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EU Trade Chief Warns Against Food Export Bans (DJ)

Source: Dow Jones Newswires
17/04/2008

Brussels, April 17 - European Union Trade Commissioner Peter Mandelson warned Thursday against restrictions on food exports in the face of soaring prices, arguing that they could trigger a "spiral of protectionism."

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"By chasing an illusion of food security these policies throttle domestic production, choke off supplies to others and risk leading to a spiral of protectionism and dwindling production," Mandelson said.

The food crisis has fueled protests in some countries and even spilled over into violence in several nations, including Egypt, Cameroon and Haiti, where the prime minister was ousted as a result.

As food prices march steadily higher, some countries have either restricted or banned exports of some basic commodities to ensure supplies at home.

Indonesia for instance has banned its farmers from selling rice abroad and Kazakhstan, one of the world's top producers of wheat, has halted foreign sales.

"I do not underestimate the political pressures which can push governments in this direction," Mandelson told lawmakers at the European Parliament in Brussels.

"But as a general rule, export taxes, quotas or bans do not make economic or development sense," he said. "In the case of basic agricultural commodities, they make even less sense."

The food price crisis could even represent an opportunity for some developing nation agricultural powers if rich countries granted them better access to their markets, Mandelson said.

"While we address the downsides of high prices, we should also not forget that they also have the potential to benefit people in the developing world because many have a comparative advantage in agriculture," he said.

"Giving them the means and the markets to exploit those advantages is the best way to address the issue of food supply in the long term, in particular for the poorest countries," he added.



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