The Dairy Companies Association of New Zealand (DCANZ) has welcomed the news that WTO Trade Ministers have agreed to end the use of export subsidies.
“This is a great achievement, something successive governments and generations of New Zealand trade negotiators have fought long and hard to achieve, and a great way for Minister McClay to kick off his new role” said DCANZ Chairman, Malcolm Bailey.
Export subsidies have been one of the New Zealand’s dairy industries most feared trade distortions, and a key priority for DCANZ in the Doha WTO negotiations. They are a mechanism to maintain price levels for farmers in highly protected and subsidised markets but have the effect of supressing world market prices at significant harm to non-subsidised producers and exporters from New Zealand and other geographies.
The WTO Trade Ministers have set 2020 as an end date for export subsidy use by developed countries and 2022/3 as the end date for key developing countries.
“The elimination dates cannot come soon enough” says Bailey. “When the EU stopped their regular use of dairy export subsidies, we saw a step change in long-term dairy market returns. They are literally something that can knock a dollar off pay-out overnight. It will be a relief to have this threat to New Zealand dairy incomes completely removed”.
DCANZ acknowledges the long-term leadership role that New Zealand officials have taken in WTO Doha Round agricultural negotiations. The current Chairman of the agriculture negotiations, Ambassador Vangelis Vatalis, is the 5th New Zealand Ambassador to Geneva to Chair these negotiations.
“As an industry which is 95% export orientated, we know better than most the importance of the WTO trade rules framework” said Bailey. “Developments like today’s are a good return on the investment that New Zealand Governments have made in agri-trade policy capability.”
DCANZ hopes the outcomes from the Nairobi meeting will provide renewed momentum in tackling the hard issues WTO members face in liberalising agricultural markets. “This is a great step forward, and we need more like it in other areas, such as domestic supports, to address other distortions. For example, dairy markets, and New Zealand dairy producers, are currently feeling the negative effects of subsidies masking price signals for dairy producers in Europe” said Bailey
“We congratulate the New Zealand Government and New Zealand trade officials on today’s achievement, and look forward to continuing to work with them towards further improvements in WTO frameworks, and ensuring trade rules are fully reflected into our trading environment” said Bailey.