Dairy industry 'risks destruction' in new trade deal
Britain’s dairy industry sounded the alarm today over massive proposed subsidy cuts as part of a new world trade deal.
Dairy UK boss Jim Begg said the European Union must prevent plans for a swift end to export subsidies – or risk destroying the sector’s economic future.
Dairy UK represents processors and distributors of liquid milk and dairy products, as well as milk producer co-operatives and dairy farmers.
It says it accepts a gradual end to subsidies as part of efforts to open up world trade.
But some trade blocs belonging to the Global Dairy Alliance – including the dairy industries in Australia, New Zealand and South America – raised the stakes last week in a way which Dairy UK says could “seriously damage” the European industry.
Mr Begg, Dairy UK’s director general, said a rapid phasing out of export subsidies would require deep cuts, either in EU prices or in production quotas:
“The EU would be forced off the world market at a rate that the Global Dairy Alliance members probably couldn’t make up for. Consumers around the world who have come to rely on EU dairy exports would lose out in the resulting shortage.”
Mr Begg said adapting to life without export subsidies required flexibility: “There is no doubt the EU will meet its commitment to eliminate export subsidies if a world trade agreement is reached.
“But when we signed up to the idea this wasn’t an offer to threaten the viability of our industry, which is what a sudden loss of export subsidies would mean.”
He added: “The EU must resist these proposals. The dairy industry has made a meaningful contribution to the process of multi-lateral trade liberalisation by accepting the end of export subsidies, but there should be no expectation that we would want to destroy productive capacity in the process.
“We genuinely want to see a successful outcome to the Doha Round (of world trade talks). Extravagant proposals will not take us to that goal.”
The EU exports 9% of its milk volume with the assistance of export refunds. The latest proposal would require the member states to slash the refunds by 80% by 2010.
