Cairns Group calls for end to trade-distorting domestic subsidies

World Trade Organisation members should "just say no" to distorting farm subsidies, Trade Negotiations Minister Jim Sutton said today.

Mr Sutton welcomed the ambitious proposal tabled by New Zealand and other Cairns Group colleagues in the WTO negotiations on agriculture during the weekend.

The Cairns Group has proposed that trade- and production-distorting support (the so-called "amber box" and "blue box") be reduced to zero over a five-year timeframe, with a fifty percent cut in the first year.

"Trade-distorting and production-distorting domestic support is the root cause of the problems in the world agricultural trading system. The Cairns Group proposal provides an excellent template for dealing with massive levels of government spending in the agriculture sector.

At present, the biggest users of amber and blue box policies are the developed economies. The European Union is entitled to provide over US$60 billion annually in trade-distorting support, while the US limit is US$19 billion and Japan's is over US$30 billion.

Mr Sutton said that in effect, the Uruguay Round Agriculture Agreement let rich countries off the hook.

"Farmers in those countries have the full force of their national treasuries behind them, while others ? like New Zealand ? are unsubsidised," he said.

"WTO Ministers agreed at Doha that we should negotiate substantial reductions in domestic support, consistent with our long-term objective of a more open and market-oriented trading system.

"That will benefit all members, especially developing countries. And for New Zealand farmers, the Cairns Group proposal would let them compete on a more equitable basis."

The Group has also proposed measures to ensure the integrity of the "green box" of non-trade distorting support, while still providing scope for members to meet their legitimate non-trade concerns such as the protection of the environment and rural development in developing countries.

The proposal on domestic support follows the earlier Cairns Group proposal on market access.

© Scoop Media