— and also of EU export subsidies

Another USDA paper identifies three important effects of EU export subsidies: they lower prices in the importing country resulting in a 'decrease in local production, meaning the artificially low price pushes domestic producers out of the market, leaving them unemployed'; they reduce the income of those who continue to produce 'which can be devastating to their livelihoods'; they can 'inhibit market development of infant industries, particularly in developing countries'. The paper reviews the situation in the dairy sector and notes that skimmed-milk powder is the EU's largest export product to developing and least developed countries. Some 95% of subsidised skimmed milk powder exports from the EU went to developing countries and some 11% to LDCs. The paper notes that 'many developing and least developed countries have become dependent on low-priced SMP and other dairy imports from the EU as a primary protein source'. The low cost of imports has displaced local dairy farmers in countries as diverse as South Africa and Sri Lanka. In the rice sector, some 50% of EU milled-rice exports goes to developing countries, with around 14% going to LDCs. The report also briefly looks at the impact of export subsidies in the cereals and sugar sectors. Comment: While criticising the export subsidies paid by the EU this USDA paper makes no reference to the impact that CAP reform is having on the need for export subsidies. In the cereals sector, where reform is most advanced, the need for export subsidies had been reduced by around 95% until the recent increase in the value of the euro against the US dollar (which saw a fivefold increase in cereals-sector export refunds in the 2004 EU budget). It is this long-term trend which is of growing importance in EU trade flows with developing countries, rather than the provision of export refunds.Another USDA paper identifies three important effects of EU export..