January 27, 2005

 

 

Australia trade ministry to protest EU wheat export subsidies

 

Opposition in Australia is growing towards a European Union plan to reinstate wheat export subsidies, concerns raised both among the nation's government and grain-growers.

 

Australian Trade Minister Mark Vaile said Thursday he will register Australia's concern with E.U. Trade Commissioner Peter Mandelson at the World Economic Forum in Davos later this week.

 

The E.U. plan to reinstate export subsidies goes against a commitment made in July in the Doha Round of global trade talks, Vaile said in a statement.

 

The E.U. cereals management committee decided last week to open a tender for 2 million metric tons of wheat that will be eligible for export subsidies.

 

The subsidy will make E.U. wheat more competitive in world markets and help clear a backlog from a large 2004 harvest.

 

A poor U.S. dollar/euro exchange rate has hampered E.U. wheat exports since the harvest, a E.U. spokesman said last week in explaining the move to reintroduce what he said was a market management tool.

 

However, Vaile said the E.U. plan isn't in the spirit of the Doha Round, which is all about trade liberalization.

 

"A credible outcome on agriculture, which is in line with the ambitious mandate in Doha, is central to completing the round," he added.

 

Wednesday, grower lobby Grains Council of Australia chief operating officer David Ginns said the E.U. plan to reinstate wheat export subsidies was "a kick in the guts" for Australian growers.

 

The E.U. move will have potentially damaging consequences for Australian cereal producers, and could put further downward pressure on prices, which are already low, reflecting plentiful global supplies, he said.

 

Ginns said the E.U. export subsidies will be the first since June 2003 and could signal a return to the "bad old days" in the 1990s when the E.U. and U.S. both offered export subsidies to the detriment of growers elsewhere.

 

He added that moves to restore export subsidies are raising doubts about the E.U.'s commitment towards fair trade and its apparent desire to regulate massive programs that corrupt the domestic and international markets.