THE European Union has scrapped its controversial dairy export subsidies in the wake of improving world dairy prices.

Federal Trade Minister Simon Crean and Agriculture Minister Tony Burke said the decision was good news for Australian dairy producers and urged the US to follow suit.

“Given that the US introduced dairy export subsidies in response to the EU introduction of subsidies, the US has no excuse to continue with this program,” Mr Crean said.

“The EU decision is good news for Australian dairy producers but the next step is for the US to also end dairy export subsidies,” Mr Burke said.

The European Dairy Management Committee this week decided to reduce the level of export subsidy refunds on butter and butter oil to zero.

This means that export refunds for all dairy products are now set at zero.

The EU introduced diary export subsidies in January this year and this was followed by the US which activated its Dairy Export Incentive Program in May.

The EU decision comes after a rise in world dairy prices and sustained and strong advocacy by Mr Crean, Mr Burke and other Australian ministers against the use of harmful subsidies.