Office of Hon Jim Sutton (and Damien O'Connor)

New Zealand welcomes Cairns Group proposal

New Zealand backed a Cairns Group proposal to eliminate export subsidies, Trade Negotiations and Agriculture Minister Jim Sutton said today.

Mr Sutton welcomed the tabling of the Cairns Group’s export subsidy proposal in Geneva yesterday.

“The elimination of all export subsidies is a must for New Zealand in the agricultural negotiations. These subsidies directly hurt our farmers by undermining their competitive position and driving down international prices.

“It’s a travesty that European Union exporters receive a government cheque for more than US$1800 for every tonne of butter they sell on the world market. That’s in addition to the world price. Our own exporters receive only the world price of around US$1300 per tonne. The EU also subsidises the export of beef and many other products.

“And while the EU is the largest user of export subsidies it is not the only offender. Last Friday the US announced it was to put an additional 25,000 tonnes of subsidised skim milk powder onto the world market in direct competition with our own unsubsidised product. Between the EU and US almost US$ 4 billion is spent on export subsidies every year on beef and dairy products alone”, he said.

The Cairns Group proposal calls for: - the elimination of export subsidies in 3 years for developed countries and 6 years for developing countries; - the establishment of rules to ensure that subsidised export credits are prohibited; and - the establishment of rules to ensure food aid cannot be used as a means to circumvent export subsidy disciplines, while not affecting genuine food aid transactions.

The export subsidy proposal complements two earlier Cairns Group proposals presented to the agricultural negotiating group at the WTO - those on market access and domestic support.

By March 2003 WTO Members must establish so-called “modalities” or formulae for reducing tariffs and domestic subsidies - and the period over which export subsidies will be eliminated.

Mr Sutton said the elimination of export subsidies was also critical for developing countries.

“Domestic productive capacity in some developing countries has been devastated by developed country surpluses being dumped in their markets. That is why not only the majority of WTO Members, but also organisations such as Oxfam, are calling for export subsidies to be eliminated.

“Given New Zealand’s share of international markets for a number of products we are a major player in the agriculture negotiations. As well as being part of the Cairns Group export subsidy proposal we have also submitted a technical paper aimed at strengthening rules on domestic subsidies in Geneva this week”.

New Zealand backed a Cairns Group proposal to eliminate export subsidies, Trade Negotiations and Agriculture Minister Jim Sutton said today.

Mr Sutton welcomed the tabling of the Cairns Group’s export subsidy proposal in Geneva yesterday.

“The elimination of all export subsidies is a must for New Zealand in the agricultural negotiations. These subsidies directly hurt our farmers by undermining their competitive position and driving down international prices.

“It’s a travesty that European Union exporters receive a government cheque for more than US$1800 for every tonne of butter they sell on the world market. That’s in addition to the world price. Our own exporters receive only the world price of around US$1300 per tonne. The EU also subsidises the export of beef and many other products.

“And while the EU is the largest user of export subsidies it is not the only offender. Last Friday the US announced it was to put an additional 25,000 tonnes of subsidised skim milk powder onto the world market in direct competition with our own unsubsidised product. Between the EU and US almost US$ 4 billion is spent on export subsidies every year on beef and dairy products alone”, he said.

The Cairns Group proposal calls for: - the elimination of export subsidies in 3 years for developed countries and 6 years for developing countries; - the establishment of rules to ensure that subsidised export credits are prohibited; and - the establishment of rules to ensure food aid cannot be used as a means to circumvent export subsidy disciplines, while not affecting genuine food aid transactions.

The export subsidy proposal complements two earlier Cairns Group proposals presented to the agricultural negotiating group at the WTO - those on market access and domestic support.

By March 2003 WTO Members must establish so-called “modalities” or formulae for reducing tariffs and domestic subsidies - and the period over which export subsidies will be eliminated.

Mr Sutton said the elimination of export subsidies was also critical for developing countries.

“Domestic productive capacity in some developing countries has been devastated by developed country surpluses being dumped in their markets. That is why not only the majority of WTO Members, but also organisations such as Oxfam, are calling for export subsidies to be eliminated.

“Given New Zealand’s share of international markets for a number of products we are a major player in the agriculture negotiations. As well as being part of the Cairns Group export subsidy proposal we have also submitted a technical paper aimed at strengthening rules on domestic subsidies in Geneva this week”.

ENDS

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