Media release

Australian Minister for Trade, Mark Vaile

26 September 2000

Cairns Group calls for end to trade-distorting domestic subsidies

Trade Minister, Mark Vaile, has welcomed a Cairns Group negotiating proposal submitted in Geneva calling for an end to unfair domestic subsidies by a handful of rich OECD countries.

The proposal will be discussed at the next session of WTO agriculture negotiations in Geneva on 28-29 September. It will also be a key area of discussion at the Cairns Group Ministerial meeting in Banff, Canada, from 10-12 October.

"There is an urgent need for stronger trade rules on subsidies to discourage over-production and allow efficient exporters to get better access to international markets at a reasonable price," Mr Vaile said.

"The Cairns Group proposal includes concrete steps to rectify the situation including a 50% initial reduction in trade and production-distorting domestic support by WTO members in the first year of implementation. Domestic subsidies for agriculture are far in excess of those for other industries. It is high time that agriculture was put on the same basis as those industries."

Mr Vaile said the Cairns Group was greatly concerned that government support to farmers in large OECD countries had returned to crisis levels of the mid-1980s. This totalled a massive, US$360 billion in 1999, most of which was provided by the EU, Japan and the United States.

''As things stand, the EU can spend up to US$55 billion a year on trade-distorting agricultural production subsidies. Japan can provide US$36 billion and the United States US$19billion. On top of this, the EU and United States are spending huge amounts of money on other subsidies that are not subject to WTO reduction commitments and which also impact heavily on international agricultural markets.

"Not only do these subsidies severely damage efficient producers like Australia but they undercut efforts by developing countries to improve the living standards of their people. They encourage inefficient production, depress prices, reduce market access and destabilise international markets."

Mr Vaile said that this latest Cairns Group negotiating proposal built on the proposal submitted in June calling for the elimination of export subsidies. Together they set a benchmark for other countries to match.

"Australia and the Cairns Group will continue to take a leading role in the push for reform of world agricultural trade", he said.

Contact: Bruce Mills 0418 273 475

Local Date: Friday, 21-Nov-2008 05:49:15 EST