The American wheat Association protested against the resumption of export subsidies for wheat from the European Union

Introduction: the decision of the EU grain Regulatory Commission on Thursday to provide export subsidies for 2 million tons of wheat was strongly opposed by the American wheat Association, which claimed that the EU's move disrupted the normal world trade order The European Union decided on Thursday to resume the wheat export subsidy program EU traders can start applying for new subsidies on January 28, and the first result will be released on February 3 The EU announced that it would provide export returns (subsidies) for 2 million tons of exported wheat between February and June 2005 Michael Mann, a spokesman for the European Commission, said that if the EU does not resume the policy of wheat export subsidies, domestic intervention stocks will inevitably increase significantly, and the cost of maintaining intervention stocks is very high, because these stocks cannot be eliminated by the market in the short term Traders said that from a practical point of view, the impact of the EU's export subsidy program on the US wheat export sales depends on the level of subsidies decided by the EU It is not clear how much subsidy the EU will provide The American wheat Association reacted strongly, claiming that the European Union's practices distorted world trade Alan Tracy, President of the American wheat Association, said that the EU once again shifted its burden to the world market in order to adjust its supply and demand balance This makes it all the more obvious that the Doha Round negotiations should successfully end the export subsidies in global agricultural trade In fact, there is no need for the EU to provide export subsidies this year to compete with the US, Canada or Australia At present, the EU market price is very low, so it is very competitive in most markets Ann courtmanche, a market analyst at the American wheat Association, explained that with the help of export subsidies, EU wheat would be more competitive in the North African and Egyptian markets Due to its geographical proximity, the EU has a unique shipping advantage in these markets For example, the F.O.B price of French soft wheat from Rouen port to Morocco is currently $141, plus a freight rate of $25, with a total cost of about $166, she said The CNF price of soft red winter wheat from Meiwan to Morocco is about $190 Therefore, the impact of EU export subsidies is huge, and the impact on Argentine wheat may be more direct At present, wheat is relatively cheap in Argentina The CNF price for wheat from Argentina to Morocco is about $150 If the EU provides a subsidy of 16 US dollars (12 euros), EU wheat will be able to compete with Argentine wheat Argentina is the world's smallest exporter of traditional wheat and has no capacity to bear huge wheat carry over stocks If Argentina's wheat sales decline due to EU subsidized exports, then Argentina will reduce its wheat export quotation to the level that can attract buyers, which may further affect domestic prices, destroy the established world trade model, and other exporting countries will be forced to lower their prices and compete for exports In this case, the EU must increase subsidies to force everyone to continue to lower export prices, thus creating a vicious circle Other market factors, such as a stronger euro, have also been detrimental to EU wheat exports In addition, the 25 countries in the European Union have reached 136 million tons of wheat production, coupled with the lowest intervention price provided by the European Union to farmers (which is still far higher than the level stipulated in the EU Common Agricultural Policy), which makes many farmers choose to apply for the intervention of wheat stocks Therefore, the storage cost in the EU may be a big problem