Factor Mobility, Agriculture, Environment and Quantitative Studies
Edited by Miroslav N. Jovanović
Chapter 15: Measuring the Extent and Costs of EU Protectionism
Vo Phuong Mai Le, Patrick Minford and Eric Nowell* 1 INTRODUCTION What would we say if the EU instead of being an engine of ever-widening free markets became a mechanism by which those of its members who could not reform their economies forced on other hitherto free market members a programme of protection? In a recent analysis, Minford et al. (2005) argued that this indeed was what the EU had become. Their conclusion was that if Britain could not, with whatever free market allies it could find, divert this process back onto the original free market agenda of the EU, then it would be forced to leave or incur massive and increasing net costs of membership. They also found that where they could calculate them, the net costs to EU citizens other than Britain’s was roughly as high in percent of GDP as to UK citizens. ‘Protection’ is a word that refers primarily to trade. But at the heart of the political economy of the current ‘sick men of Europe’ (Germany, France and Italy) lies the fear of unemployment; so protection also extends to the labour market and to the welfare system designed to buy off the unemployed. In the labour market this protection covers limits on hours (designed to share work around), strong powers for unions, minimum wages, high unemployment benefits of potentially indefinite duration, workers’ councils designed to stop job cuts, and much else. Because this protection is not enough to stop firms closing factories, if they could...
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