The World Trade Organisation agreement eliminating export subsidies for agricultural exports reached in Nairobi at the weekend is a quiet success story that may become even more important as threats to the controversial TPPA deal increase.
The agreement has been welcomed by dairy giant Fonterra — one of the biggest beneficiaries of the package signed in Kenya.
Fonterra chairman John Wilson said the historic breakthrough would be good news for dairy farmers, adding that for years the use or even the threat of export subsidies have resulted in world dairy prices being below their true level with a subsequent reduction of the return to dairy farmers.
Successive New Zealand governments have been working for years to overcome the problem of subsidies which, along with tariffs, are recognised as one of the barriers to free trade.
The problem is that New Zealand’s largely subsidy-free status is not the norm. The top 21 food producing nations paid an amazing $722 billion in farming subsidies in 2012. Heading the list is the United States with $486 billion followed by China on $165. The European Union, with which New Zealand would love to establish a free trade agreement, forks out more than $100 billion.
