higher the likelihood of stopping smuggling.

While it is true that the cigarette prevalence in Ireland has been consistently dropping, it doesn’t mean that if the government cut taxes the rates would shoot back up. Canada provides a valuable example. In 1994, the Canadian government slashed taxes on cigarettes to tackle the booming illicit trade. Despite alarmist expectations, the smoking prevalence dropped, and the trend has persisted. Compared to pre-tax cuts times, illicit trade has also significantly decreased.

The Irish Heart Foundation’s recommendation to annually increase the price of cigarettes so that the overall cost of a pack reaches €20 by 2025 doesn’t stand up to scrutiny, and will only lead to further spikes in illegal trade in Ireland. 

In order to succeed, the Irish government should escalate detection efforts to target the supply side of the illicit market, and consider significant tax cuts, or, at least, disregard calls for more increases of tobacco excise taxes.

Originally published here.

David Clement: On challenge to dairy supply management: You go, Joe!

Removal would be a huge step forward for American producers, Canadian producers, and consumers on both sides of the border

Last month news broke that the Biden administration will initiate a trade dispute mechanism against the Canadian dairy industry, which is the first formal challenge under the newly renegotiated U.S.-Mexico-Canada Agreement (USMCA).

The Biden administration claims that Canada’s quota and tariff system under supply management is in violation of what was agreed on when the USMCA was signed in 2018. Though it is unclear whether the administration will emerge victorious when the dispute panel reports back later this year, the removal of Canada’s system of supply management would be a huge step forward for American producers, Canadian producers, and consumers on both sides of the border.

The impact of easing restrictions for American farmers would be substantial, which is why the Biden administration is undertaking its challenge of supply management. Given Canada’s population, opening the Canadian market for U.S. producers would be similar to adding another California in terms of market access.

The U.S. International Trade Commission estimates that if the USMCA were to be enforced as agreed on, dairy exports to Canada would increase by $227 million a year, poultry exports by $183.5 million, and egg exports (for consumption, not industrial use) by $10.8 million. Cumulatively, the $422 million increase would account for an estimated 19 per cent of the total agricultural export gains the U.S. expected from the full implementation of the USMCA.

No doubt defenders of supply management will claim that U.S. export growth will come at the expense of Canadian farmers. But that just isn’t true. Something both protectionists and progressives forget: Trade isn’t a zero-sum game. The benefits of increased trade would be enjoyed by both Canada and the U.S. That same U.S. Trade Commission report estimates U.S. imports of Canadian dairy products would increase by $161.7 million if the terms of the USCMA were enforced. Reduced trade barriers would allow Canadian farmers to sell their products to this new group of American consumers, which is one reason why research published in the Canadian Journal of Economics in 2016 concluded that “supply management may no longer be beneficial to domestic producers of the supply‐managed commodities.”

That said, if there is to be a real winner from the proper enforcement of the USMCA it wouldn’t be producers on either side of the border. It would be Canadian consumers, who have long faced inflated prices because of supply management, to the disproportionate detriment of low-income Canadians. Supply management’s mandate to limit supply and significantly reduce competition artificially inflates prices for Canadian consumers, adding upwards of $500 to the average family’s grocery bill each year. For low-income Canadians that artificial price inflation accounts for 2.3 per cent of their income, which in turn pushes between 133,000 and 189,000 Canadians below the poverty line. Supply management is a disastrously regressive policy.

With very few exceptions, Canadian politicians have not had the courage to take on Canada’s dairy cartel, mostly because of its oversized influence as the most powerful lobby in Canada. If our politicians can’t do the right thing and stand up against this powerful lobby, maybe President Joe Biden can. You go, Joe! Canadian consumers sure would appreciate it.

Originally published here.

The global organizations and populists who aim to seize COVID vaccine tech and IP

When Donald Trump claimed in September 2020 that every American would have access to vaccines by April 2021, his comments received scorn. The Washington Post said his claims were “without evidence,” CNN quoted health experts who said it was impossible, and The New York Times claimed it would take another decade.

Now, a year into this pandemic, nearly half of the eligible population has received at least one vaccine dose in the U.S., and distribution has been opened to every American adult.

Operation Warp Speed, which invested tax dollars and helped reduce bureaucracy across the board, has contributed to what has truly been a miraculous effort by vaccine firms.

While Trump’s proclamations eventually become true and the question of vaccine ability has been settled, there is now pressure on the Biden administration to turn over domestic vaccine supply to countries with skyrocketing cases.

On Sunday, the U.S. declared it will send additional medical supplies to India, currently experiencing the largest global spike in cases.

But at international bodies, countries and activist groups are petitioning for far more: they want to force biotech companies to waive intellectual property rights on vaccines and COVID-related medical technology.

Along with nearly 100 other countries, India and South Africa are the architects of a motion at the World Trade Organization called a TRIPS Waiver (Trade-Related Aspects of Intellectual Property Rights).

If the waiver is triggered, it would ostensibly nullify IP protections on COVID vaccines, allowing other countries to copy the formulas developed by private vaccine firms to inoculate their populations and play into the hands of future governments more hostile to private innovation.

This week, U.S. Trade Representative Katherine Tai met with the heads of the various vaccine makers to discuss the proposal, but it is uncertain if the Biden administration will support the measure at the WTO.

While many companies have voluntarily pledged to sell them at cost or even offered to share information with other firms, this measure would have more far-reaching implications.

This coalition seeking the TRIPS waiver includes Doctors Without Borders, Human Rights Watch, and World Health Organization Secretary-General Tedros Adhanom Ghebreyesus, who first backed this effort in 2020 before any coronavirus vaccine was approved.

They claim that because COVID represents such a global threat and because western governments have poured billions in securing and helping produce vaccines, low and middle-income countries should be relieved of the burden of purchasing them.

Considering the specialized knowledge needed to develop these vaccines and the cold storage infrastructure required to distribute them, it seems implausible that any of this could be achieved outside the traditional procurement contracts we’ve seen in the European Union and the U.S.

That said, rather than celebrating the momentous innovation that has led to nearly a dozen globally-approved vaccines to fight a deadly pandemic in record time, these groups are trumpeting a populist message that pits so-called “rich” countries against poor ones.

Intellectual property rights are protections that help foster innovation and provide legal certainty to innovators so that they can profit from and fund their efforts. A weakening of IP rules would actively hurt the most vulnerable who depend on innovative medicines and vaccines.

If the cost of researching and producing a COVID vaccine is truly $1 billion as is claimed, with no guarantee of success, there are relatively few biotechnology or pharmaceutical companies that can stomach that cost.

BioNTech, the German company headed by the husband-wife team of Uğur Şahin and Özlem Türeci that partnered with Pfizer for trials and distribution of their mRNA vaccine, was originally founded to use mRNA to cure cancer.

Before the pandemic, they took on massive debt and scrambled to fund their research. Once the pandemic began, they pivoted their operations and produced one of the first mRNA COVID vaccines, which hundreds of millions of people have received.

With billions in sales to governments and millions in direct private investment, we can expect the now-flourishing BioNTech to be at the forefront of mRNA cancer research, which could give us a cure. The same is true of the many orphan and rare diseases that do not otherwise receive major funding.

Would this have been possible without intellectual property protections?

Moderna, for its part, has stated it will not enforce the IP rights on its mRNA vaccine and will hand over any research to those who can scale up production. The developers of the Oxford-AstraZeneca vaccine have pledged to sell it at cost until the pandemic is over.

While this should smash the narrative presented by the populists and international organizations who wish to obliterate IP rights, instead they have doubled down, stating that these companies should hand over all research and development to countries that need them.

If we want to be able to confront and end this pandemic, we will continue to need innovation from both the vaccine makers and producers who make this possible. Granting a one-time waiver will create a precedent of nullifying IP rights for a host of other medicines, which would greatly endanger future innovation and millions of potential patients.

Especially in the face of morphing COVID variants, we need all incentives on the table to protect us against the next phase of the virus. 

Rather than seeking to tear them down those who have performed the miracle of quick, cheap, and effective vaccines, we should continue supporting their innovations by defending their intellectual property rights.

Yaël Ossowski (@YaelOss) is deputy director of the Consumer Choice Center, a global consumer advocacy group.

To tackle illicit trade, let’s smash taxes

Last year, the Irish Revenue seized more than €32m worth of illegal cigarettes, 326 weapons, a crocodile head and a turtle shell, among other assorted contraband items. Alcohol has also been smuggled in massive quantities, with over 764,174 litres worth €4.17m seized in 2020 alone.

As criminals continue to improve their methods of concealment, the scope of undetected activities expands further. We should all be concerned by this. Not only do black markets bypass all regulatory oversight, meaning there are no controls for safety or quality, they create an incentive and funding model for additional criminal behaviour, such as arms or human trafficking, while also depriving the government of tax revenue and putting legitimate businesses at a disadvantage.

There is no silver bullet for solving this enormous challenge, and the Irish government should start by implementing smarter anti-illicit trade policies. But it should beware that many of these black markets evolve as a reaction to overregulation and over-taxation, which is something that the government could, with the right political will, address relatively easily.

We know that illicit trade is, in many ways, a consequence of restrictive policies such as sin taxes, which drive criminals to provide consumers with a cheaper alternative. Ireland’s policies, such as the recent 50-cent increase in excise duty on a packet of cigarettes, likely plays to the benefit of smugglers seeking quick profits, while doing very little, if anything, to help people quit smoking.

If the government’s aim is to reduce smoking, it could endorse reduced-risk nicotine products, like e-cigarettes and vaping, through reduced taxation and more accurate public information campaigns on the relative health benefits. Not only would this achieve the broader goals put forward by public health regulators, as research by the European Policy Information Center has found, but it could also help discourage the illicit trade of tobacco.

Within Europe, regulatory disparity encourages the illegal flow of cigarettes from low-cost countries such as Belarus and the Ukraine into the European Union. In Minsk, for example, the price of a pack is around 1.40 EUR, ten times cheaper than in Ireland. In November last year, over 5.5m cigarettes originating from the Ukraine were seized at the Dublin Port ,with the budget loss estimated at around €2.5m.

Smugglers exploit these countries’ territorial proximity to the EU, and by entering through countries such as Latvia, counterfeit tobacco products can make their way into western Europe.

Of course, black markets exist not only because there are groups willing to take the risk of smuggling products across borders, but because there is demand for overregulated products. Surveys aren’t everything, but one conducted by iReach did find that 70 per cent of adults (including 67 per cent of non-smokers) in Ireland agree that it is “understandable” that consumers might choose not to buy cigarettes and tobacco from legitimate retailers in Ireland. 

Tobacco high-cost countries such as Ireland are especially vulnerable to criminal activities, and while detection efforts should be extended, the government should consider taking decisive steps in the form of tax cuts or, at the very least, abstaining from further tax increases. 

The evidence to support this is compelling. A 2010 study published by CIRANO in Montreal found that each additional dollar in taxes raises the propensity to resort to consuming contraband cigarettes by 5.1 per cent, while each additional dollar in tax cuts decreased it by 5.9 per cent. It is clear, therefore, that higher taxes increase the attractiveness of the black market, and that the deeper the tax cuts, the higher the likelihood of stopping smuggling. 

The overarching goal behind excise tax increases, regulators claim, is to reduce smoking rates in Ireland. While it is true that the cigarette prevalence in Ireland has been consistently dropping, this doesn’t mean that if the government were to cut taxes the rates would shoot back up. 

The Irish government need only look to Canada where, in 1994, the government slashed taxes on cigarettes to tackle the booming illicit trade and, despite alarmist expectations at the time, the prevalence of smoking dropped and continues to fall. Illicit trade has since also significantly decreased.

In order to piece together a more coherent strategy, the Irish government should continue to target the supply side of the illicit market, but it would be a mistake not to consider significant tax cuts and smarter regulation. A multi-pronged approach will be the only way to reduce illicit trade and avoid the problems associated with it.

Originally published here.

Fake pesticides threaten consumer health

Counterfeiting is a real problem…

European institutions, particularly on the European Parliament’s legislative level, constantly debate and seek to regulate the use of crop protection tools. The catalogue of available products is getting thinner every year, which has been criticised by farmers. However, making chemical compounds or products illegal does not automatically rid the market of their presence. In fact, the ill effects of prohibition apply to the agricultural sector to the same extent as other consumption areas. 

In 2018, the European Union Intellectual Property Office stated that €1.3 billion are lost every year in Europe due to fake pesticides. This translates to €299 million and 500 jobs lost per year in Germany, €240 million and 500 jobs each year lost in France, and €185 million and 270 jobs lost annually in Italy.

In 2018, EUROPOL revealed that some 360 tonnes of illegal or counterfeit pesticides were seized in Europe in a joint effort with the European Anti-Fraud Office (OLAF). Counterfeit pesticides, now estimated to represent 14% of the European crop protection market, pose serious health risks to consumers. They are not subject to the rigorous safety assessments of food safety authorities. Adding to that, untested products can also lead to considerable harvest loss, resulting in less food security for European consumers.

Recent numbers make the 2018 statistics pale in comparison. In 2020, EUROPOL stated that 1,346 tonnes of counterfeits, illegal, and unregulated products had been taken off the market, or the equivalent of 458 Olympic-sized pools, with a total worth of €94 million of criminal profits seized. In the illegal trade raids, one can also notice an uptick in seizures of illegal pesticides, which relates to non-approved products. Year after year, the European Food Safety Authority (EFSA) records the presence of unapproved pesticides in European food. As a result, there have been calls upon member states to increase their inquiries into the imports of non approved pesticides into the European Union. In an effort to tackle this problem at its roots, we believe that a re-evaluation, conjointly with farmers associations, of the approval of these substances is a sensible solution. Suppose the European Union or member states outlaw a chemical substance due to health concerns, yet the ban results in an uptick in illegal trade with absolutely no safety assessment. In that case, a sensible compromise solution that takes into account the worries of producers while respecting the safety of consumers is in order.

Note on the illicit trade with fertilisers: In 2012, the Danish newspaper “Politiken” published an extensive report on the prevalence of illicit trade with fertilisers, which triggered a question to the European Commission about the extent of this problem. In a written answer, the Commissioner in charge replied in July of 2012 that Berlaymont was not aware of illegal trade in this area, and assured the necessary observation and enforcement mechanism were in motion to avoid it. Given the extent of fraudulent trade with organic food and the prevalent spread of fake pesticides, we believe that an investigation into the existence of illicit fertilisers in Europe is opportune.

Illicit trade is a significant challenge for societies in today’s globalised world. From cosmetics to medicines and agricultural products, illicit trade is putting millions of consumers around the globe at risk. The scope of the problem is transnational, and, therefore, the cost of misguided policies is very high. Our goal should be to create and sustain the conditions under which there would be no incentive to turn to the black market. This can be achieved by reducing tax burdens, enhancing branding and marketing freedom, introducing harsher penalties for fraudulent trading practices, and ensuring transparency across the EU.

Originally published here.

Why the free trade agreement with Mercosur should be ratified despite media hysteria about the Amazon fires

The hysteria has been fuelled by media outlets that prioritise sensationalism over unbiased reporting…

It is now more than a year since the European Union and Mercosur (Argentina, Uruguay, Paraguay, Brazil) reached a trade agreement, ending twenty years of negotiations. Described as “historic” by former European Commission President Jean-Claude Junker, the agreement provides for the lifting of 91% of customs duties on European exports and 93% of customs duties on imports into the EU. Because of the size of the free trade area it creates (780 million consumers), this agreement is the most significant economic agreement ever negotiated by the EU. 

However, one issue continues to divide the Member States: the Amazon rainforest. Two months after the announcement of the agreement between the EU and Mercosur, the fires of the summer of 2019 had indeed caused a lot of commotion. French President Emmanuel Macron immediately reacted by declaring that he would not sign the treaty “as is” – accusing Jair Bolsonaro of having “lied” about his climate commitments. A few days earlier, Irish Prime Minister Leo Varadkar had already warned that Ireland would oppose the treaty if Brazil did not step up its efforts to protect the Amazon. A month later, Austrian MPs voted against the agreement. More recently, in June, Dutch MPs also opposed the deal. The ratification of the treaty thus seems to be in real danger. 

The rejection by several heads of state and national MPs of a treaty that took twenty years to negotiate is a response to an inevitable global hysteria. The curve of Google searches on the Amazon suggests that the world discovered in August 2019 that there was a fire season. 

This hysteria has been fuelled by media outlets that prioritise sensationalism over unbiased reporting. In August 2019, the BBC headlined: ‘Amazon fires up 84% in a year’, ignoring the fact that variations from year to year can be considerable and that the number of fires in 2018 was meager. The BBC even attached a truncated graph to the article that obscures the underlying trend. 

Indeed, if we look back over the last 15 years, the trend is downwards, as the National Institute for Space Research (NISR) data clearly shows. The fires of 2019 were not exceptional; the total number of fires was only 7% higher than the average of the last ten years – the average of the last ten years (2009-2019) is 25% lower than the average of the previous ten years (1998-2008). The 7% increase is mostly in ‘dry brush and trees felled for livestock’ as environmentalist Michael Shellenberger points out in Forbes.  

The media is not the only one involved in maintaining myths about the Amazon. In August 2019, President Emmanuel Macron wrote in a tweet, “The Amazon, the lung of our planet that produces 20% of our oxygen, is on fire. This is an international crisis”. The idea that the Amazon is “the lung of the planet” comes up very regularly. Curious, Michael Shellenberger asked Dan Nepstad, an Amazon expert and lead author of the IPCC’s Fifth Assessment Report (Working Group II, Chapter 4). His answer was clear: this idea has no scientific basis. While it is true that plants produce oxygen, this oxygen is then entirely absorbed by organisms in the Amazon soil. The net contribution of the Amazon rainforest to the production of ‘our oxygen’ is therefore zero. Moreover, the Amazon ecosystem produces oxygen and stores carbon, but so do the soy farms and pastures, the IPCC expert reminds us.

In 2020, the obsession with the Amazon rainforest does not seem to have eased. Last August, Le Parisien still ran the headline: “Fires in the Amazon: the most catastrophic summer since 2010”. This information is entirely irrelevant and misleads the reader:

  1. The fire season is not over, so there is no point in jumping to conclusions.
  2. The data already available for June and July are not particularly worrying: the number of fires is more or less equal to the median.
  3. Even if 2020 turns out to be an exceptional year, it would be too early to conclude that the trend is really on the rise.
  4. As the IPCC expert points out, it is too often forgotten “that there are legitimate reasons for small farmers to use controlled burning to keep insects and pests down.”

In a statement issued on 17 June, several hundred NGOs demanded a freeze on the negotiations until a guarantee is obtained “that no Brazilian products that cause increased deforestation are sold in the EU”. But is this really reasonable? We are talking about the quarter of the Brazilian population that is still below the poverty line and is simply trying to get out of poverty by growing soya and raising cattle. What right does the West have to prevent the Brazilian countryside from developing in the same way that the European countryside developed centuries ago? Indeed, let us not forget that until the 14th century Europe was 80% covered with trees – compared to 40% today, according to Shellenberger in his latest book Apocalypse Now.

This does not mean that the entire Amazon should be destroyed. The question is not even relevant. As Nepstad reminds us, ‘only 3% of the Amazon is suitable for growing soya’. The challenge, however, is to do more with less. In this respect, Brazil benefits from a technology that was non-existent at the time of the development of European agriculture: genetic engineering. Indeed, thanks to their increased yield, in 2014, GMOs made it possible to use 20 million fewer hectares to produce the same amount of food and fuel – slightly more than the area covered by the French forest.

In Forbes, Dan Nepstad tells Shellenberger that “Macron’s tweet had the same impact on Bolsonaro’s electoral base as Hillary Clinton’s tweet calling Trump’s electorate pathetic. Postponing ratification of the treaty is not penalising Bolsonaro; it is rewarding him. Conversely, ratifying the treaty supports vulnerable populations – let’s not forget that poverty kills more than climate. The benefits for European consumers would also be colossal. So what are we waiting for?

Originally published here.

Fake products create real hardships

Protecting brands is not just about economics, it is also about human rights…

The hardships in factories around South-East Asia aren’t new to European media consumers. Thousands of workers all around the continent are affected by adverse living and work conditions — particularly in those factories that make counterfeited goods. In 2016, counterfeited goods amounted to 6.8% of EU imports from third countries, according to the OECD and the European Intellectual Property Office EUIPO. China remains by far the largest producer of fake goods in the world, all while having amongst the worst human rights records.

“Dotted around China’s industrial heartland, well-connected consultants are helping factory owners flout labour laws to churn out goods that end up on the shelves of well-known Western stores”, writes the Hong Kong-based South China Morning Post in a piece that outlines the corruption and abuse that surround the counterfeit goods market.

In Europe, there is a mechanism that allows for oversight and accountability of production sites. No, I’m not talking about political committees or government institutions, but: brands. Brand recognition and corporate responsibility allows Western democracies and its consumers to keep an eye on the products and services they want to support with their hard-earned Euros. If a tech-company is found to produce microchips in factories that accept child labour, inhumane work hours, or unsafe work environments, they will be reprimanded by public opinion, media coverage, and the loss of their customer base. As a result, corporate decisions are made to seek to prevent this from happening in the future. However, counterfeit marketers forgo this accountability, often by tarnishing the reputation of an existing brand.

This is why brands play an essential role in distinguishing good actors from bad ones. In Europe we regularly have conversations about labelling, ignoring that first and foremost, brands are labels in themselves. Trusted brands build a reputation on responsibility, something that they rightfully intend to protect. When it comes to fighting counterfeiting, consumers, producers, and government actors ought to be on the same side.

While rooting out fake products will not eliminate injustice, it is a crucial stepping stone in the fight against organised crime. Outside of the situation of factory workers, counterfeit goods are often linked to criminal organisations of the worst kind. A 2015 report by the French Union for Industrial Production points to the fact that 20 percent of illicit cigarette sales finance international terrorism (according to the French Centre d’analyse du terrorisme in 2015). This number has been filtered out of a total number of 75 international prosecutions involving large-scale counterfeiting of tobacco products.

Actionable items to consider are vast, but first and foremost, we need to put fighting counterfeiting high on the agenda list of trade agreements around the world. If we seek to fight organised crime, we need to do so with our trading partners not against them. It’s important to note that this is not a one-way street — fighting these bad actors also means opposing the parasitic nature of corruption and fraud that plague the host countries of these organisations as much as they do those that import the goods.

Lastly, fake goods represent an active health threat. The EU is inundated with fake consumer products. According to an annual report by the European Commission, there were 2,253 alerts of dangerous products on the EU market in 2020, 10% of which were COVID-19 related, so like for instance masks and hand sanitizers. In a comical way, Commission Didier Reynders held up a stuffed animal monkey at a press conference in Brussels, to underline that fake children’s toys also represent a significant health threat to the most vulnerable in society: children.

Counterfeiting has no place in a mature market place. The EU ought to step up its game to find more allies in its approach to root out fake products, so that less consumers are defrauded or put in harm’s way.

Originally published here.

To fight human rights abuses, we should protect credible brands

In recent years, there has been welcome attention paid to how worker safety and rights are protected in countries that trade with Europe….

While most trade takes place within legal and regulated channels, there remains an entire sector of the global economy that peddles in knock-offs and illicit goods.

The threats posed by illegal trade go way beyond safety and product quality considerations. The creation of parallel supply chains that have no respect for human rights imperils our shared efforts to ensure that all humans are treated with respect and dignity. 

The European Union should level up on its efforts to expose forced child labour and harsh treatment of workers across the world by raising awareness about these activities through its anti-illicit trade policies, and by partnering up with affected brand owners to eradicate abuses and illegal trade.

Often, we lack knowledge about how specific products make it to our local stores. Let us use chocolate as an example. Labourers produce cocoa in South America and West Africa, and then it’s sent to Europe where chocolate makers turn cocoa into chocolate bars that we see on our shelves. The cases of child labour in these areas are numerous and, likely, many of these illegal practices go undetected. In Mexico, for example, products such as green beans, coffee, cucumbers, and tobacco are often produced by using child labour, some legal and some not. As of 2019, 152 million children were still in child labour. 

China’s reluctance to abide by liberal values, in this regard, is well-known. It was estimated that at least 100,000 Uyghurs, ethnic Kazakhs, and other Muslim minorities are being subjected to forced labour in China following detention in re-education camps. Cruel treatment is used to produce gloves, clothing, and consumer products that are later shipped to Europe. Illegal trade, from this perspective, is any kind of economic exchange that involves human rights abuses at any of its stages. 

Brands globally strive to achieve sustainability and enforce labour standards while parallel supply chains only exist to generate quick profits by exploiting legal loopholes and using other human beings as a means to an end. Moreover, illegal trade has been linked to terrorism and the same groups that smuggle cigarettes and goods also traffic humans and weapons.

Cigarettes are among the most illegally trafficked goods in the world. The global black market for tobacco products is large and growing, and in countries that are among the world’s largest tobacco producers such as Brazil and Malawi, the incidence of child labour is high. Children who are involved in illegal work miss out on their chance to get an education and to elevate their status in their own societies. As a result, developing regions continue to cripple with poverty.

As in the case of cocoa, gloves and other consumer goods, the only way to know for sure that what we buy was produced and shipped legally is by putting trust in specific brands. EU policies and those of member states should encourage branding and marketing of goods produced legally and in accordance with human rights conventions in order to root out parallel supply chains. Restrictive tax policies punish official retailers and open doors to criminals who disregard basic human rights and would do anything to get the profits they seek.

An effective partnership between affected brands and government bodies is the way to address abuses and illegal activities. The Achieving Reduction of Child Labour in Support of Education (ARISE) programme executed by the International Labour Organisation is a great example of such cooperation in action. Through addressing the identified social and economic factors that encourage small-scale tobacco farmers to employ children in dangerous work, it prevents and makes strides towards the elimination of child labour in supply chains.

In conclusion, illegal trade that is facilitated through parallel supply chains that abuse human rights exists because of the dynamic loopholes in place. Every government effort to stamp out some goods – such as cigarettes – out of the market by taxing them and imposing various marketing restrictions is a call for criminal groups who use child labour and forced labour to scale up their work. 

Driven by profit, criminals completely ignore basic ethical considerations and know no boundaries. While law enforcement is crucial, is it also important to make sure that consumers can readily access information about goods produced by trustworthy brands, and that those are available so there is no incentive to turn to the black market.

Originally published here.

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