EU:s medborgare betalar i dag cirka 400 miljarder kronor för
en politik som fördubblar matpriserna, gynnar storjordbrukare och
förpestar handelsrelationerna med resten av världen
A contemptible deal
European Union leaders claim they want to be loved. They grandly declared at the Laeken summit 18 months ago: "Within the Union, the European institutions must be brought closer to its citizens." Now, just as the work of the convention created to achieve that end reaches its climax, two powerful countries have done the kind of private, behind-closed-doors deal that brings only contempt for the Union in the eyes of its people.
The informal agreement between President Jacques Chirac of France and Germany's Chancellor Gerhard Schröder to emasculate reforms to the EU's 43bn (£30.3bn) farm subsidy regime is hardly the first such pact and is unlikely to be the last. But it is a profoundly unwelcome glimpse of the potential for horse-trading that could paralyse the Union after it expands from 15 to 25 member states next year.
According to EU diplomats, Mr Chirac and Mr Schröder did not strike a formal bargain when they met for dinner on Tuesday but each showed understanding of the other's priorities. The implication was clear: Germany would help France water down the farm reform in return for French support in opposing proposals it dislikes in the takeover directive.
World trade leaders have failed to reach a compromise on
agriculture modalities the methods for achieving negotiation
objectives - before a 31 March deadline.
The stalemate is seen as a setback for the Doha round and non-subsidised farmers in the developing world. WTO Director-General, Supachai Panitchpakdi, expressed "great disappointment" that talks had failed but was "encouraged" that they had not broken down completely. The European Commission, responsible for negotiating for the EU, said it was "not the end of the world."
French President, Jacques Chirac, has strongly criticised EU Agriculture Commissioner, Franz Fischler, for his "obstinacy" over the reform of the Common Agriculture Policy. Speaking at the opening of an agricultural event in Paris on Saturday, Mr Chirac said he could not understand why the Commissioner insisted on making suggestions that would never be accepted by the member states. .... more
The seeds of reform /of the Common Agricultural
Dags att lämna tullunionen!
Hervé Gaymard, the French agriculture minister, and his counterparts from Luxembourg, Spain, Portugal, Austria, Ireland and the Walloon part of Belgium have just published what purports to be a defence of the CAP in the Financial Times and other European newspapers.
LETTERS TO THE EDITOR: CAP is something we can be proud of By Herve Gaymard Financial Times; Sep 23, 2002 From Mr Hervý Gaymard and others. Sir, Certain critics blame many of Europe's difficulties - and the world's - on the common agricultural policy. The media often take these criticisms on board without appropriate detachment.
It is widely asserted that the CAP costs Europe too much, they say, deeply puzzled.
How could anybody regard euro40 billion ($39 billion) a year of direct subsidy (plus twice as much again in higher prices demanded of European consumers) as too much to pay for producing food nobody wants, keeping third-world farmers poor and wrecking Europe's rural environment? Cheap at the price, say the ministers.
The setback on CAP reform is a scandal. And Mr Gaymard and his fellow farm ministers are a disgrace.
German Chancellor Gerhard Schröder and French President Jacques Chirac had a first informal meeting last night after the Chancellors re-election last month. Both men were expected to be anxious to build up more harmonized relations. The most important issue to be resolved that has caused sharp differences in the past, was the reform of the Common Agricultural Policy.
WHAT is the European Union for? To promote peace? To project European power? To create a single European market? All of the above are popular answers in Brussels. But look at what the EU actually spends its money on, and you may be forced to conclude that its real purpose is to subsidise agriculture.
Although just 4% of the EU's population work in agriculture, subsidies for farmers are the budget's biggest single item. The euro40 billion-plus ($39 billion) dispensed every year through the common agricultural policy (CAP) consumes almost half of all EU spending.
The situation is even worse than those numbers suggest. A recently released study by the OECD, the Paris-based rich-country club, suggests that when indirect subsidies such as price supports and tax-breaks for farmers are added to direct payments, EU farmers got euro104 billion in aid in 2001 compared with around euro50 billion in subsidies in the United States.
Farmers in the EU get about 35% of their income from subsidies, compared with 21% in the United States and just 1% in New Zealand.
Franz Fischler, the European Union's farm commissioner, will on Wednesday set out radical proposals for reform of the Common Agricultural Policy. His proposals could create an unprecedented opportunity for the EU to modernise one of its most discredited policy areas.
No doubt EU farmers, already in difficulties, will fiercely resist Mr Fischler's proposals. Led by France, Spain and Ireland, they will argue that the existing arrangements are not due for review until 2006. However, the reason for bringing forward the review is to enable the enlargement and free trade negotiations to make progress.
EU: Eastern farming
It is little surprise that the six countries heading the list of European Union accession candidates have all demanded the full benefits of the Common Agricultural Policy. Farmers in the Czech Republic, Cyprus, Estonia, Hungary, Poland and Slovenia naturally want to feed at the same subsidy trough as their EU counterparts.
Their demands are unreasonable, but not as unreasonable as the CAP itself. The Union should seize the opportunity presented by the enlargement negotiations to review the CAP - and start preparing to dismantle the worst features of this absurdity.
The applicants argue that, without CAP support, their farmers could be wiped out by subsidised competition from the west.
They say this could destroy the single market and risk provoking political battles between, say, Polish and German farmers that would make the Anglo-French beef war look like small potatoes.
To strengthen claims for EU finance, some applicants are increasing their own support payments to bring agricultural policies closer into line with the CAP. A region in which farm aid is still commendably low by world levels risks becoming addicted to subsidies.
Brussels has already informally told accession states that they will not qualify for the main element in the E41bn-a-year CAP - direct payments to farmers. EU farmers receive these in increasing amounts, in exchange for the phased reduction of intervention prices. Brussels rightly says there is no case for paying compensation to non-EU farmers who never benefited from high intervention prices.
Applicant states retort that what matters is not CAP history but the future shape of competition. In theory, because the direct payments made to existing EU farmers are not production-linked, they should not affect production levels. But, in practice, the payments could encourage farmers to keep producing even when economic logic suggests they change jobs or retire. East European farmers would not enjoy that luxury.
Fortunately, eastern Europe has offsetting advantages, such as low-cost labour and land. These should persist long after accession, which is itself not expected before 2003 at the earliest and is likely to be followed by lengthy transition periods. There is time to raise efficiency. The EU should use this same period of transition to reduce its direct payments: compensation for price cuts should not last forever.
The budget for the period to 2007 is set, but it is not too soon to start looking further ahead. The way forward is to accelerate talks on subsidy cuts in the World Trade Organisation.