Bridges Weekly Trade News Digest • Volume 6 • Number 27 • 17th July 2002
European Commission Presents Plans For Radical CAP Reform
European Commission Presents Plans For Radical CAP Reform
EU Agriculture Commissioner Franz Fischler on 10 July outlined to the European Parliament (EP) plans to reform the EU’s Common Agricultural Policy (CAP) by shifting income support away from producing surpluses and towards meeting tough environmental, animal welfare and food safety standards. Under the proposals, less money will be spent on market subsidies and more on rural development. "It is not enough just to touch things up cosmetically. We need a complete facelift to give credibility to the CAP," Fischler told the EP.
According to the proposal (available at http://europa.eu.int/comm/agriculture/mtr/comdoc_en.pdf), farmers would get a single decoupled payment from Brussels based on historical references — regardless of whether they continue production on the same scale. Fischler explained that this would streamline the CAP, enabling the extension of the Programme to millions of new farmers in an enlarged EU and giving the bloc the moral high ground in trade negotiations. Direct aid to farmers would be cut by three percent a year over seven years, with the savings spent on rural development. Aid to larger farms would be capped at EUR 300,000 per year. Guaranteed cereals prices would be cut by five percent, reducing the amount the EU pays in export subsidies that bridge the gap between high internal prices and a lower world market.
Arguing that EU member states had agreed in Berlin in 1999 to maintain the present CAP until at least 2006, European farming giant France is vehemently opposing the proposal while further pointing to the disadvantage of European farmers vis-à-vis US growers under a new US Farm Bill which has significantly increased spending on farm subsidies.
Stating that he was generally encouraged by elements of the proposal, Australia’s Trade Minister Mark Vaile expressed his concern that the reform plans did not include any commitments to phasing out export subsidies for European farmers. "Surpluses will therefore continue to be dumped on world markets," he said in an 11 July statement. However, Thailand, a fellow member of the Cairns Group of agriculture exporting countries, welcomed the Commission’s move: "If the European Union reduces its subsidies to farmers, it would help boost the export prices of agriculture products from Thailand to the EU market," Suvarn Valaisathien, deputy commerce minister, said on 12 July.
"EU Unveils Disputed "Facelift" For Farm Subsidies," REUTERS, 10 July 2002; " Australia Trade Min: EU CAP Review Won’t Cut World Surplus," DOW JONES, 11 July 2002; ""Towards Sustainable Farming" Commission Presents EU Farm Policy Mid-Term Review," EU PRESS RELEASE, 10 July 2002; "TRADE: Thailand Relieved At EU’s Call For Cuts In Farm Subsidy" TERRAVIVA-EUROPE, 15 July 2002.