USW outraged at new levels of EU subsidies
We have seen news reports that the European Commission raised the level of wheat export subsidies today, granting a 10 euro ($13.21) per tonne refund on 451,750 tonnes.
These EU restitutions have reached outrageous levels.
With recent firm soybean and corn values adding support to normal seasonal increases in wheat prices, the EU's decision to raise their export subsidies even further is not only unnecessary - but is a flagrant application of the most egregious trade distorting subsidies.
The EU decision to raise exort restitution levels to 10 Euro's (US$13.00) comes at the same time that EU wheat prices - without any subsidy attached - are already the most competitive into markets such as North Africa.
US SRW, now at more than $155/MT FOB gulf ports, will calculate in excess of $200 C&F N. African markets. Argentine wheat prices are now close to $130 FOB which makes their C&F price at a minimum $175. Even small quantities of wheat with somewhat questionable quality from the Black Sea, if even available, realistically calcluate close to $165 C&F.
However, current French wheat prices FOB Rouen are US$136 (105 Euro) - and with far cheaper shipping costs, brings French C&F prices to barely $160. And now, in addition to having the cheapest landed cost on a straight commercial basis, the EU is providing another $13 per MT subsidy to European exporters making these sales.
Not only are the restitutions not necessary, but they are counterproductive, coming at the very time that WTO negotiators are trying to remove trade distortions. These restitutions are the most trade distorting mechanism of all: direct export subsidies.
These restitutions make no sense at all. |