Tuesday, February 28, 2006

European Protectionism Undermines Single Market

In the past week, protectionism by national governments has stopped a bid for the Suez energy company in France (the government is merging Suez with the state-owned Gaz de France), and the bid by E.On for Spain's Endesa power company.

Italy's Silvio Berlusconi is now calling for retaliation against the French. The EU Commission is gearing itself up to take action.

Protectionism should be challenged, whether it's at the national level, as now, or at the European level, as with the EU's actions against Microsoft or against cheap leather goods from China. The difficulty for the EU Commission is not taking sides. In the case of the Chinese shoes, the EU's tariffs seek to protect Italian and French manufacturers at the expense of European consumers. In the case of these energy bids, this time round, the open market requires the protectionist European governments to be taken to task. In the case of the shoes and Microsoft, the EU is promoting its own brand of protectionism.

In other words, the EU is happy to override protectionism driven by "national pride" - a pride it actively wishes to destroy - whilst being equally happy to promote a protectionism which harms consumers for the benefit of cross-border manufacturing groups. At some point, the EU's internal contradictions on this matter will come to a head.

Telegraph | Opinion | The single market and Gallic delusions

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