Tuesday, March 3, 2009

How some tariffs can actually be pro-free trade

Here's something you don't see every day: anti-protectionist tariffs. The European Commission is reportedly considering tacking import tariffs on biodiesel from the US in order to counter the subsidies that American producers receive from their own government. The tariffs will be tailored to, among other things, the amount of subsidies that the fuel receives back in the US:

The level of tariffs would be tailored to individual companies to reflect the types and amounts of the fuel they produce, and the amount of subsidies and other support they receive from American authorities, the diplomats said.

While this action would cancel out the effects of some of the American subsidies, there's still the matter of the European subsidies. The obvious reason for the encouragement of biodiesel is that it's more environmentally-friendly than fossil fuels, though I wonder if this is really the case.

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