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		EU regulation - driving jobs off-shore Lincolnshire Echo - October 26 2004 Last week I was in back-to-back meetings in Brussels with two wholly different industries -- egg production and aluminium smelting -- who nevertheless faced exactly the same problem. They both believed that excessive EU regulation would drive jobs and production off-shore, outside the EU altogether. Far from achieving the objectives of the regulation (in one case animal welfare, in the other, higher environmental standards), the work would go to countries with far lower standards. So they both faced a double whammy. Loss of business to cheaper overseas competitors, and production moved to areas with lower standards. More hens kept in intolerably small cages. More pollutants released into the atmosphere (and in terms of Global Warming, a ton of carbon dioxide released in China is every bit as bad as a ton released in Lincolnshire). The EU has decided to ban cages for hens from 2012. All eggs will then be produced by the "barn egg" or free-range methods. This may sound ideal, but there are downsides. For example, a free-range hen is more likely to be killed by a fox, while a "barn" hen is more susceptible to aggressive behaviour from other hens. And free-range eggs (like organic food) are far more likely to suffer from bacterial contamination -- think of all the droppings from hens and other animals that free-range hens live with. But the plain fact is that the higher cost of these production methods, coupled with parallel plans to reduce import duties, will make non-EU countries like India, the Ukraine and Brazil much cheaper than the EU for egg production. This may not matter for fresh eggs, where transport time makes it difficult to ship long distances. But a high proportion of eggs used in the UK go into food manufacturing -- quiches, cakes and so on -- so they come dried, and transport time is not a factor. All of this business could go abroad -- another huge blow for UK agriculture. And it's not just the egg producers. Something like a quarter of UK grain goes to feed laying hens. Our arable farmers will feel the pinch, too. The bunny-huggers who have demanded an end to cages must get their heads round the idea that the ban will mean more hens suffer, not less. They'll just suffer in different countries. There is an uncanny parallel with the aluminium problem. Much of our scrap aluminium (and a very high proportion of the metal is recycled) is going to China, where it may well be used to make new aluminium castings to ship back again to Britain. All that process work has been moved off-shore. Why? Partly because of lower wage rates in China. But also because of lower environmental standards, which make China much more competitive. As we plan to pile on carbon taxes in the EU, we simply squeeze out energy-intensive production to laxer régimes. Is there a solution? Several, and none palatable. We could simply apply import tariffs to goods produced to lower standards. Or we could ban imports of these goods. But we would immediately run into problems from the WTO. Such duties or import bans run counter to global trade rules. Or we could argue that high standards in the EU are a public good to be subsidised by the tax-payer, and so restore the competitiveness of EU industry. But taxes in the EU are already too high, without new subsidies for industry. And industries won't want a subsidy régime that puts them at the mercy of politicians. Subsidies could also breach WTO rules. Perhaps the best way forward would be a two-pronged approach. On one hand, we could work to promote higher standards in third countries. The EU is already talking of offering preferential trade terms to third countries which apply higher standards. And instead of the massive folly of the Kyoto programme, we could instead consider targeted help to third countries to improve standards -- perhaps helping China with clean-coal technology, for example. Alongside that, we should certainly lead by raising standards at home. But -- and it's a vital "BUT" -- we should do so in easy steps, both to ease the way for our own industries, and to avoid opening up a gap that destroys EU competitiveness. This is an approach which will earn fewer headlines, and require more hard work, but it might actually deliver, without destroying jobs and competitiveness at home. Will the EU try this alternative route? I doubt it.