Washington, DC
January 28, 2005
The European Union resumed its use of export subsidies on wheat
this week. While the level of subsidy has not been announced,
one source indicates that traders have been invited to tender
between February 3 and June 23 for up to 2 million metric tons
of wheat that would be eligible for export restitution.
Justification for using export
subsidies centered on two main points – cheaper prices on wheat
shipped to North Africa from Argentina and the former Soviet
Union countries, and the need to avoid accumulating intervention
stocks in Europe. The UK Home Grown Cereals Authority claimed
that competing wheat offers to North Africa were undercutting
European offers by $10-$15 per MT.
Europe’s decision was immediately
challenged by wheat interests in Australia and the United
States. World Grain News quoted Australian Trade
Minister Mark Vaile: “This move goes against the commitment made
by the E.U. during the July Doha Round last year as part of a
comprehensive package to eliminate export subsidies. This is
not in the 'spirit' of Doha, which is all about trade
liberalization.”
U.S. Wheat Associates also criticized the move. “Once
again, the EU is adjusting to their supply-demand imbalance by
shifting the burden to the rest of the world,” said USW
President Alan Tracy. “Their actions highlight the need for a
successful Doha Round to end the use of export subsidies in
worldwide agricultural trade.” USW Market Analyst Ann
Courtmanche pointed out that Europe already enjoys a logistical
advantage in accessing North African markets due to close
proximity, so the EU should not need to use export subsidies to
compete in that market. |
