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Trade minister urging Europe to drop planned -

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Trade minister urging Europe to drop planned export dairy export subsidies

The World Today - Tuesday, 27 January , 2009 12:18:00

Reporter: Alexandra Kirk

ELEANOR HALL: And with more bad news, the Federal Government is warning that the global financial
crisis is leading to a more nationalistic approach to trade.

The Trade Minister Simon Crean is calling on Europe to ditch its plan to reintroduce export
subsidies for dairy produce, saying it is a serious backward step that will drive international
dairy prices even lower.

Mr Crean is attending the World Economic Forum in Switzerland this week, where he'll make the case
for lowering trade barriers.

He told Alexandra Kirk that he will argue strongly against the dairy subsidies.

SIMON CREAN: Well we're going to try and stop it. Countries have signed off on the principle of
ending export subsidies but without a Doha deal, they're still legal. Now, of course, the Europeans
are doing what they're doing, they can claim, it's possible to be done under existing rules. We
say, yes, but we've got to commitment in principle to not do it, and more importantly, we have
taken a commitment to ensure that we don't revert to protectionists tendencies within this global
economic slowdown.

ALEXANDRA KIRK: And how damaging will the increase in the export dairy subsidies be to Australia's
dairy industry?

SIMON CREAN: It depends how they apply it and it's unclear at this stage how it will be applied but
it's damaging for two reasons. First of all, it's breaching the signal that all countries signed up
to opposing and that was no reversion to protectionist policies. Secondly, it runs the risk of
reactive responses - other countries envoking it in response.

Now the last thing we need with the world economy slowing is to take steps that exacerbate that
slowing. It's counterintuitive but people think that when the economy is going bad, what you've got
to do is to move back to protectionism. What you've got to do is to liberate those markets.

You've got to open them up more than ever because world trade grows faster than world output. And
if you're trying to get the maximum impact from your fiscal stimuluses, and all of your activities
that generate domestic activity, what you must do is to open up the trade flows, not start to close
them up.

ALEXANDRA KIRK: How vehemently will you oppose this move?

SIMON CREAN: We'll oppose it very strongly. It's not just us, it's the whole of the Cairns Group
that have considered this and said that this shouldn't go ahead. It's against the spirit. We have a
commitment to stop this procedure and we have the G20 world leaders saying let's not revert to
protectionist tendencies.

ALEXANDRA KIRK: And what do you think the chances are of overturning it?

SIMON CREAN: Well, let's see. And I think that depends on how quickly as a group of nations we can
proceed to say that we are ready to conclude the Doha deal. We've got so close on a number of
occasions, the opportunity presents itself again in Davos to move in that direction. If we can get
the momentum, then that might have some impact in terms of addressing this specific complaint.

But this is the problem that you get to Alex if you don't conclude the deal. You get people
justifying what they're doing in the name of "it's able to be done", even though all of us say, "it
shouldn't be done".

ELEANOR HALL: That's the Trade Minister Simon Crean speaking to Alexandra Kirk.