Cairns Group rips U.S. dairy export supports

Canada and the other 18 countries in the Cairns Group of agricultural exporters warn Washington’s plans to subsidize U.S. dairy exports will undermine other dairy-producing nations’ economic recoveries.

In a release Wednesday, the Cairns Group described U.S. Agriculture Secretary Tom Vilsack’s recently-announced allocations under Washington’s Dairy Export Incentive Program as a “backwards step.”

“This unfortunate decision by the U.S. follows that of the (European Union) to reintroduce export refunds for a number of agricultural products,” which the Cairns countries also condemned in a late January statement.

“Regrettably, the U.S. has not heeded our call for economies to resist domestic pressures to retaliate with their own export subsidies.”

Both the U.S. and EU say they won’t exceed their World Trade Organization (WTO) commitment levels on export subsidies, “but this is not the point,” the Cairns Group said in its statement Wednesday.

“If other economies follow the example set by the U.S. 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 unsubsidized farmers in developing countries, jeopardizing their agricultural production, food security and their most competitive export sectors.”

The Cairns countries urged both the U.S. and EU to “specify a clear and early date for the removal of these subsidies in order to help restore confidence in agricultural markets” and, in the meantime, to “exercise the utmost restraint in the use of these export subsidies and to avoid markets where they will have the biggest impact on unsubsidized producers.”

The Cairns Group countries account for over 25 per cent of the world’s agricultural exports and collectively press for the liberalization of trade in agricultural exports.

Members other than Canada include Brazil, Argentina, Australia, New Zealand, Indonesia, Pakistan, Bolivia, Peru, Chile, Colombia, Costa Rica, Guatemala, Malaysia, Uruguay, Paraguay, the Philippines, South Africa and Thailand.

“Every attempt”

The U.S. Department of Agriculture last Friday rolled out the allocations in question for July 2008 through June 2009 under its Dairy Export Incentive Program.

USDA described the program in a release as helping U.S. dairy exporters “meet prevailing world prices” and encourage the development of export markets where they’re otherwise not competitive against other countries’ subsidized dairy goods.

USDA’s program allocations include 68,201 tonnes of nonfat dry milk, 21,097 tonnes of butterfat, 3,030 tonnes of “various cheeses” and 34 tonnes of “other” dairy products, as well as “individual product and country allocations” to be made available through invitations for offers.

“These allocations illustrate our continued support for the U.S. dairy industry, which has seen its international market shares erode, in part, due to the reintroduction of direct export subsidies by the European Union earlier this year,” Vilsack said last Friday.

“The Obama administration remains strongly committed to the pledge by the leaders of the Group of Twenty (G-20) to refrain from protectionist measures,” he said. “Our measured response is fully consistent with our WTO commitments and we will make every attempt to minimize the impact on non-subsidizing foreign suppliers.”

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