Wellington - The New Zealand government expressed disappointment Friday at the European Union's move to reintroduce export subsidies for dairy products after a two-year suspension.

The move is expected to directly impact on New Zealand's Fonterra farmers' co-operative, which is the world's biggest single exporter of dairy products, selling to about 140 countries, at a time that international commodity prices are tumbling.

Fonterra reported earlier this month that prices of its biggest item, whole milk powder, had fallen 54 per cent since July, while cheese, butter and casein traded on the international market had all fallen by 45-55 per cent.

Trade Minister Tim Groser and Agriculture Minister David Carter said in a statement that the EU's move would send a negative signal at a critical time for multilateral negotiations to liberalise world trade and the global economy, "when all efforts are being made to reject protectionism and to convince countries to remove distortions in agricultural markets."

"In recent years we have seen the Europeans take some very positive steps forward in reforming their Common Agricultural Policy, which we have welcomed, but this announcement represents a major step backward," Groser said.

"The European move means it's now even more urgent that we complete the Doha Development Round in the World Trade Organization.

"The agreement by WTO members to eliminate export subsidies in agriculture is one of the most important potential gains from the round.

"It is clear that unless we move forward soon, unsubsidised producers like those from New Zealand will continue to bear the cost of the trade-distorting measures of others."

The ministers said full details of the EU's new export subsidies for butter, cheese and milk powders, which were suspended two years ago, were not yet known but it was understood they would take effect from next week. (dpa)