U.S. Criticized Over Dairy Subsidies

GENEVA (AP) -- Twenty-nine countries at the World Trade Organization criticized the United States on Wednesday for reintroducing export subsidies on U.S. dairy products, calling the handouts a dangerous retreat into protectionism and warning of "subsidy wars."

Brazil, speaking on behalf of 23 developing countries, told a WTO meeting that Washington was promoting a "murky protectionism" that weakens the global trading system at a time when global commerce is already shrinking at a record pace.

Australia, on behalf of agricultural exporting nations, said the announcement Saturday by U.S. Agriculture Secretary Tom Vilsack of subsidies for 102,000 U.S. tons (91,000 metric tons) of mainly milk powder, butter and cheese was unfair to countries trading fairly, and potentially damaging to global economy's recovery.

The subsidy decision under the U.S. Dairy Export Incentive Program follows a similar move by the European Union in January.

"Subsidy wars only drive prices even lower, thereby delaying economic recovery further," said Peter Grey, Australia's WTO ambassador. "They punish those trying to compete without the help of subsidies, and particularly damage unsubsidized farmers in developing countries, jeopardizing their agricultural production, food security and their most competitive export sectors.

The U.S. diplomatic mission in Geneva said it could not immediately comment.

Vilsack said over the weekend that President Barack Obama's administration "remains strongly committed" to the pledge by the leaders of the Group of 20 major economies last month "to refrain from protectionist measures." He said U.S. subsidies were "fully consistent with our WTO commitments."

"This is not the point," retorted Grey. "If other economies follow the example set by the U.S. and the EU and raise tariffs, domestic support and export subsidies toward their maximum WTO commitment levels, it would undermine the effectiveness and credibility of the WTO system."

Grey said the U.S. and the EU were showing poor leadership. He called on them to promptly withdraw the subsidies.

Brazil's WTO envoy Roberto Azevedo said avoiding protectionism was not only about keeping tariff levels where they are and continuing access for imports.

Protectionism "includes any form of government intervention, such as subsidies, which artificially tilts the field in favor of domestic enterprises, to the detriment of competitors abroad," Azevedo said, speaking for a group of 23 developing nations that includes China, India and South Africa.

"In this case, the unsubsidized farmers in the developing world will also be negatively affected."

On Monday, New Zealand Prime Minister John Key said the "very unhelpful move" was at odds with Obama's position that the U.S. opposed protectionism.

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