EU subsidies a threat to Aussie dairy: Opposition

Posted by Daniel Palmer on 30th January 2009

Warren Truss, the Leader of The Nationals and Shadow Trade Minister, has called on Trade Minister Simon Crean to step in amid claims the threat of a full-blown trade war between the European Union and the United States over dairy exports could negatively impact the dairy sector in Australia.

“The likely subsidy war over dairy could devastate Australian exports and begin an outbreak of widespread trade protectionism in response to global economic turmoil,” Mr Truss said. “The G20 nations which met last year made clear that the erection of new trade barriers will only worsen the world’s financial plight, as we saw during the Great Depression.”

Last week, the EU reintroduced subsidies on dairy exports in a move seen by some as a step toward protectionism. Prices for dairy products have slumped from the highs seen in 2007-08, with the EU offering subsidies of up to 50 per cent on its milk powder, butter and cheese exports.

“The EU’s move will kill off any hopes of a recovery in world dairy prices, locking in unsustainably low prices for its own farmers and everyone else,” Mr Truss claimed. “In Australia, our dairy farmers have had the rungs pulled out from beneath them. They cannot hope to compete at what effectively will be a capped price far lower than today’s market price. The damage to our exports will be profound, at a time when we can hardly afford to lose more markets.”

“If the subsidies become entrenched Australia should seek relief and compensation for our loss of exports through the WTO disputes process,” Mr Truss concluded. “The importance of this issue cannot be over-estimated. We will all be worse off if EU dairy subsidies are allowed to snowball into a full-on trade war.”

Mr Crean told ABC radio yesterday that he was concerned by the developments in the EU and hoped the World Economic Forum in Davos would help push home the need for an opening up of global markets.

“Yes, well that’s a very worrying development and of course, if Doha were [indistinct], export subsidies would be outlawed, and that’s another reason why it’s so important to get this (trade liberalisation). [The EU] just wouldn’t be able to do it, the disciplines of the world trade organisation system would prevent it,” he said. “The truth of it is that the path forward has got to be built around opening up markets.”