21 Dec 2015

Little change for dairy in free trade deal

8:52 am on 21 December 2015

A free trade agreement being touted as "significant" will bring little change for New Zealand's biggest export earner, dairy.

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Photo: 123rf

The World Trade Organisation's members met in Kenya during the weekend and agreed to get rid of export subsidies for developed countries by 2020. Developing countries will have more time.

Federated Farmers dairy chairman Andrew Hoggard said no countries currently had an export subsidy on dairy products, and they were last used by the European Union in 2009.

Nevertheless, Mr Hoggard said it was good that the threat of future subsidies had been removed.

"If the EU had of gone back to export subsidies, it would be seriously bad for New Zealand dairy."

Trade Minister Todd McClay said the gradual removal of all agriculture export subsidies would level the playing field for New Zealand farmers.

"We've waited more than 50 years for unfair subsidies on agricultural products to be removed from around the world."

The agreement removed export subsidies but not production subsidies for farmers, nor did it do away with tariffs or quotas for agricultural goods.

Fonterra chairman John Wilson said the deal was good news.

"Export subsidies have long been acknowledged as the most damaging form of subsidy and their removal from agricultural trade is a watershed for global trade."

Dairy Companies Association chairman Malcolm Bailey said dropping export subsidies could be worth billions of dollars to New Zealand across all types of agriculture.

"Even though there's a phase-in period of a number of years, it stops the destabilisation of international markets when these subsidies are used, so it stops the prices coming down.

"This is worth billions to New Zealand, potentially."

Ministers at the Nairobi meeting did not make any progress on the Doha agreement, which was more wide-ranging.

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