MercoPress. South Atlantic News Agency

US reintroduction of dairy export subsidies trigger barrage of criticisms

Farm protectionism at the heart of “sour milk” meeting at WTO

Twenty-nine countries at the World Trade Organization criticized the United States on Wednesday for reintroducing export subsidies on US dairy products, calling the handouts a dangerous retreat into protectionism and warning of “subsidy wars.”

Brazil, speaking on behalf of 23 developing countries, told a WTO meeting that Washington was promoting a “murky protectionism” that weakens the global trading system at a time when global commerce is already shrinking at a record pace.

Australia, on behalf of agricultural exporting countries, said the announcement Saturday by US Agriculture Secretary Tom Vilsack of subsidies for 91.000 tonnes of mainly powdered milk, butter and cheese was unfair to countries trading fairly, and potentially damaging to global economy's recovery.

The subsidy decision under the US Dairy Export Incentive Program follows a similar move by the European Union in January.

“Subsidy wars only drive prices even lower, thereby delaying economic recovery further,” said Peter Grey, Australia's WTO ambassador. “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.

Vilsack said over the weekend that President Barack Obama's administration ”remains strongly committed“ to the pledge by the leaders of the Group of 20 major economies last month ”to refrain from protectionist measures.“ He said U.S. subsidies were ”fully consistent with our WTO commitments.“

”This is not the point,“ retorted Grey. ”If other economies follow the example set by the US and the EU and raise tariffs, domestic support and export subsidies toward their maximum WTO commitment levels, it would undermine the effectiveness and credibility of the WTO system.“

Brazil's WTO envoy Roberto Azevedo said avoiding protectionism was not only about keeping tariff levels where they are and continuing access for imports.

Protectionism ”includes any form of government intervention, such as subsidies, which artificially tilts the field in favour of domestic enterprises, to the detriment of competitors abroad,“ Azevedo said, speaking for a group of 23 developing countries that includes China, India and South Africa.

”In this case, the unsubsidized farmers in the developing world will also be negatively affected.”