President Michel’s solution to the MFF conundrum

In my previous post I discussed the challenges facing European Council President Charles Michel as he took over responsibility from the Finnish Presidency to prepare the draft conclusions on the Multi-annual Financial Framework for the coming meeting of the European Council on 20 February next.

The Finnish Presidency proposal had been attacked on all sides as unsatisfactory. Yet, in that previous post, I speculated that Mr Michel was unlikely to hear anything very different to what the Finnish Presidency had heard when charged with forwarding the ‘negotiating box with figures’ to the December 2019 meeting of the European Council.

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Charles Michel’s MFF juggling act

During the past few weeks, the President of the European Council Charles Michel has been meeting national sherpas to sound out Member State positions regarding the Commission’s proposal for the next Multiannual Financial Framework (MFF) for the period 2021-2027. In the next few weeks he will be meeting national leaders face-to-face.

He has called a special European Council meeting which, ominously for national leaders who value their beauty sleep, is scheduled to start on 20 February but which notably has no termination date or time.  Mr Michel may plan to take a leaf out of the Saudi Crown Prince Mohammed bin Salman’s playbook who famously kept the rich elite of Saudi Arabia under lock and key in a luxury hotel until they agreed to part with some of their money.

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Climate mainstreaming the CAP in the EU budget: fact or fiction

Climate mainstreaming of the EU budget was introduced in the Commission’s Multiannual Financial Framework (MFF) proposal for the period 2014-2020 which first put forward the idea that “the optimal achievement of objectives in some policy areas – including climate action, environment, consumer policy, health and fundamental rights – depends on the mainstreaming of priorities into a range of instruments in other policy areas” (COM(2011)500). The Commission advocated in particular that the EU budget could play an important role in catalysing the specific investments needed to meet the EU’s climate targets and to ensure climate resilience.

The policy fiche on climate action in the Annex to the 2011 MFF proposal included the idea that the proportion of EU budget spending contributing to the EU’s transition to a low carbon and climate resilient society should be increased to at least 20%, subject to impact assessment evidence.

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Agriculture in the European Green Deal

The Commission published its Communication on the European Green Deal in mid-December 2019. Previously flagged in Commission President von der Leyen’s Political Guidelines for the new Commission, it defines the key political objectives of the new Commission for the next five years.

The headline commitment is to make Europe the first climate-neutral continent by 2050 (while conflating the EU with Europe may seem like over-reach by the Commission, it should be remembered that other European countries, most recently Switzerland, either participate in or are linked to the EU Emissions Trading Scheme and the UK government’s preference is that it will remain associated after Brexit).

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Role of the land sector in meeting EU’s climate targets

The EU has signed up to the 17 UN Sustainable Development Goals to be achieved by 2030. Among these are Goal 13 to take urgent action to combat climate change and its impacts and Goal 15 to protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss.

The incoming Commission President-elect Ursula von der Leyen set out in her Political Guidelines for the new Commission her ambition that the EU should raise its commitment to reduce greenhouse gases (GHGs) in 2030 from 40% to 50% immediately and to 55% in the first half of the next decade compared to 1990.

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Eurostat publishes preliminary 2019 farm output and income data

Eurostat has now published preliminary estimates of 2019 agricultural output and income. The value of agricultural output in current prices shows a small further increase in 2019 as compared to 2018. Compared to the previous peak in 2013, agricultural output value has grown by just under 4% in the past six years. This is mainly due to an increase in the value of crop output, with the increase in the value of livestock output lagging behind. However, because of greater spending on intermediate consumption, gross value added in agriculture remains just below the record 2017 level.

Operating surplus (the return to land, capital and family labour) also increased compared to 2018 but is still well below the record 2017 level.

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Implications of the UK election result for EU-UK agricultural trade

The UK election has resulted in a resounding victory for the Conservative Party under Boris Johnson with its manifesto call to ‘get Brexit done’. The Conservatives won 365 seats, Labour 203, Scottish National Party 48, Liberal Democrats 11, the Northern Ireland Democratic Unionist Party 8, and other parties 15 seats giving the Conservative Party a thumping 80-seat majority.

One interpretation of the result is that a majority in the UK has now voted for Brexit. However, counting the votes cast instead of seats won shows a slight majority (52-48) voted in favour of parties that were opposed to Brexit or wanted a second referendum.

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What explains the differential cuts in CAP P1 and P2 spending in the Commission’s MFF proposal?

As I discussed in this post, the Finnish Presidency has been tasked with presenting a first draft of the MFF ‘negotiating box’ with numbers prior to the next European Council meeting 12-13 December 2019. This will be no mean feat given the wide differences of opinion between the ‘frugal five’ Member States – Austria, Denmark, Germany, the Netherlands and Sweden – that want overall a smaller budget than what the Commission has proposed, and other Member States that want to reverse some of the Commission’s cuts in cohesion and agricultural spending (Politico’s Lily Bayer goes through the different alliances in this article published today).

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Commission publishes CAP transition regulations recognising implementation of new CAP will be delayed

DG AGRI and the Commission have now officially recognised that, in view of the present state of play in both the Parliament and the Council, the basic acts governing the CAP post 2020 and the ensuing delegated and implementing acts will not be formally adopted by January 2020 and that, therefore, it will be necessary to plan for a transitional period. The new legal framework will now begin from 1 January 2022.

Although the current CAP Regulations continue in force until they are repealed, they need amendment to ensure that there is a legal basis for making payments to farmers in 2021.

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MFF discussions pushing small increase in CAP budget compared to Commission proposal

The European Council leaders at their meeting on 17-18 October 2019 failed to make progress in advancing discussions on the next Multi-annual Financial Framework (MFF) due to start on 1 January 2021. The Council’s conclusions noted that: “Further to a presentation by the Presidency, the European Council exchanged views on key issues of the next Multiannual Financial Framework such as the overall level, the volumes of the main policy areas, the financing, including revenues and corrections, as well as the conditionalities and incentives. In the light of this discussion, it calls on the Presidency to submit a Negotiating Box with figures ahead of the European Council in December 2019”.

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