CAP Reform

The Commission’s impact assessment of the range of changes to direct payments included in its draft legislative proposals provide useful additional detail on the economic impacts to be expected from these changes and thus their political feasibility. The impact analysis has yet to be released officially but the relevant annex of the draft assessment can be found here.

Annex 3 of the impact assessment (IA) addresses all of the proposed changes in Pillar 1: greater convergence between Member States; the move toward flat rate payments within Member States or regions; additional income support in less favoured areas; capping of payments; the small farmer scheme; specific support for young farmers; a better definition of ‘active farmers’; as well as coupled aids (the ‘green’ payment option is evaluated in Annex 2 of the IA).… Read the rest

The two previous posts covered the Commission’s draft proposals for the Direct Payments regulation and the Rural Development regulation. In this post, I cover its draft proposal for a revised single common market organisation regulation.

Summary

• There is the first formal acknowledgement that the Commission is not going to propose legislation to renew the sugar quota regime when it expires in 2014/15, although there will be a one year extension. Ending the sugar quota system is given as an example of simplification of the CAP under the proposal.
• A single animal disease/loss of consumer confidence provision is extended to plant products given the experience with the e.coli… Read the rest

In a previous post I looked at the draft Direct Payment regulation, one of four key regulations which will shape the future CAP after 2013. In this post, I look at what is proposed in the Rural Development regulation. This comes with the health warning that the actual legislative proposals will not be released until October 12th, and some of these proposals may change in the meantime.

Summary of proposals

• Greater coordination of EAFRD spending to ensure complementarity of RD programming with the programming of the other shared-management funds, the Regional Fund, the Social Fund, the Cohesion Fund and the Fisheries Fund.… Read the rest

The International Centre for Trade and Sustainable Development has made copies of the draft Commission legislative proposals for CAP reform available here. These are the versions circulated within the Commission for comment, and they could change further before they are formally released to the European Parliament and the Member States on 12 October next.  Nonetheless, the draft regulations are worth analysing in detail because of the indications they give to the Commission’s thinking.

The proposals are contained in four main regulations which would replace the existing regulations governing the CAP, as follows:
–    A regulation governing direct payments under Pillar 1
–    A regulation governing rural development payments under Pillar 2
–    A regulation revising the single Common Market Organisation regulation
–    A horizontal regulation covering financing, management and monitoring of the CAP.… Read the rest

Pascal Lamy, WTO Director-General, used his keynote speech to a recent congress of European agricultural economists to address a perennial issue in agricultural trade policy, namely, whether agriculture should be treated like shirts, shoes and tyres and fall under the same trade regime?

“Now, while the international community broadly-speaking agrees on what the basic objectives of agricultural policy are, I believe that there continues to be a disagreement on what “global integration” can do for agriculture (in particular, international trade). Is greater global integration beneficial or harmful to agriculture? That is the question that underlies trade negotiations in this field at the World Trade Organization, but it is also a question for which a coherent response has yet to emerge.”

… Read the rest

This guest post is written by Professor Ulrich Koester, Professor Emeritus of Agricultural Market Analysis and Policy at the University of Kiel. It originally appeared in German as an opinion piece in the periodical Wirtschaftsdienst 8/2011.

Discussions on the EU medium-term financial framework 2014-2020 are currently taking place in Brussels. Of particular significance are the expenditures for agricultural and fisheries policies. These policies account until now for €58 billion of expenditure or 47.4% of the EU budget. According to the draft proposal this share should reduce to 39% by 2010. It is rather shocking that, at a time when budget resources are scarce, and in light of the poor experiences to date with the current instruments and the results of numerous scientific and internal EU analyses, that it appears that the volume and structure of EU expenditure will not be greatly changed.… Read the rest

As a follow up to my earlier post on the complexities that may hold up the signing of the extended EU-Moroccan Free Trade Agreement, Korski and Leonard from the European Council on Foreign Relations in an op-ed piece in the International Herald Tribune today outline conflicting issues at play in EU-Egypt agricultural trade relations. The issue here arises from the e.coli outbreaks due to bean sprouts in northern Germany and Bordeaux earlier this year that killed at least 48 people and hospitalised hundreds more.

Apparently, investigators from the European Food Safety Authority found a link between these outbreaks and imported Egyptian fenugreek seeds used to produce bean sprouts.… Read the rest

Yet another post on a trade topic, but this is justified by the news from Geneva last week where the WTO Doha Round’s attempts to hang on to life become fainter and weaker. Pascal Lamy was in sombre mood at the meeting:

What we are seeing today is the paralysis in the negotiating function of the WTO, whether it is on market access or on the rule- making.  What we are facing is the inability of the WTO to adapt and adjust to emerging global trade priorities, those you cannot solve through bilateral deals.

While no government has yet declared that the Doha Round is dead, it is clearly on life support.… Read the rest

In September 2010 the European Commission forwarded a draft agreement on further reciprocal liberalisation of agricultural trade with Morocco to the Council and the Parliament, and ultimately the member states, for approval. This draft agreement has nothing to do with responding to the Arab Spring, although its ratification now takes place in that context.

The agreement springs from the authorisation given by the EU Council in 2005 to open negotiations under the 2000 Euro-Mediterranean Agreement which provides that the Union and Morocco will gradually implement greater liberalisation of their reciprocal trade in agricultural products, processed agricultural products and fishery products.… Read the rest

One issue which was not specifically addressed as part of either the Commission’s November 2010 Communication on the CAP post 2013 nor its proposal for the Multiannual Financial Framework is the future of the financial discipline mechanism for CAP Pillar 1 spending. Financial discipline is the process by which EU Farm Ministers each year determine if percentage reductions are required to keep Pillar 1 spending within the budget (in practice, by making reductions in direct payments).

Financial discipline explained

Financial discipline was introduced in the Fischler 2003 CAP reform to take effect over the period 2007-2013. The aim is to anticipate budgetary problems before they occur.… Read the rest