Abolishing Ag Export Subsidies “Just a First Step”

Rockhampton-based Senator Matt Canavan has welcomed international agreement to abolish agriculture export subsidies – but warned more work is needed.

"Global trade in agriculture is the most distorted sector in world trade,” Senator Canavan said today. “These distortions in world agriculture and food markets mean that Australian farmers, as well as those in many developing countries, are unfairly disadvantaged.

“Abolishing agricultural export subsidies is just a welcome first step.

“Export subsidies are being phased out already across the world but far larger distortions in international commodity prices are caused by direct subsidies to producers, particularly in the US and Europe.

“These tend to increase supply and force down prices on world markets. They can be just as distorting as trade subsidies and hurt Australian producers by ultimately reducing farm gate returns.

“The announcement overnight from the World Trade Organization (WTO) Ministerial Conference in Kenya that the 163 WTO members have agreed to abolish all agriculture export subsidies is historic and will end more than $15 billion of agriculture subsidies.”

However, Senator Canavan said global trade in agriculture remains the most distorted sector in world trade.

“Australia has reduced its own tariff levels and other trade distorting protections on agricultural and food products. Our simple average applied tariff on agriculture is 1.2 per cent of revenue. Australia is recognised internationally as one of the world’s most efficient agricultural producers.

“Globally, the average tariff on agriculture and food applied by other countries is 17 per cent.

“A study conducted ahead of the Doha round of trade talks in 2001 found that the full liberalisation of global merchandise trade could increase world income by $287 billion – and $182 billion, or a full 62 per cent, of these gains were from increased trade of agriculture and food.

“The WTO decision is welcome but a lot of work remains to be done. I believe the best way to do it is to continue focusing on discreet areas of trade reform, rather than an all-encompassing grand deal. Abolition of export subsidies by WTO shows it can be done.”

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