Term Economics On Public Policy - 1039 Words

Assignment #2 Lent Term EC230-Economics in Public Policy Question #1: Imagine you are asked to write a press briefing note six years ago on behalf of Del Monte, Inc and the Government of Ecuador, summarizing in about 200 words the case against the EU s tariff on non†ACP bananas. It is still February 2009. On behalf of Del Monte, Inc. and the Government of Ecuador, we want to reiterate our concern regarding the current European Union Tariff Regime on non-ACP bananas. To begin with, this is a regime that is inconsistent with the WTO rules. First, the European Union’s tariff quota allocation to the ACP countries goes against the non-discriminatory Article 13 of the GATT, which states that countries cannot establish multiple tariff regimes†¦show more content†¦In addition, banana tariffs made prices to soar 63% in 1994 and demand to fall 25% (Cassidy, 2009). In consequence, as we can see in Figure 1, tariffs decreased consumer’s surplus by areas 1+2+3+4 due to the difference ‘’between the maximum that consumers would pay for each unit of the good, and what they would actually pay’’ (Pettinger, 2012). In conclusion, the EU non-ACP tariff regime has only freeze out competitors from the Latin American market, but also made its imports in the EU more expensive (Cassidy, 2009); therefore, we urge the EU to eliminate this tariff regime. Figure 1. Question #2: You are now hired by an ACP Caribbean Government to do the same, but in defense of the EU s banana tariff regime. On behalf of the ACP countries, we want to endorse and defend the European’s union tariff regime. Based on the Lomà © Convention, the EU and ACP trade agreements should be based on cooperation and partnership. In addition, the EU has a moral responsibility to support banana production in ACP countries due to the involvement of millions of families in this activity, and thus in their socio-economic stability. To support, this decision we would like to argue that the EU is supporting the true high quality banana farmers of the ACP countries (Shah, 2010). In contrast, banana production is lead by American