Export subsidies: there they go again

Demonstrating, once again, its cynical regard for the letter of its obligations, the EC Commission has decided to reinstate dairy export subsidies that are primed to lock-in the low world dairy prices that are allegedly their rationale.

"The European Commission has announced plans to artificially boost prices by buying up 139,000 tonnes of diary products at a cost to the public purse of £237 million. From March 1 until the end of August, the EU will become the owner of 30,000 tonnes of butter and 109,000 tonnes of skimmed powder milk, paid for at above market cost to support the dairy industry. The EU is has also agreed to begin new export subsidies for European butter, milk powder and butteroil." extract from UK Telegraph

The Community will offer €200 subsidies on skim-milk powder, for example, when world prices are about €1300 (a 15% subsidy!). So much for the undertaking that the EC Members gave at the November, 2008, meeting of the G-20 in Washington, called to organize government response to the financial crisis and the impending recession. The EC action is narrowly within the scope of that watery promise, of course:

"We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. In this regard, within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures to stimulate exports." extract from the G-20 Declaration

Unfortunately, this sort of @#%#-you policy from the world's wealthiest states is the reason that international cooperation has to be backed by agreements with meaningful, reciprocal enforcement. It justifies continuing skepticism about the EC's tactics of overloading WTO trade liberalization 'modalities' with rococo complications designed to permit the Commission to exercise full policy autonomy under the guise of cooperation.

Tags for this entry: trade wto agriculture subsidies ec dairy