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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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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Member State CAP allocations and progress on the MFF

The Commission’s presentation of its CAP legislative proposals in June 2018 includes Annexes setting out the Member State allocations both for Pillar 1 direct payments (Annex IV of the draft CAP Strategic Plan Regulation) and Pillar 2 rural development (Annex IX of the same draft Regulation). In its draft legislative proposals for the 2013 CAP reform, the Commission had also included an Annex setting out the Pillar 1 Member State allocations (based on the external convergence formula that it had put forward in its MFF proposal a couple of months previously).

But this was not the case for Pillar 2 allocations.

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CAP spending in the next MFF

Last week, the European Parliament secretariat (Policy Department for Structural and Cohesion Policies) presented a briefing authored by Albert Massot and Francois Negre to the AGRI Committee comparing the Commission’s CAP legislative proposals for the period after 2020 with the current regulations. It consists of two documents: a relatively short contextual statement, and an annex containing six ‘Dashboards’ which in a two-column format set out in specific detail how the CAP reform package (2021-2027) proposed by the Commission on 1st June 2018 compares with the current CAP (2014-2020) regulations, topic by topic. It makes a very useful contribution in structuring the debate around the Commission’s CAP proposals.

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Another look at the possible Brexit implications for the CAP budget

Preparations within the Commission for its next MFF proposal, which is now expected in May next year, are well under way. Thinking on the shape of the next MFF began in January last year with the Dutch Presidency Conference on preparing for the next MFF. In December 2016 the High Level Group on the Future Finances of the EU produced its final report and recommendations for a reform of the own resources side of the MFF. In June 2017, the Commission produced its Reflections Paper on the Future of EU Finances. This was one of a series of Reflection Papers published by the Commission in the wake of its White Paper on the Future of Europe published in March 2017.
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The budgetary context for the CAP after 2020

Last week I attended the XVth Congress of the European Association of Agricultural Economists which was held in Parma, Italy. With almost 600 contributed papers, poster papers, organised sessions and panels, it was a feast both of stimulating ideas and great food. Over the next few weeks, I hope to highlight a few of the papers which were of interest to me. In this post, I take the opportunity to refer to my own contribution to an organised session on the economics and politics of the CAP after 2020.
This panel discussion also included contributions from Tassos Haniotis (DG AGRI), Jean-Christophe Bureau (AgriParisTech) and Johan Swinnen (University of Leuven).
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What can we expect following the CAP public consultation?

DG AGRI launched its 12-week public consultation on modernising and simplifying the CAP on 2 February last. The publication of the on-line consultation was accompanied by an inception impact assessment to support the preparation of a Commission Communication on modernising and simplifying the CAP which is expected late this year, possibly in November.

According to the Q&A memorandum prepared by DG AGRI which accompanied these documents, the stakeholder consultation is expected to provide opinion-based information. “It is an opportunity to take into account societal demands in the policy discussions on the future of the CAP and adapt it to better integrate the new political priorities in an inclusive and comprehensive manner.

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