The trade distorting effects of export refunds: The case of beef exports to Africa

The usual sale of European agricultural products to Africa using export refunds has been heavily discussed in recent decades. At the centre of the discussion are the consequences on the agricultural producers in Western and Southern Africa. There are two different points of view: On the one hand, the European Union's (EU) export policy reduces the prices on these markets and relieves high burdens on local producers; on the other hand are claims that refunds do not influence local prices significantly. Hence, the Common Agricultural Policy (CAP) has no effect on markets of third countries, besides depressing world market prices. This paper focuses on the effects of EU's export subsidies for beef exports on its market share in several developing countries. Twenty-seven African countries were analysed using a fixed-effects model between 1988 and 2000. The results clearly show a highly significant positive impact of the export refund rate on the market and the import share. With its export policy, the EU raises its market position and edges out other competitors.