Letter in The Financial Times, written by Dr John Meadowcroft

LETTERS TO THE EDITOR: Allow developing world to compete

By John Meadowcroft

Financial Times; Apr 21, 2004

From Dr John Meadowcroft.

Sir, While the European Union recently imposed a record £331m fine on Microsoft for alleged anti-competitive practices, Oxfam has highlighted the price-fixing and subsidies enacted by the EU to benefit a cartel of European sugar producers to the tune of £538m a year. This cost is borne by European consumers and producers in the developing world who would happily supply cheaper sugar.

The huge disparity between the EU’s approach to computer software and sugar production can be explained by the power of agricultural interest groups in maintaining the Common Agricultural Policy. If Microsoft had as much political muscle as French and German farmers, then no doubt the EU would be paying Microsoft millions of euros to keep its Windows operating system and Internet Explorer browser packaged together.

The solution, quite simply, is trade liberalisation. The EU should end subsidies and price-fixing and allow imports from the developing world to compete freely with home-grown products. This would have a far greater positive impact on the world’s poor than the EU’s current multi-million euro development aid budget. Companies such as Microsoft should be granted the freedom to strive for whatever competitive advantage they can muster; in a free market only the consumer has the power to grant an effective monopoly to any company, large or small.

John Meadowcroft, Research Fellow, Institute of Economic Affairs, London SW1P 3LB