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Farmers Weekly Interactive, a U.K.-based online news and data service, reported early this week that the European Union is introducing export refunds for the first time in three and a half years, which should help to reduce surplus pigmeat.

FWI reported that this would be in addition to a recently introduced private storage scheme, which has also stabilized prices to some extent. However, "the export refunds are likely to be attacked by Third World countries and could frustrate the ongoing World Trade Organization talks," FWI said.

The National Pork Producers Council, which represents U.S. pork producers on industry and public policy issues, opposes the possible return of subsidies on E.U. pork exports.

Kara Flynn, NPPC spokeswoman, said the organization is aware of the possibility of a return of an export subsidy for E.U. and the NPPC doesn't like it. However, Flynn added that the subsidy is legal under the WTO.

Josh Snead, international trade research specialist with NPPC, said the E.U. uses over 90% of the worldwide agricultural export subsidies. The U.S. uses only about 2% of the world's export subsidies, Snead said.

Snead said that under the WTO, the E.U. can subsidize its pork exports up to 16 cents per pound. The U.S. is a lower-cost producer of pork due to cheaper fed grain prices thus it is more competitive. However, the E.U. subsidy would offset much of the cost advantage currently held by the U.S.

The NPPC is even more opposed to pork tariffs, Snead said. The average tariff on pork worldwide is 77%.

Export subsidies were last used by the E.U. for pork in 2000. Media reports in Europe reported E.U. Farm Commissioner Franz Fischler as saying he is considering reinstating the export subsidies for a limited period in an effort to bring pigmeat prices back up to acceptable levels.

Source: eFeedLink - 23rd January 2004