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EU Trade Reform

Greetings Readers

The proposed EU reforms of the Common Agricultural Policy have been greeted by Fonterra with some support. (see News briefs)

Fonterra claims that the reforms, while having the potential to reduce New Zealand's earnings, were positive as they attempt to eliminate trade distorting support for European farmers.

It is disturbing to see the reassuring, but perhaps questionable, stance taken by Fonterra being vigorously rejected by the American Farm Bureau. Ironically both organisations quote the same 'three pillars' of agricultural trade" reform, eliminating export subsidies, reducing domestic subsidies and improving market access as their objective.

Could Fonterra be reading the EU reforms wrong? Is NZ going soft on its advocacy for trade reform?

One thing that appears clear is that the proposed EU reforms do not necessarily reduce the total subsidies paid but do change the form of the subsidy payment from indirect to a more direct payment to farmers.

It would be a disaster if the EU reform implemented is only a perverse type of reverse internal subsidy transfer that changes nothing in the market place in terms of the three pillars of international trade reform.

Does the Minister of Trade also agree that “in the big trade picture, the proposals were not negative” or does he like many others recognise that the EU is showing a continuing aversion to real reform.

Don’t bet the farm on a quick and positive outcome form the current trade reform proposal.

Good Farming

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