FrozenStrawberry Tariff

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Frozen-Strawberry Tariff

• Hui Yu

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Chinese Fruit May Spur EU Battle

• Chinese frozen-strawberry exporting is growing
  rapidly in Europe.
• Low-cost produce exports cause penalties from
  Polish farms.
• EUs first agricultural import duty, a 34.2
  punitive tariff on imports of frozen strawberries
  from China.
• The trade officials must decide whether to make
  the tariff permanent.

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Compare Strawberry Exports
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Chinese Polish

• Advantages in inexpensive land and labor.
• Benefit from tax breaks so as to undercut market
  prices.
• Government policies to boost agriculture.

• European farmers are benefit of heavy subsidies.
• Polish workers earn more than double.
• Companys cost is twice due to social security
  and insurance.

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Chinese Government Policies

• Tax-cutting policy in agriculture reform helps
  farmers to increase their income.
• Fruit is exempt from tax.
• Provides tax breaks, inexpensive land to
  encourage investments on fruit-processing
  companies helping farmers.
• No 1 document sets policies to facilitate
  agricultural exports.

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Chinese frozen-strawberry exports

• Low cost produce exports undercut the market
  price.
• European jam, yogurt producers need cheap fruit
  to cut their costs.
• EU consumers are benefit from Chinese fruit
  import to save their money.
• European fruit farmers are asking for more
  protection from Chinese competition.

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Punitive Tariff on Chinese Import

• Reduce frozen-strawberry supply to EU, market
  price goes up.
• As cost Increase, EU producers have to raise the
  prices for fruit products.
• EU consumers spend more. Demand will decrease.
• Chinese farmers and fruit producers suffer
  losses.

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Economic View

• Reasonably utilize the scare resource, make more
  efficient PPF.
• China supply cheaper fruit to save EU consumer
  money. EU can also sell other products to China.
• Low cost production should provide supply
  worldwide, benefit the whole society.
• Tariff add barriers among countries, raise total
  production cost and block global economic
  cooperation.

9
Economic Policy Effect

• Is it the best way depending on tariff to protect
  EU fruit farmers and producer ?
• Positive policies help EU farmers to cut cost and
  increase advantage in global competition.
• Chinese fruit producers divert production away
  from exports into the domestic market.