The Cairns Group is deeply concerned by the recent decision by the EU to reintroduce export refunds for a number of agricultural products. Export subsidies are a seriously damaging form of trade-distorting support measures and the Cairns Group has campaigned relentlessly for their elimination, including in the context of the Doha Round of trade negotiations. The Cairns Group recalls the agreement by WTO Ministers made in Hong Kong in 2005 that these subsidies should be eliminated entirely by 2013, a commitment which has been reflected in all subsequent versions of the negotiating text.
The Cairns Group believes that this decision by the EU sends an extremely negative signal at a time when it is important to resist pressures for increased support and protection in the wake of the global financial and economic crisis. We call on the EU to reverse its decision to re-introduce export subsidies. We also urge countries to resist domestic pressures to retaliate with their own export subsidies.
Increasing trade distorting measures and protectionism in a time of a crisis carries a very high price. The reintroduction of export subsidies at this time, such as the subsidies re-introduced for dairy products recently, is likely to drive international prices down to artificially low levels and, at the very least, prolong the current downturn. This is a dangerous action, given the risk that it could encourage further trade-distorting responses which need to be avoided. Moreover, by resorting to export subsidies again, as it did last year for pork and did previously for wheat, the EU continues to shield its producers from market forces, at the expense of unsubsidised producers in other markets. It is of particular concern that farmers in many developing countries, which cannot afford to engage in subsidy wars, stand to suffer most from increased distortions in world agricultural markets. This is not the leadership we require from key economies at this point in time.
The EU’s decision underscores the importance of concluding the Doha Round as soon as possible. The Cairns Group stands ready to quickly and constructively re-engage in negotiations in order to secure modalities which fully meet the Doha mandate and advance our objective for a fair and market oriented agricultural trading system.