Common Agricultural Policy (Hansard, 16 March 2004)

§ Hilary Benn

The Government acknowledge the damaging impact that export subsidies have on the poor in developing countries by depressing world market prices and distorting trade. Evidence suggests that with elimination of all agricultural export subsidies from the expected levels in 2005, it is estimated that annual global incomes would be US$3.6 billion a year higher by 2010, than if expected levels of export subsidies persisted and there were no further reforms.

It is for this reason we have pressed for reductions in the use of export subsidies in Europe. We fully support the commitment made at the Doha ministerial meeting in 2001, which agreed that agriculture negotiations would aim to achieve: substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support.

However, export subsidies cannot be tackled in isolation, as they are a consequence of high internal support prices and restricted access to the EU market for developing country exporters. While the Common Agricultural Policy reforms agreed in June last year don't deal explicitly with export subsidies, they will result in the de-linking of domestic support from production and this is expected to lead to real changes in output, by gradually reducing the incentives for EU farmers to over-produce. This in turn will reduce the need to dispose of surpluses onto the world market through the use of export subsidies. The reforms that have been made to the CAP mean that the EU is now able to reduce its export subsidies to about 25 per cent. of the level that was paid 10 years ago.