Back to Subsidies: US Decision Criticised by Cairns

GLOBE - The Cairns Group has said that it is extremely disappointed by the recent US decision to reintroduce dairy export subsidies, calling it a "backwards step."

28 May 2009

2 minute read

This decision by the US follows that of the EU to reintroduce export refunds for a number of agricultural products, which the Cairns Group similarly condemned in a statement published 27 January 2009. "Regrettably, the US has not heeded our call for economies to resist domestic pressures to retaliate with their own export subsidies," says Cairns.

"The US and the EU must show better leadership, particularly during this time of global financial and economic crises. Both the US and the EU have argued that they will not exceed their WTO commitment levels on export subsidies. But this is not the point. If other economies follow the example set by the US and the EU and raise tariffs, domestic support and export subsidies towards their maximum WTO commitment levels, it would undermine the effectiveness and credibility of the WTO system.

"Subsidy wars only drive prices even lower, thereby delaying economic recovery further. They punish those trying to compete without the help of subsidies, and particularly damage unsubsidised farmers in developing countries, jeopardising their agricultural production, food security and their most competitive export sectors.

"We therefore call on the US and the EU to review their decisions with a view to withdrawing these export subsidies within the shortest timeframe. Both need to specify a clear and early date for the removal of these subsidies in order to help restore confidence in agricultural markets. In the meantime, we call on the US and the EU to exercise the utmost restraint in the use of these export subsidies and to avoid markets where they will have the biggest impact on unsubsidised producers.

"The US and EU decisions also underscore the importance of securing a balanced and ambitious conclusion to the Doha Round as soon as possible. WTO Members have already agreed – as a result of strong pressure from the Cairns Group and others pushing for the real reform of international agriculture – to completely eliminate export subsidies by 2013 as part of an overall trade deal."

Cairns Group Ministers are meeting in Bali in June to explore how to advance the agriculture Doha Round negotiations. They will also use this meeting to address the issue of export subsidies and to reinforce the importance of not resorting to trade protectionist measures at this difficult time for the global economy.