EU is giving itself permission to set price floors according to EU Trade Comissioner Peter Mandelson. Norway recently complained to World Trade Organization that EU had imposed a minimum price on Norwegian farm-raised salmon.
According to EU, Norway was dumping salmon on the EU market by selling it below market price. WTO gave Norway the victory in this case, but EU claims that WTO did not say they had violated WTO agreements by using minimum prices and will continue the practice while they are implementing the other decisions made by WTO in the decisions.
This makes no sense to me — who is the EU protecting by setting price floors? I thought market price was the price someone was willing to sell and buy the item for, at which point selling below market price is just a new market price.
What the EU is actually trying to say is that they don’t like that producers are selling below cost. But unregulated markets trend towards no profit at any given time. It should not be abnormal that it bops below once in while. The whole point of the EU was to create a free market where products, people, and capital could move freely. So far I have seen protectionism, market regulation down to a ridiculous level, and now also price regulation. This looks less pretty every dayâ€¦