The Cairns group called on Brussels on Wednesday to repeal a decision to offer subsidies for European Union dairy exports, saying the move could drive down world prices and hurt poor farmers.
Trade ambassadors from the coalition said the EU's move to protect its farmers could in fact prolong the world's economic trouble by blocking trade.
In a joint statement circulated in Geneva, where the World Trade Organisation has its headquarters, the group said:
"Increasing trade-distorting measures and protectionism in a time of a crisis carries a very high price.
"The reintroduction of export subsidies at this time ... is likely to drive international prices down to artificially low levels and, at the very least, prolong the current downturn."
"It is of particular concern that farmers in many developing countries, which cannot afford to engage in subsidy wars, stand to suffer most from increased distortions in world agricultural markets. This is not the leadership we require from key economies at this point in time."
Brussels said last week it would re-introduce export subsidies on butter, cheese and whole and skimmed milk powder that have been suspended since 2007. The move was in response to a recent fall in producer prices.
Members of the Cairns Group have low farm subsidies and want to open agricultural markets worldwide.
The group comprises: Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Peru, the Philippines, South Africa, Thailand and Uruguay.