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The trade component of the CDI penalises countries for erecting barriers to imports of crops, clothing, and other goods from poor nations. It looks at two kinds of barriers: tariffs (taxes) on imports, and subsidies for domestic farmers, which stimulate overproduction and depress world prices. Such barriers deny people in poor countries jobs and income. The component also evaluates rich countries' share of imports from developing countries in order to account for unmeasured (tacit) barriers.
Europe's Trade Policies
Europe’s top performer on Trade
Low agricultural subsidies (estimated to deter agricultural imports as much as a 6.8% uniform ad valorem tariff would)
Europe’s lowest performers on Trade
High tariffs on agricultural products (equivalent to a tariff of 86.3 % of the value of imports)
High tariffs on textiles (34.1% of the value of imports, ranks at the bottom of the CDI on this indicator)
Highest agricultural subsidies (equivalent to a tariff of 17.2% of the value of imports) of the CDI countries
High agricultural subsidies (equivalent to a tariff worth 15.1% of the value of imports)
Because most trade policy is a community competence, all EU member states have the same tariff rates (18.9% for agricultural products and 4.1% for other goods), but their subsidy levels vary widely. Our analysis will explore these differences and provide suggestions for how European countries can transform their trade policies in order to make them more development-friendly.