CAP Reform

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 outbreak in Germany over the summer.
• The general market disturbance clause is expanded to cover all sectors in the CMO. In this context, we should also recall the proposal for a new Special Reserve in the MFF regulation for crises in the agriculture sector with an annual ceiling of €500 million to be mobilised over and above the ceilings of the financial framework.… 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. The funds are placed under a Common Strategic Framework (CSF) at EU level which will be transposed into Partnership Contracts at national level. The CSF will replace the current approach of establishing separate sets of strategic guidelines for these funds. In principle, monies from these other funds can be used to support the priorities in the RD Regulation.… 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.

We look at the draft Direct Payments Regulation in this post and will comment on the others in later posts.… 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.”

Lamy is an international civil servant accountable to the WTO membership as a whole, where countries hold very different views on this issue. He is thus limited in what he could say, but there are three things worth taking away from his talk.… 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.

The largest share of EU expenditure goes on the first pillar of the Common Agricultural Policy.… 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. As a result, the Commission imposed a ban on the import not only of fenugreek seeds but all beans from Egypt until 31st October.

According to the article, the ban could affect up to 10 per cent of Egypt’s agricultural exports if kept in place for a full year.… 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. It is therefore important to consider the options facing the WTO before the next Ministerial Conference in Geneva on December 15-17. Two recent volumes from VoxEU.org edited by Richard Baldwin and Simon Evenett provide a good discussion of the current malaise  (see Next Steps: Getting Past the Doha Crisis and Why World Leaders Must Resist the False Promise of a Doha Delay).… 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. The negotiations were concluded in December 2009 and the Commission forwarded the agreement for approval in September 2010 with the hope that it would come into effect in 2011. The agreement is in line with the Barcelona Process and the European Neighbourhood Policy.

However, the agreement has run into opposition in the Parliament from a mixture of motives, including foreign policy issues related to Morocco’s claim over Western Sahara and traditional agricultural opposition to further trade liberalisation, strengthened on this occasion by the after-effects of the e.coli… 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. Each year, the Commission assesses whether there is a prospect of a budget overrun during the coming year and, if necessary, proposes action to address this. The Commission must make a proposal for adjustments to spending if it projects that Pillar I spending (market measures and direct aids of the CAP) is likely to exceed the Pillar 1 ceiling reduced by a margin of €300 million.… Read the rest

Ever wondered how French farmers (and farmers in general) fight the PR war necessary to keep those CAP subsidies flowing? Then take a look at this, from yesterday’s stage of the Tour de France, the world’s biggest and most prestigious professional bicycle race.

… Read the rest