Bridges Trade BioRes • Volume 4 • Number 9 • 14th May 2004
EU AGRICULTURE TO FACE TIMES OF TRANSITION
EU AGRICULTURE TO FACE TIMES OF TRANSITION
The European Environment Agency (EEA) has warned new EU member states about the likely negative environmental impacts of joining the Common Agriculture Policy (CAP) in a new report released on 28 April. Meanwhile, EC Trade Commissioner Pascal Lamy and Agriculture Commissioner Franz Fischler circulated a letter to their trading partners on 10 May, offering to end all export subsidies. This offer came as negotiations in the current round of WTO trade negotiations — in which agriculture holds the key role — are intensifying. Trade Ministers were meeting in Paris at the sidelines of an Organisation for Economic Cooperation and Development (OECD) summit in Paris from 14-16 May to forge a political deal, and negotiators in Geneva are expected to agree on a basic framework deal by the end of July this year.
EEA warns new member states about environmental dangers of CAP
Intensified farming and land abandonment are the two main threats for countries joining the EU, according to the EEA report "Agriculture and the Environment in the EU accession countries". In productive areas, the report foresees a moderate intensification of agriculture, with greater use of fertilisers, pesticides and machinery to increase yields. This could lead to increased soil and water pollution and aggravate the problem of already high concentrations of algae in 70 percent of the aquatic ecosystems in the new member states. The other trend would be the abandonment of farming on marginal, less productive land. This would lead to soil erosion and threaten areas that often host an abundance of wildlife. The EEA thus advises the EU to invest in making use of agri-environmental schemes, aid for less-favoured areas, farm advisory services and aid for small, semi-subsistence farms to lessen environmental impacts. Jacqueline McGlade, EEA Executive Director, noted "A new strategic vision is required to deploy agri-environment measures as a central tool of environmental management and rural development in the 10 acceding countries."
The Lamy / Fischler letter
In a letter dated 9 May, Lamy and Fischler set out EC positions on key areas that WTO Members need to move on in order to create a negotiating framework by July this year. On agriculture, the letter acknowledges the need for subsidising countries to take the lead. Lamy and Fischler deal with all three agricultural pillars. On market access, they support the so-called blended formula (which combines elements of the so call Uruguay Round formula that sets an average reduction with a minimum reduction per tariff line — to be applied to certain "import sensitive" products — and the Swiss formula, which would bring down all tariffs horizontally to a maximum ceiling, effectively addressing tariff peaks). On domestic support, the letter notes that the EC is open to commitments "guaranteeing the overall reduction of trade-distorting domestic support," while maintaining non-trade distorting, or "green box" support, free of restrictions. On export support, the letter states that the EC would be ready to eliminate such subsidies, as long as other Members moved in parallel to get rid of other forms of export competition, including export credits, food aid and state trading enterprises.
Some reactions
In their reactions to the letter, a number of the EC’s trading partners welcomed the offer to end export subsidies. US Trade Representative Robert Zoellick said "I hope this will provide a shot in the arm to the overall negotiations". Australia’s Trade Minister Mark Vaile echoed the same sentiments. Mexico’s Eduardo Perez Motta said "I think it helps. I do not want to sing victory but they are giving positive signals". A Brazilian spokesperson agreed that "The fact these positions are being made public is welcome. It constitutes a move we view positively and with satisfaction". Japanese Minister of Agriculture, Forestry and Fisheries Yoshiyuki Kamei also welcomed the EC move, noting that Japan’s position was that all forms of export support should be eliminated in a set of stages, and that the matter warranted further discussion.
G-20 makes countermove
Also prior to the ministerial-level meeting in Paris, the G-20 group of developing countries, including Brazil and South Africa, circulated a document rejecting the blended formula preferred by the EU and US. The G-20 argued that the formula was "biased in favour of the tariff structures of its proponents, enabling them to maintain the protectionist status quo". While the group has not produced an alternative formula of its own yet, Brazil’s foreign minister Celso Amorim indicated that a text is in the works and will likely be presented prior to the next meeting of the WTO agriculture negotiating session, scheduled for the first week of June.
The next agriculture negotiations are scheduled for 2-4 June, 23-25 June and 14-16 July, with Members expected to agree on framework modalities by the end of July.
Additional Resources
For a more detailed account of the letter and reactions, see BRIDGES Weekly, 13 May 2004
ICTSD reporting; "EU may end farm export aid, seeks trade talks boost," REUTERS, 10 May 2004; "WTO heavyweights step up search for farm deal," REUTERS, 4 May 2004; "USTR Zoellick Welcomes EU Offer To End Farm Subsidies," DOW JONES, 11 May 2004; "Australia Welcomes EU Offer To Scrap Ag Export Subsidies," DOW JONES, 11 May 2004; "Latin Americans wary of latest EU trade proposal," EFE, 10 May 2004; "New members warned about environmental threats of EU farm policy," EURACTIV, 30 April 2004; "New EU states need measures to limit impact on environment," EEA NEWS RELEASE, 28 April 2004.