Adam Smith Institute

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Remind us why we allow the European Union to do things like this to us and them

It's the wrong major Christian holiday of the year to be getting obsessed with the price of eggs but there does seem to be a distinct lack of goodwill to all men in this action by the European Union:

The plight of his company, and the broader agricultural sector, has come to encapsulate a wider disenchantment in Ukraine with a trade agreement signed two years ago with the European Union. The deal, which went into force in January, included protections for farmers in the European bloc, and, as a result, one of Ukraine’s most successful industries has been effectively shut out of the new opportunities.

The Ukraine sits on one of the largest blocks of the finest arable land on the planet. The last time we had free trade with it, the 1870s as the railways extended into the steppes, this increased the living standards of all of us as we could buy yet more of ever cheaper food.

At the expense of our local landlords of course, this was one of the triggers of the agricultural depression of that decade and the great landed estates never really recovered. In the work of Saez and Zucman on the development of wealth this is made very clear. Agricultural land as the great store of wealth, monopolised by all too few, simply disappeared as an important part of the societal stock of wealth. Disappeared into the maw of the population as cheap food.

This we would argue is a Pareto improvement. And more than that, it's exactly the thing which the EU's CAP is designed to prevent. For example:

For a blend of economic and political reasons, Ukraine built a singular capitalist achievement after the fall of Communism: enormous, technologically advanced chicken farms that are among the largest in the world.

At its peak, Avangard had space nationwide for 30 million laying hens. Thanks to cheap grain and low labor costs, it is able to produce billions of eggs annually at a low price. The wholesale price of an egg in Ukraine is 4 cents, compared with 25 cents in Poland and 35 cents in Germany.

The quotas applied make it near impossible to import those eggs into the EU. And no one should be under any misapprehension that our own production comes from some happy farmer's wife throwing handfuls of grain to clucking free range chickens. The only question is whether the barns are there or here - and whether the people profiting are making a margin on 4 cents there or 35 cents here.

This is one of the things that Brexit allows us to correct. As with Cobden being right in the 1840s, the point of free trade is that we get to consume the cheaper food grown by others. And of course, the cheaper their food is the more open to their imports we should be, not this idiot system of refusing to allow food in precisely because it is cheap.

Unilateral free trade with the Ukraine, that's what we want for Easter, even if not for Christmas.