WRITTEN QUESTION E-1198/97 by Sirkka-Liisa Anttila (ELDR), Mirja Ryynänen (ELDR) and Kyösti Virrankoski (ELDR) to the Commission (3 April 1997)

Subject: Cuts in export subsidies for EU agricultural produce, particularly Emmental cheese, and their effects on the volume of cheese manufactured in Finland

When Finland joined the EU, our food economy underwent a particularly drastic change in its operating environment, to which it will take several years to adjust. In the discussions which preceded the referendum on membership it was specially stressed that the EU would not devastate our countryside or destroy our agriculture. On the contrary the aim of the Union is to increase, through its own activities, the vitality of the countryside. The Finns' trust in these promises is wavering, because the number of jobs in agriculture in Finland is dropping sharply.

On 28 February 1997 the EU cut export subsidies on cheese, particularly on exports to the USA. Finland has traditionally exported some 6 to 8 million kg of Emmental cheese per year to the USA, which represents over 30% of our total cheese exports. When Finland joined the EU the subsidy on Emmental was FIM 8 per kg. It is now FIM 4.12 per kg. This recent cut in the export subsidy means that it is no longer profitable or possible to export cheese to the USA. This 30% cut in export subsidy as at 28 February 1997 will mean the closure of one cheese factory in Finland (Toholampi) and another 100 people added to the existing number of over half a million unemployed.

What are the grounds for such a drastic cut in export subsidies on Emmental cheese? Is the USA being turned into a zero-export-subsidy area, and if so, why? Does the Commission take any account at all, in negotiating and agreeing to export subsidies, of cuts in such subsidies of the effect on employment?

Answer given by Mr Fischler on behalf of the Commission (22 May 1997)

As soon as the Agriculture Agreement entered into under the General Agreement on Tariffs and Trade (GATT) came into force, it was clear that the restrictions under that Agreement would weigh particularly heavily on the cheese sector. The Commission has had to adapt its policy on refunds accordingly. For more details, the Honourable Member is requested to see the answer to Written Question E-2836/96 by Mr Viola and others ((OJ C 91, 20.3.1997. )) in which the Commission listed the instruments available to it both to comply with undertakings under the Agreement and to protect Community exports of milk products on the international market to the greatest extent possible. It also set out the criteria to be used to differentiate and, where necessary, abolish refunds for certain destinations.

On that occasion, the Commission confirmed once again that it constantly seeks to ensure that all export possibilities are used and that the negative impact of limits on subsidised exports are spread in balanced fashion among the various national productions. The decision to reduce by 30% refunds for exports of cheese to the United States was taken entirely with these considerations in mind because exports of Emmental to the United States were more than three times greater in 1996 than they had been in 1995.

The cheese sector is demonstrating unremitting dynamism both in terms of the constant growth in production and in increasing structural demand on the world market despite the reduction in refunds. This means that any impact of refunds in this sector must be negligible compared with the restrictions on subsidised exports resulting from the GATT Agreement.