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Change of heart on agricultural export subsidies?

Posted by Charlotte Hebebrand on November 27th, 2007

We have two comments on the news that the European Commission is conceding to demands for increased EU export subsidies for pig meat as a result of decreasing competitiveness due in part to higher feed costs.

  1. Although EU officials have indicated that export subsidies have no place in the future Common Agricultural Policy regardless of the outcome of the Doha Round, this latest development clearly demonstrates that such principles can rather quickly fall by the wayside in face of political pressure.  Cementing unilateral reforms with WTO commitments is therefore crucial to avoid such developments.  The Doha Round, if concluded, will importantly forbid export subsidies in agriculture – long considered to be the most trade distorting government support – by 2013.
  2. Export subsidies for pork do nothing to address the underlying problems of sharply increased feed prices.  Dropping tariffs on cereals, as the Commission is also proposing, is a more direct instrument that will not cause international market distortions but rather serve to facilitate trade.  Commissioner Fischer Boel will hopefully also reiterate to EU member state representatives that the slow and uneven authorization process for genetically modified food and feed may well lead to supply disruptions and even greater price increases of feed, as her staff warned in a recent report.

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