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The huge dumping of extra-EU exports of dairy products and to the EPAs of West Africa, SADC, CEMAC and EAC in 2016

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SOL | 11 April 2017

The huge dumping of extra-EU exports of dairy products and to the EPAs of West Africa, SADC, CEMAC and EAC in 2016

by Jacques Berthelot (jacques.berthelot4@wanadoo.fr)

Dairy products are the second largest sector of EU agricultural production in 2015, accounting for 14.1% of the value of total agricultural production, after fruit and vegetables (23.8%) and before cereals and seeds (13.3%). In 2016, they contributed €15.6 billion (bn) or 11.8% of extra-EU agricultural exports, second only to cereals (22.8%) but before fruits and vegetables (9%), wines (7.8%) and pigmeat (6%). However, it is a sector that has experienced recurring crises, which have been particularly profound over the last three years, because the EU’s milk policy has always been built on an overproduction, which began with the CAP in the late 1960s. This overproduction was promoted by one of the strongest import protections in the world and by unlimited export refunds before the WTO, including in the form of external food aid, with refunds exceeding €2 bn per year until 1995, before gradually declining to disappear in 2014. The imposition of production quotas since 1984 did not solve the issue since they have been set at a level above about 10% to the needs of the domestic market, which has led to falling producer prices and the need to increase exports. Since the fall in producer prices, offset by semi-coupled direct aids (notified in the WTO blue box) of the 1992 and 1999 CAP reforms and the decoupled aids of the CAP reform of 2004 (notified in the WTO green box) has not been enough to stop overproduction and falling prices, the European Commission has strived to open new markets by multiplying bilateral free trade agreements (FTAs) and by ending production quotas in 2015, expecting increased markets in Russia and China. But this hope has vanished with the closure of the Russian market and the recent decline in Chinese imports. If the EU has succeeded in opening up a market of 18,500 tonnes of cheese to Canada after the European Parliament ratifies the CETA agreement, it has been pressuring India in the ongoing FTA negotiation over the last 6 years and even more the ACP countries (Africa, Caribbean and Pacific) to sign and implement EPAs (Economic Partnership Agreements) that would be destructive for these countries.

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 source: SOL