Australian wheat complaint rejected by the Commission

By David Cronin

Date: 03/02/05

The European Commission has rejected complaints from Australia against its decision to grant export subsidies in response to the bumper cereals harvest in several European countries.

A tender issued by the Commission to grant export refunds for two million tonnes of wheat closes today (3 February). Canberra has denounced the decision, claiming that it goes against the spirit of a pledge to eliminate export subsidies made by the Union at a World Trade Organization (WTO) meeting in June 2004.

But Michael Mann, the Commission's agriculture spokesman, said that the EU was still committed to scrapping such subsidies as part of the WTO's Doha Development Round, which is scheduled to conclude in December this year, provided other major economies did likewise.

"We did what we did in response to an exceptional situation," he said. "It was perfectly justifiable."

Australia's Trade Minister Mark Vaile protested about the subsidies to European Commissioners Mariann Fischer Boel (agriculture) and Peter Mandelson (trade) at the World Economic Forum in Davos last weekend.

France, Austria, Hungary, the Czech Republic, Poland and Slovakia issued a paper in late January, stating that the export of cereals from the EU has been "seriously disturbed" by a loss of competitiveness resulting from the volatile exchange rate between European currencies, including the euro, and the dollar.

A number of central European countries have encountered difficulties coping with wheat and maize surpluses. In response, Germany has taken some of the cereals into storage. But the countries affected have said that the storage facilities made available to them have been "far from sufficient".

Last year's grain harvest throughout the EU totalled 285 million tonnes, compared to 227m for the same 25 countries in 2003. With the resulting domestic grain supplies exceeding food and feed requirements, prices in the EU market have sunk.

The European Commission rejected complaints from Australia against its decision to grant export subsidies in response to the bumper cereals harvest in several European countries. A tender issued by the Commission to grant export refunds for two million tonnes of wheat closed on 3 February 2005. Canberra had denounced the decision, claiming that it went against the spirit of a pledge to eliminate export subsidies made by the Union at a World Trade Organization (WTO) meeting in June 2004.