EU ponders €280m dairy injection
Subsidies and other barriers lock African producers out of fortress Europe, analysts say
November 18, 2009
 By Ann Crotty
The EU's 27 finance ministers will decide later this week whether to inject €280 million (R3 billion) of additional subsidies into the region's troubled dairy industry.
Ministers will make their decision amid growing concerns about the collapse of the dairy industry in Africa and reports that progress towards the Millennium Development Goals has reversed.
The proposed new subsidies are part of what one agricultural industry source in South Africa described as the construction of fortress Europe.
"The EU is no longer interested in importing goods from Africa. It is introducing all manner of impediments to trading with this continent," the source said.
In addition to the reintroduction of subsidies for dairy exports, the implementation of technical standards around food safety issues, packaging, traceability and the environment are making it increasingly difficult as well as prohibitively expensive for Africa, including South Africa, to export into the EU.
In a recent issue of Africa Business Frontier, analyst Jamil Mammadalizde said that the EU's initial reintroduction of dairy subsidies earlier this year was directly affecting African producers.
"European dairy products are already dominating African markets. In Gambia, for example, attempts to establish dairy plants to provide the national market with milk, butter and other basic products have utterly failed due to EU competition," he said.
Mammadalizde said that increased export subsidies would result in more milk and butter being dumped on world markets and would impede the ability of African producers to compete in the market.
According to a World Bank report, the Group of 20 countries have implemented widespread protectionist measures to deal with the effect of the global financial crisis. These measures have been introduced despite earlier pledges to avoid such barriers to trade.
"Major powers, from the US and EU to China and India, have erected new barriers to imports in the form of tariffs, subsidies or other measures designed to protect domestic industries," said Mammadalizde.
In applying for exemption from the Competition Act, local dairy group Clover cited the "perennial threat of often heavily subsidised foreign imports competing with our domestic products" as one of the major factors threatening the viability of the industry.
Commenting on the move to reintroduce the controversial export subsidies for dairy products earlier this year, EU Agriculture Commissioner Mariann Fischer Boel said the move was within the rules of the World Trade Organisation (WTO) and in no way represented a change in EU policy.
"In the Doha round of the WTO talks we have pledged to phase out such payments by 2013, on condition our trading partners discipline their own export-support programmes," said Boel. "Our export refunds do not allow our exporters to undercut prices on overseas markets."
Local trade analysts say the rapidly increasing requirements that have to be adhered to by parties wanting to export to the EU are making it hard to get produce into that region.
"There is a growing army of bureaucrats demanding adherence to all manner of standards," said one analyst.
He added that each different buyer had its own particular reporting measures so it became extremely expensive and time consuming for an exporter to complete the process.
"The US is still quite open and China is opening up big time. As for the EU we should just forget about it; they haven't started to measure 'footprint' yet, but when they do, local products won't stand a chance, particularly with citrus."
To date the local citrus fruit industry has managed to deal with the EU's phyto-sanitary demands. But lobbying by Spain, the world's largest citrus exporter, looks set to introduce measures that will make exporting to the EU extremely difficult from next year.
The industry is apparently in talks with the Department of Agriculture about using the WTO's dispute settlement procedures to address the problem.
But as one trade lawyer noted, access to the WTO dispute system was feasible for South Africa, but other African countries rarely had the needed resources to protect themselves from unfair trading practices.
"This means they increasingly have to rely on aid in place of trade."
|
|
