The EU’s effects on poorer countries
Although it is sometimes wrongly described as a free trade area, the European Union (EU) can be accurately described as a modern-day equivalent or successor to the Zollverein (the German Customs Union of 1834), acting as a highly integrated customs union that goes beyond mere tariff reductions into complete economic unification. Similar to the 19th-century German Zollverein, which was championed by Prussia to unify fragmented German states, the EU operates as a single economic area with a unified trade policy toward non-members and no tariffs among members.
Its purpose on the road to political union is to benefit its members economically at the expense of non-members. It is beyond doubt that EU policies have had a bad effect on people in poorer countries.
Historically, the EU's Common Agricultural Policy (CAP) heavily subsidized European farmers, allowing cheap European food products to be exported to, or ‘dumped’ upon African and other developing markets. This undercut local farmers who could not compete with artificially low prices, destroying livelihoods in countries where agriculture is a primary source of income.
The EU's tariff regime sets higher tariffs on more processed goods. This means a country can export raw cocoa relatively easily, but faces stiffer barriers if it tries to export chocolate, essentially penalizing developing countries for trying to move up the value chain and industrialize their own economies. In 2014, Germany earned more from coffee exports than the entire African continent combined, partly as a result of this policy.
The Carbon Border Adjustment Mechanism (CBAM) disproportionately affects lower-income nations, where exporters may lack the financial and technological capacity to transition to greener production methods. Mozambique, for instance, risks losing a significant portion of its aluminium export revenue, roughly a fifth of its total exports, because of the CBAM's phased implementation. While the European Parliament initially proposed compensating least-developed countries for these losses through decarbonization funding, this provision was ultimately dropped from the final regulation.
The EU's Deforestation Regulation bans products linked to deforestation, such as cocoa, coffee, and palm oil, from the EU market unless they meet strict due diligence requirements. While it aims to protect global forests, it imposes heavy compliance costs on smallholder farmers in countries like Ghana and Côte d'Ivoire, where agriculture is central to the economy. Small farmers typically lack the resources to navigate complex certification systems.
The EU has made fishing agreements in West Africa. Having instituted rigorous fishing quotas in European waters, the EU makes deals with West African countries allowing its large trawlers to fish on a massive scale. Senegalese fishermen objected to a deal their country struck with the EU in 2014 that gave EU trawlers extensive access to their waters. Critics argue these agreements often benefit EU fishing industries while depleting fish stocks that local coastal communities depend on for food and income.
The EU promoted biofuels heavily from the early 2000s, driven by goals of reducing carbon emissions and energy import dependence. The effects on developing countries have been extensively criticised across several dimensions.
Oxfam warned that Europe's growing appetite for biofuels was pushing up global food prices and driving people off their land, resulting in deeper hunger and malnutrition in poor countries. They estimated the land used to power European cars with biofuels for one year could produce enough wheat and maize to feed 127 million people. Higher agricultural and food prices driven partly by increased demand for biofuels have had a negative impact on food security in food-importing developing countries, and especially on the poorest households.
The World Bank found that EU and US biofuel targets were causing investors to view every farm, jungle, and meadow in the developing world as they would an oil field, encouraging a rush for land in Africa and other developing regions that reduced the amount of land available for growing food. A clear link was established between EU biofuel policies and the strong interest of European companies in acquiring agricultural land in developing countries, especially in Africa. This led to increases in land concentration to the detriment of smallholder farming.
Even land classified as ‘marginal,’ and therefore supposedly available for biofuel crops, often supplied poorer households with food, feed, medicinal plants, building material, and fuel, not to mention its sociocultural significance.
In most cases reviewed, employment on biofuel plantations negatively affected household economies, or at best had no positive effect, owing to low wages. In many households where a member worked at a plantation, their own agricultural activity was either reduced or stopped entirely, leading to a decrease in productivity and income.
A number of large-scale biofuel investments in Africa were of a speculative nature with negative consequences for local people, and many large-scale projects failed or were abandoned.
It is worth noting that the EU has since pulled back from first-generation crop-based biofuels, partly in response to these criticisms, and has moved toward stricter sustainability criteria. But the damage done during the peak mandate years, particularly the 2000s and early 2010s, was real and proven to have negatively affected poorer households worldwide.
Given all of the above, it is difficult to reach any conclusion other than one of identifying the EU as a predatory organization which seeks to enhance the status of its members, already rich by world standards, at the expense of poorer people in poorer countries. Fortunately, the UK is no longer complicit in its consequences.
Madsen Pirie