TCS Daily

No More Norwegian Salmon

By Tomasz Teluk - May 15, 2003 12:00 AM

EU membership can spoil markets. Consider the conflict between the European Commission and Poland over tariffs on products from non-EU European countries - a spat that has resulted in threats from Brussels.

During the preparation of last Saturday's dinner I said to my wife: "This is probably the last year we will be able to eat such cheap and tasty Norwegian salmon." My spouse looked at the fried fish, bought for €2 a kilo, with nostalgia. After Poland joins the EU, the government will be forced to introduce high tariffs on products from European Free Trade Association (EFTA) countries - Norway, Iceland, Switzerland and Liechtenstein. Consumers will have to make do with salty Baltic herring like in past communist times.

Nervous Negotiations

Warsaw has blocked the negotiations again. The Polish government did not agree to immediate restrictions on the importation of fish from Norway and other EFTA countries. The Commission reacted nervously. Eneko Landaburu, the EU executive body's top enlargement staffer, said the protective clauses should be introduced in November. Landaburu, one of the most important EU officials, has said a delay will make it difficult for Poland to participate in the Single Market.

The Commission seeks agreement in bilateral talks. Pressure applied by the EU has been strong, but Poland has refused to accept half of €230 million being paid per year by EFTA countries, according to the Norwegian newspaper, Nationen. Norway will pay 97 percent of the money. Instead of low customs tariffs, the deal offers quotas on the selling of fish. The Polish government said it would agree neither to the number of fish quotas nor to the way the deal would be managed.

Poland stands to lose 25,000 jobs after the agreement takes effect. True, the fishing industry is not a major job market considering that Poland has a total population of 38 million. Local companies export almost 150,000 tons of fish for $250 million and import more than 280,000 tons for $370 million. But only one-quarter of the firms comply with European standards. Many enterprises will collapse when these regulations come into effect.

The abolition of the 20 percent European entrance duty will be good for the market, as will reduced tariffs on fish from China and Russia. Diversity will strengthen competition. But protecting the market from EFTA products will be a problem. Prices on some products have already risen more than 100 percent.

Help Us Government!

According to recent polls, a vast majority of Poles are in favor of the welfare state. That is the real tragedy for the entrepreneurial spirit. More than 80 percent of citizens judge that the government should guarantee a high level of all welfare benefits, such as education and healthcare. Some 68 percent want to limit the earnings of the best paid managers. Sociologists from Warsaw University called it "salary's egalitarianism"!

Similar attitudes are evident in the fish conflict. The fish traders' lobby does not want EU or EFTA taxes. Their clients do not want to pay for expensive goods. But some of the companies have asked the government to put special tariffs on fish from Russia and China. Politicians in power are against the agreement. They want to preserve the local market. But Polish fishermen are against Warsaw's negotiators because salmon and herring from Norway are cheaper. Fishermen, organized in the Fishery Crisis Committee, have written to EU Agriculture and Fisheries Commissioner Franz Fischler and called on him to...oppose the Polish proposition.

Polish fishermen are against the consumer. They forget that if they do not modernize their fishing boats and refrigerators, and improve their sales network, we will eat German herring and Scottish salmon.

This Fish Stinks

Poland has a tough time absorbing EU money. The Supreme Chamber of Control counted that only 0.15 percent (€856,000) of the total allocation of €575 million was transferred to investors from 2000 to mid-2002. Funds were not available because of administrative reasons and bureaucracy. If this waste continues it is clear that Poland will pay more to the EU budget than it gets back. That will be the new Eurotax for Polish citizens.

The saddest thing is that Poles are not able to count on themselves and they blame capitalism for all their troubles. A year ago the public was shocked to learn about the practice of trading dead bodies by a government-owned ambulance service. Ambulance workers and doctors sold information about the dead patient to funeral homes. Some of them even accelerated the death of aged people. Why? Because funeral services obtain benefits from the government-managed social security for each death certificate.

Commentators concluded: "Free market results in such brutality." This certainly is not true. In a private company this would never have happened. If it did, the company would lose the confidence of its clients. No free market results in pathology and corruption. In this case some consumers lost their family members. Ambulance workers and doctors are badly paid and they are corrupt. Now some patients prefer to remain in their homes rather than call the ambulance.

Poles are too state-oriented. This fish stinks. They treat the European Union as the good uncle who distributes money for free. But in the future, Poles will need to trust more in entrepreneurship and the market. If not, they can only expect big disappointment. For free.

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