WRITTEN QUESTION E-1367/03 by Jonas Sjöstedt (GUE/NGL) to the Commission. EU agriculture subsidies and elimination of local producers.
Date: 2003-04-10
Institutions: European Parliament, Provisional data
Subjects: Dominican Republic, agricultural trade, common commercial policy, dairy industry, dairy production, dumping, export (EU), export refund, powdered milk, trade agreement (EU), trading operation

C 84 E/468

Official Journal of the European Union

EN

3.4.2004

Answer given by Mr Liikanen on behalf of the Commission

(7 May 2003)

The Commission is working towards the development of a Euro V standard for the light-duty vehicles
covered by the scope of Directive 98/69/EC (1). The main emphasis will be on the reduction of Nitrogen
oxides (NoX) and particulate emissions. The control of ultra-fine particulates, due to their perceived
association with human health effects, is a priority, not only for diesel engines but also for gasoline direct-
injection engines where there are concerns to be addressed. The development of new laboratory methods
for measuring ultra-fine particulates is progressing well under the auspices of the United Nations Economic
Commission for Europe (UN-ECE) but there is still some way to go before a rigorous and reliable test
method is available for the purposes of type-approving vehicles for their exhaust emissions.

The impacts of measures aiming at a Euro V standard will also have to be assessed taking into account the
elements of sustainable development.

The Commission intends that the Euro V stage would apply from the end of the decade for the various
categories of vehicles within the scope of Directive 98/69/EC, respecting the same five-year period of
legislative stability set by the institutions between the Euro III and Euro IV stages.

A proposal could be expected to be adopted by the Commission at the end of 2004.

(1) Directive 98/69/EC of the Parliament and of the Council of 13 October 1998 relating to measures to be taken
against air pollution by emissions from motor vehicles and amending Council Directive 70/220/EEC, OJ L 350,
28.12.1998.

(2004/C 84 E/0543)

WRITTEN QUESTION E-1367/03

by Jonas Sjöstedt (GUE/NGL) to the Commission

(10 April 2003)

Subject: EU agriculture subsidies and elimination of local producers

The Swedish media recently reported that the Swedish-Danish dairy company Arla had dumped several
thousand tonnes of powdered milk in the Dominican Republic, thereby eliminating some 15 000 local
producers from the market and depriving them of their means of making a living. Arla’s annual exports of
powdered milk are aided by SEK 160 million from EU export subsidies. Unfortunately, Arla’s subsidised
exports are no exception; several different cases of a similar nature constitute a clear pattern.

What view does the Commission take of a procedure whereby companies such as Arla, with the aid of EU
subsidies, can contribute to product dumping of this kind and what steps has it taken to ensure that such
cases can be avoided?

Answer given by Mr Fischler on behalf of the Commission

(28 May 2003)

Trade between the Union and the Dominican Republic takes place in the context of the World Trade
Organisation (WTO) Agreement on Agriculture (AoA) following the Uruguay Round (UR) of Multilateral
Trade Negotiations and of
the Memorandum of Understanding between the Community and the
Dominican Republic on import protection for milk powder in the Dominican Republic.

The Memorandum of Understanding (1) was adopted by the European Council
in July 1998 and the
Dominican Republic Presidential Decree No 505/99 of 24 November 1999 provided for the implemen-
tation of the new WTO Schedule in the Dominican Republic. To protect local production and at the same
time ensure sufficient supply for consumers at reasonable prices, the Dominican Republic in its new WTO
Schedule, established a tariff rate quota of 32 000 tons of milk powder of which 70 % for the Community
and 15 % each for New Zealand and other suppliers. In that context, there have been regular imports of
Community milk powder in the Dominican Republic.

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Official Journal of the European Union

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In the Dominican Republic milk production has been increasing by between 4 % and 6 % per year but
while farm production costs range from 4-6 DOP/litre, (Dominican Republic Peso) the processors pay
producers 6,75 DOP/litre, the retailers pay processors 17 to 18 DOP/litre of pasteurized milk and the
consumer pays upwards of 20 DOP/litre. The retail prices of Community milk powders in the Dominican
Republic are higher than those practiced for other imported powders and for domestically produced
powders. The data available to the Commission confirm, therefore, that its export policy in relation to the
Dominican Republic is reasonable and responsible.

A report on the Dairy Market in the Dominican Republic published by the United States Department of
Agriculture in 2001 (2) estimated that there were approximately 59 000 milk producers in the Dominican
Republic of which 17 500 specialise in milk production and the rest in cattle raising for the twofold
purpose of producing milk and beef. But as in all countries in the world, restructuring is taking place in
the Dominican Republic at both producer and processor levels, which translates into a continuous decrease
of the numbers of producers. As for the Community, the number of producers has fallen in the past ten
years by about 50 %.

Regarding local milk production in the Dominican Republic, the report suggests that a number of
structural problems relating to an unreliable energy supply, concentration on the market and problems of
quality, among other things, hamper the development of local milk production rather than imports.

The Commission maintains regular contact with the authorities in the Dominican Republic concerning the
application of the Memorandum of Understanding and also requested periodically (June 2002, December
2002 and February 2003) price information on milk powders, both domestically produced and imported.
The Dominican Republic authorities have not made any representations suggesting that imports from the
Community are hampering the development or negatively affecting prices to the detriment of local dairy
farmers and thus indirectly the development of national milk production. Furthermore, the Commission
has offered technical support to develop the dairy sector. Such proposal triggered a request from the
Dominican Republic authorities to finance a study on current situation and future perspectives of the dairy
sector in the Dominican Republic (in preparation).

The Community pays subsidies on exports depending on the gap between prices practiced on the internal
market and quotations on the world market, within the ceilings on export subsidies set out in the
Community’s WTO schedule. In that framework, export refunds on skimmed milk powder (SMP) and on
whole milk powder (WMP) intended for supply to the Dominican Republic under the quota are fixed at
lower levels than for exports to other destinations. The gap between the refund for the Dominican
Republic and other destinations has been widened even further for the 2003/2004 quota year by
decreasing the Dominican Republic refund.

As for the future, the Community has made it clear that it is ready to further reduce export subsidies, on
the condition that all other forms of export assistance are subject
to equivalent disciplines. These
commitments are further reflected in its paper on modalities for the agricultural negotiations under the
WTO. Actually, export subsidies are becoming less and less significant, falling from 25 % of the value of
Community farm exports in 1992 to 5,2 % in 2001.

Finally, it should be noted that when there have been negative impacts resulting from its exports, as it was
the case of beef exports to West Africa in the 1980s, the Community has reacted, in some cases by
discontinuing refunds for certain products. However, experience shows that when the Community stops
providing export subsidies for a particular market, the Community’s market share is frequently taken over
by products from other developed countries, which create similar market challenges to local producers.

(1) Council Decision 98/486/EC, OJ L 218, 6.8.1998.
(2) Ph.D. Wagner A. Méndez and Ph.D. Ruben D. Núñez:

United States Department of Agriculture 2001.

‘The dairy market in the Dominican Republic 2001’.