unoriginalname38 – the blog of Dave Cole

The Rebate Debate

There is part of me that wants to say that we should scrap the rebate because it was brought in by Mrs. Thatcher, and is therefore evil. It remains a crude solution to the problem of, essentially, the CAP, a problem that can only worsen with the joining of the accession countries.

So I find myself agreeing with the government's line (or what I perceive it to be): the rebate is negotiable so long as the CAP is on the table as well. Market distortions aside, the CAP dumps vast quantities of cheap food onto the scene, shafting (principally) the African countries that then cannot sell their produce at a fair price.

It is worth remembering why the rebate was brought in to begin with - Britain has a comparatively small agricultural sector (thus not receiving much net benefit) and was joining in a much weaker financial situation, not long after having been bailed out by the IMF.

I wonder why the government has taken its position. Most likely, it is a combination of political opportunism (it plays in Peoria), belief that the rebate is justified and, I hope, holding out to use it as a negotiating tool to scrap or at least heavily reform the CAP.

Talking of helping out poorer countries, I've been looking at the debt cancellation announcement a little bit. I am no economist, nor will I pretend to be, but some things jump out at me. The US$40bn gesture was only being paid back at about US$1.5bn per year. I have no idea what it costs to service forty billion dollars' worth of debt, but it suggests that we weren't getting that money back any time soon.

There also remain forty countries that receive not a penny of relief and another dozen or so that will only do so if they achieve some goals that aren't easily achieved when you're a highly indebted poor country.

xD.

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