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EUROPEAN PARLIAMENT
Directorate-General for Research
WORKING DOCUMENT
THE AGRICULTURAL ASPECTSOF THE AGENDA 2000
AND ACCESSION OF THE COUNTRIESOF CENTRAL AND EASTERN EUROPE
INTRA AND EXTRA INSTITUTIONAL DEBATEON THE COMMISSION PROPOSALS
Agriculture, Forestry and Rural Development Series
AGRI-121 EN01-1998
THIS DOCUMENT IS PART OF THE ANNUAL RESEARCH PROGRAMME FOR 1998 OF THE EUROPEANPARLIAMENT'S DIRECTORATE-GENERAL FOR RESEARCH (REF.: IV/WIP/97/12/043) AND HAS BEENREQUESTED BY THE COMMITTEE ON AGRICULTURE AND RURAL DEVELOPMENT. IT IS ACONTRIBUTION TO THE COMMITTEE'S REPORT ON THE REFORM OF THE COMMONAGRICULTURAL POLICY (AGENDA 2000 - PART ONE, CHAPTER III) (COM(97) 2000 - C4-0522/97),DRAFTSMAN: ARLINDO CUNHA (A4-0219/98 - 3.6.1998).
AUTHOR: MRS. MARGRET SCHELLINGADMINISTRATOR
WITH THE ASSISTANCE OF MISS JOANNA DUTTA, VISITOR
SUPERVISOR: DR. ANGEL ANGELIDISHEAD OF DIVISION
MANUSCRIPT COMPLETED IN JANUARY 1998
ORIGINAL: ENGLISH
PUBLISHER: EUROPEAN PARLIAMENTDIRECTORATE-GENERAL FOR RESEARCHDIVISION FOR AGRICULTURE, FISHERIES,FORESTRY AND RURAL DEVELOPMENTROBERT SCHUMAN BUILDINGOFFICE 6/15L-2929 LUXEMBOURGTEL: +352-4300-24113FAX: +352-4300-27719
THIS STUDY DOES NOT REPRESENT THE OFFICIAL POSITION OF THE EUROPEAN PARLIAMENTAS AN INSTITUTION.
REPRODUCTION AND TRANSLATION FOR NON-COMMERCIAL PURPOSES ARE AUTHORISEDPROVIDED THE SOURCE IS ACKNOWLEDGED AND THE PUBLISHER IS GIVEN PRIOR NOTICE ANDSENT A COPY.
PRINTED IN LUXEMBOURG
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Table of Contents
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Principal Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PART 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1. Legislative Background of the Agenda 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. Objectives of the Agenda 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8a. CAP reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8b. CEEC Enlargement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8c. Budget Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
B. Commission Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1. Proposals for the Reform of the Common Agricultural Policy . . . . . . . . . . . . . . . . . . . . . . . . 10a. Crop Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10b. Beef Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11c. Reform in the Dairy Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11d. Mediterranean Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12e. Differentiation and Ceilings for Direct Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 12f. Rural Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2. Agricultural Aspects of Enlargement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3. Budgetary Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PART 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
A. Procedure and Examination of the Commission Proposals and Interinstitutionaland External Debate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1. Procedure Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2. European Parliament . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162.1 Report Oostlander (A4-0101/96) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162.2 Report Christodoulou (A4-0353/96) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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2.3 Report Rehder (A4-0384/96) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172.4 Report Oostlander Baron Crespo (A4-368/97) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182.5 Report Colom I Naval (A4-0331/97) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3. Council of Agricultural Ministers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22a. Agricultural Ministers Positions regarding Cap reform and Enlargement . . . . . . . . . . . . 22b. Position of the National Delegations regarding Agenda 2000 CAP reform
proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26c. Budget Debate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4. Economic and Social Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5. Committee of the Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
B. Responses from Agricultural Organisations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
1. COPA, COGECA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2. CPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3. National Organisations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4. Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
PART 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
1. Agricultural Council's Text 17, 18 November . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2. Presidency Conclusions of the European Summit, Luxembourg 13,14 December . . . . . . . 39a. Evolution of Union Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40b. Reform of the Common Agricultural Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40c. Accession of the CEEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40d. Budgetary Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3. Future Outlook for the Reform of the CAP and the Accession of the CEEC . . . . . . . . . . . 41
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
CEEC-Countries of Central and Eastern Europe (PECO - Pays d’Europe centrale et orientale),1
the 10 associated countries of Central and Eastern Europe, listed here in chronological order of theirapplication to the EU. Hungary, Poland, Romania, Slovakia, Latvia, Estonia, Lithuania, Bulgaria, theCzech Republic and Slovenia.
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FOREWORD
This report provides the background to and an outline of the agricultural proposals of the “AGENDA2000" communication presented to the European Parliament and the European Council by the EuropeanCommission on 16 July 1997 (COM(97)200).Regarding agriculture the Agenda 2000 deals broadly withthree issues. The first is further reform of the CAP by attempting to move important segments of EUagriculture toward further market orientation. The second thrust concerns support for rural developmentand infrastructure. Finally, Agenda 2000 sets the budgetary framework for the financing of agriculturalsupport up to the year 2006.
It is the aim of this report to summarise the process and the agricultural proposals within the Agenda 2000and to explore the implications they have for the accession of the 10 applicant Central and EasternEuropean States (CEEC) and to outline the proposals for the budget regarding agriculture. 1
The responses to the Communication both within the EU institutions and the external debate will beaddressed . These responses will be divided into the debate within the European Institutions and theresponse within agricultural organisations, chambers of agriculture and in the specialist press.
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Principal Abbreviations
APAF Agricultural Preaccession FundCAP Common Agricultural PolicyCEEC Countries of Central and Eastern EuropeCOGECA General Committee of Agricultural Cooperation in the EUCOPA Committee of Agricultural Organisations within the EUCPE European Farmers CoordinationEAGGF European Agricultural Guidance and Guarantee FundEC European CommunityEU European UnionGATT General Agreement on Tariffs and TradePECO Pays de d’Europe Central et OrientalPHARE Poland Hungary Aid for the Reconstruction of the EconomyURA Uruguay Round AgreementWTO World Trade Organisation
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PART 1
A. INTRODUCTION
1. Legislative Background of the Agenda 2000
The Enlargement of the European Union was agreed upon (at the European summit) in Copenhagen in1993 and confirmed in Essen in December 1994, Cannes in June 1995 and Madrid in December 1995.
Upon request of the European Council of Essen in December 1994 in May 1995 the Commissionpresented a White Paper on the preparation of the CEEC for integration into the EU (COM(95)163) providing guidance to the associated countries in preparing themselves for operating under the EU'sinternal market, followed by an Interim report to the European Council on the effect on the policiesof the EU of enlargement to the associated countries of central and eastern Europe(CSE(95)605) in December 1995 and an Agricultural Strategy Paper (CSE(95)607) based uponseveral country and sector studies prepared in collaboration with scientific advisors, highlighting the mainchallenges of an EU-accession of the CEEC for the CAP and drawing up policy options for the future.
In July 1995 the Commissions also published a working document on the Agricultural Situation andProspects in the CEEC comprising a series of ten country reports and a summary report, attempting toprovide an objective analysis of the situation in agriculture and the agro-food sector in the CEECs and anassessment of the developments to be expected in the medium term.
After all ten CEECs associated with the EU had formally applied for EU membership, in April 1996 theCommission sent a series of factual and technical questions concerning their societies to the applicantcountries with the view to preparing opinions on the individual countries' membership application.
On 16 July 1997 the European Commission presented the Communication (COM (97)2000) entitled“Agenda 2000" to the European Parliament. In Volume 1 “ For a stronger and wider Union” thedevelopment of Union policies is dealt with including further reform of the Common Agricultural Policyto deepen the commitment to economic and social cohesion as well as to agricultural and ruraldevelopment while preparing the Union for enlargement. Part III of Volume 1 provides the new financialframework for the period 2000-2006. It demonstrates that the twin objectives of deepening and enlargingthe Union can be achieved within the 1.27% GNP ceiling for own resources, thus ensuring continuedbudgetary discipline, and addresses the question of the future financing of the system. Volume 2addresses, “The Challenge of Enlargement”, containing an analysis of the impact of enlargement on theUnion’s policies and a detailed presentation of the reinforced preaccession strategy. Volume 3 presentsthe "Opinions of the European Commission on the Applications for Accession” and is complemented by10 individual reports on the CEEC's Applications for Membership of the European Union(COM(97)2001-2010).
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2. Objectives of Agenda 2000
a) CAP reform
The objective of the agricultural proposals of the Agenda 2000 is to deepen the reform of the CommonAgricultural Policy of 1992 proposed by the Commissioner for Agriculture and Rural Affairs at the time,Mr Ray MacSharry. Two major factors obliged the EC Commission to undertake a major review ofagricultural policy. A renewed upward trend in intervention stocks, especially of cereals, dairy productsand beef, once again threatened together with increasing expenditure on other products, to undermine thebudgetary discipline imposed by the European Council in 1987. At the same time the EC came undergrowing pressure in the Uruguay negotiations to meet the insistent demands of its GATT (GeneralAgreement on Tariffs and Trade) partners to reduce the effect of its subsidised exports on world markets.
The 1992 proposals involved substantial cuts, to be spread over three years, in the level of support pricesfor all the main product groups, and a further reduction in milk quotas. A double effect was thus to beachieved of cutting budgetary expenditure and bringing the price of exports closer to those prevailing onworld markets. Payments to compensate farmers would be on a per hectare basis (thus decoupled fromphysical production) but intended to be biased in favour of small producers because larger farmers wouldbe obliged at the same time to set aside (fallow) in rotation a prescribed proportion of their arable land.
The Commission now proposes deepening and extending the 1992 reform through further shifts from pricesupport to direct payments and developing a coherent rural policy to accompany the process.
b) CEEC Enlargement
Within the far reaching political and economic change resulting form the enlargement of the EuropeanUnion to the Countries of Eastern and Central Europe particular strain will be felt in the area of agricultureand rural development due to the relative size of the agricultural sector and the substantial agriculturalproduction potential of the CEEC, which are bound to lead to severe strains for the Common AgriculturalPolicy in its present form .
Integrating CEEC agriculture into the current CAP would lead to substantial budgetary and tradeproblems. Direct income support payments might have to be extended to the farmers in the new membercountries and increasing production surpluses would need to be sold on the world market using exportrestitutions to bridge the gap between the EU and the lower world market prices.
Estimates of the additional costs of administering the agricultural markets in an enlarged Union rangebetween 5 and 50 billion ECU. However, even at the lower end of this range the burden on the EU budgetwould be major and would exceed the current budgetary ceiling on agricultural expenses that links thegrowth of the agricultural budget to that of the overall budget.
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The second reason why the Eastward enlargement will generate problems for the CAP arises from theobligations that the EU and the CEEC have assumed within the GATT/WTO framework. The UruguayRound of the GATT negotiations established ceilings for subsidised agricultural exports and for the totalamount of agricultural export subsidies difficult to be phased in over the period 1992 to 1999. These limitswould become binding constraints for an enlarged EU with its increased agricultural production surpluses.A renegotiation of the trade agreements within the WTO in the next round of negotiations starting in 1999on the other hand, would be bound to be cumbersome and difficult.
It is wholly in the interests of the EU to help the CEEC re-establish their agricultural and agro-food tradewith the CIS since the CEEC still enjoy a privileged political and geographical position in keeping CISmarkets supplied. Since 1993 net CEEC agro-food exports to the countries of the ex-USSR haveincreased. In 1996 these exports will account for approximately 35% of all CEEC agro-food exports andin some countries (e.g Poland) they will even equal the proportion of exports to the EU. This is a promisingavenue for the expansion of trade in CEEC agri-food products, and therefore should be encouraged bythe EU. The eventual accession of the CEEC could pave the way for possible extra-Community trade withthe CIS which would also help to ease pressure on Community markets
c) Budget
Since the agreement reached at the European Council meeting in Brussels in February 1988 theCommunity budget has been contained within a medium term financial framework accepted jointly byCouncil, Parliament and Commission. The present financial framework covering the period 1993 to 1999laid down in the Delors II proposals was confirmed at the 1992 Edinburgh European Council Summit,where the expenditure ceiling was set at 1.27% of EU GNP laid down in the decision on own resources.
EAGGF- European Guidance and Guarantee Fund
The implementation of the reform of the Structural Funds since 1 January 1989 has gradually changed thenature of the aid granted by the EAGGF Guidance Section. An ever-increasing share of Communitycontributions is taken up by the part-financing of operational programmes ( 92% of the total in 1995 ascompared with 52% in 1993 and 40% in 1991). The second reform of the Structural Funds, which cameinto force on 1 January 1994 can - as far as agriculture is concerned - be broken down into the followingfour objectives;
(i) Objective 1 (regions whose development is lagging behind)(ii) Objective 5(a) (agricultural structures in all regions)(iii) Objective 5(b) (rural development in certain limited areas)(iv) Objective 6 (regions with extremely low population density), following the accession of the
new Member States.
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The general trend in the European Agricultural Guidance and Guarantee Fund (EAGGF) GuaranteeSection expenditure since 1990 can be summarised as follows;
(Million ECU)
1990 1991 1992 1993 1994 1995 1996
Guideline Expenditure Financed within the guidelineMargin
Total Expenditure (1)
30 630 32 511 35 039 36 657 36 465 37 944 40 828
25 069 30 961 31 119 34 950 32 970 34 503 39 108 5 561 1 550 3 920 2 067 3 495 3 441 1 720
26 454 31 784 31 950 34 590 32 970 34 503 39 108(2)
(2)
(1) All types of Expenditure have been financed within the guideline as from 1993(2) Preliminary
Source: Commission DG VI - EAGGF
B. COMMISSION PROPOSALS
1. The proposals for the Reform of the Common Agricultural Policy
The new reform proposed for agriculture in the Agenda 2000 Communication was based on the policychoice expressed in the “Agricultural Strategy Paper” presented by the Commission to the EuropeanCouncil in Madrid in December 1995 (CSE(95)607).
a. Crop Sector: Cereals, Oilseeds and Protein crops
C In a recent analysis by the Commission (“CAP 2000, Long term prospects, Grains, Milk and MeatMarkets”, European Commission-1997) cereals yields are forecast to resume their upward trend andproduction is therefore expected to rise from 201 million tons in 1996 to 214 million tons by 2005.From 2001 onwards the GATT commitments on subsidised exports become constraining for bothwheat and coarse grains, leading to a rapid increase in intervention stocks ( some 58 million tonnesby 2005). However oilseeds are expected to increase very modestly and the area cultivated is strictlylimited by the outcome of the Uruguay Round Agreement.
The Commission favours a more offensive strategy for the CAP to simultaneously avoid the routine useof export subsidies, reinforce the competitiveness of cereals on the single market and to bring about moresimplification.
The Commission therefore proposes the following measures from 2000 on:
- The cereals intervention price is to be fixed in one step (2000) at a safety net level of 95.35 ECU/ton,( presently 119.19 ECU ton);
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- A non-crop-specific area payment is to be established at 66 ECU/ton (multiplied by the regionalcereals reference yields of the 1992 reform); this payment will be lowered if the market prices aresustained at a higher level than currently foreseen;
- Set aside: the reference rate for compulsory set-aside is fixed at 0%, voluntary set-aside is allowed,extraordinary set-aside is abolished; set-aside areas get the non crop specific payment;
- Silage cereals (mainly silage maize) are excluded from the regime;
- Special cases: for protein crops, a supplementary aid is established at a level of 6.5 ECU/ton in orderto preserve their competitiveness with cereals; for durum wheat the present supplements aremaintained.
b. Beef Sector
According to analysis by the Commission beef will be subject to a cyclical downswing of production until2000. Supply control measures adopted in 1996 to address the effects of the BSE crisis as for examplethe elimination of adult cattle over 30 months in the UK from the food and feed chain, will lead to asubstantial reduction in stocks over the next few years. After 2001, however, if the market policy remainsunchanged intervention stocks would tend to accumulate gain given the GATT limited export possibilitiesand could reach some 1.5 million tonnes by 2005.
Instead of simple technical measures such as quotas on animal numbers or on production, the Commissionproposes a “proactive approach” to reduce export funds to traditional destinations, help develop newexport outlets without subsidies and rebalance internal meat consumption to the benefit of beef. Thereforeover the period 2000-2002 the Commission proposes to gradually establish a market support level of 1950 ECU/ton (presently at 2 780 ECU/ton).
In response to income loss the Commission proposes direct income payments, gradually increasing andstill paid per head of cattle reaching the following level:
- Suckler cow (yearly payment) will increase from 145 ECU to 215 ECU
- Male Bovine Bull (one payment) from 135 ECU to 368 ECUSteer (two payments) from 109 ECU to 232 ECU
- Dairy cow (yearly payment) a new level of 70 ECU
c. Reform in the Dairy Regime
Due to the fragility of the milk and dairy products sector the Commission rejects radical proposals, suchas drastic price cuts and rapid abolition of the quota system. Instead the Commission points out that thepresent system can not be sustained indefinitely and takes a cautious approach proposing to:
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- extend the quota regime up to 2006;- improve flexibility and simplify the present common market organisations;- gradually decrease support prices, by an average of 10% in total over the period;- introduce a new yearly payment for dairy cows adjusted to average yield, at a level of 145 ECU.
(The total dairy cow premium would equal the suckler cow premium of 215 ECU).
d. Mediterranean Products
In this part of the document the Commission limits its propositions to the reform of the tobacco and oliveoil sectors which it presented in a report to the Council and Parliament and announces a reform proposalfor wine. For more detailed discussion of these proposals see the bibliography for the working study onwine and olive oil by the Parliament Directorate General for Research.
In relation to fruit and vegetables the Commission intends to carefully monitor the implementation of thereform agreed by Council in July 1996.
e. Differentiation and ceilings for direct payments
The Commission intends to propose the introduction of an individual ceiling covering all direct incomepayments granted under the Common Market Organisations. In addition, while excluding renationalisation,Member States would be allowed to introduce differentiation criteria according to commonly agreed rules.
f. Rural Policy
Targeted agri-environmental measures such as organic farming, maintenance of seminatural habitats, alpinecattle keeping etc are to be reinforced and encouraged through increased budget funding. Low inputfarming systems are to be promoted. The Commission will make a proposal enabling Member States tomake direct payments, conditional on compliance with environmental provisions.
To encourage sustainable rural development, a reorganisation of existing rural policy instruments isproposed:
- The existing accompanying measures financed by the EAGGF Guarantee section (agri-environmentscheme, afforestation, early retirement) to be supplemented by the less favoured areas (LFA) schemeincluding its application in the Objective 1 regions.
- For those areas eligible under Objective 1 of the Structural funds the present approach of integrateddevelopment programmes will be maintained.
- In the rural areas eligible under the new objective 2, operations ( formerly objectives 5(a) and 5(b))will be financed by the EAGGF Guarantee Section as accompanying measures.
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- In all rural areas outside Objective 1 and the new objective 2, rural development measures toaccompany and complement market policies will be co-financed by the EAGGF Guarantee section.They will be applied horizontally and implemented in a decentralized way, at the initiative of theMember States.
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2. Agricultural Aspects of Enlargement
In the second volume of the Agenda 2000 entitled “The Challenge of Enlargement” the Commissionpresents the principal perspectives of accession of the CEEC, the consequences for agriculture andbudgetary costs for the Union.
i) Agriculture is significantly more important in the CEEC than in the EU in terms of contributionto GDP, and especially in terms of share in total employment. On average 22% of the workforce(9.5 million) in the CEEC compared to 5% (8.2 million) in the EU are employed in agriculture.
ii) Agricultural prices in the candidate countries are in general substantially lower than thosein the EU, but these prices vary considerably by country and by product. In 1995, farm gate pricesin the candidate countries were in the range of 40-80% of the EU level, with 10-30% for cereals,oilseeds and protein crops, 30-40 % for milk and dairy products, 35-45% for beef and up to 80%for certain fruits and vegetables. The Commission predicts that agricultural prices will rise in theCEEC and price gaps for cereals and beef may have significantly diminished if the Commission'sreform proposals are carried out. However, significant price gaps will still exist especially for dairyproducts, sugar and certain vegetables and fruits.
iii) The Commission projections for production and consumption of the main crop and livestock productscover the period up until 2005 are based on the working hypothesis that all 10 countries would joinin 2002 and would start applying the CAP in its present form. In 1992, as explained, under thereforms proposed by McSharry direct payments to farmers, set aside and compensatory paymentswere introduced. However direct payments to farmers under the present CAP are inappropriate forthe CEEC as the payments were meant to compensate for reductions in price support. Thereforecandidate countries are in great need of structural improvement programmes and economicdiversification in rural areas.
3. Budgetary Criteria
According to Commission estimates, if the current method of calculating the guideline is maintained, thefollowing expenditure for the reformed agricultural policy within the 15 Member States could be covered:
- market intervention measures and export refunds should decrease as a result of the reform by 3.7billion ECU by the year 2006;
- direct compensatory payments which are expected to entails additional expenditure of about 7.7billion ECU by the same date;
- existing accompanying measures at approximately 2.8 billion ECU / p.a. plus an additional 1.9 - 2.0billion ECU over the entire period of reference for new accompanying measures aimed at ruraldevelopment and horizontal measures for fishery.
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At the same time agricultural expenditure for the applicant countries would comprise:
- pre-accession aid, currently estimated at about ECU 500 million per year, for modernising farms andagri-food distribution channels;
- market organisation measures upon accession of a first group of new Member States between 1.1and 1.4 billion a year and enhanced accompanying measures and special modernisation aidfollowing on from the pre-accession measures, an additional amount rising from 0.6 to 2.5 billionover the period from the time of accession.
The Commission intends to propose the introduction of an individual ceiling covering all direct incomepayments granted under the Common Market Organisations. In addition, while excluding renationalisation,Member States would be allowed to introduce differentiation criteria according to commonly agreed rules.
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PART 2
A. Procedure and Examination of Commission proposals and Intra- and Extra- InstitutionalDebate
1. Procedural Framework
The General Affairs Council was instructed by the European Council of Amsterdam to examine in detailthe different elements that make up the Agenda 2000, presented by the European Commission on 16 July1997 namely;
i) the development of Union policies, in particular the agricultural and structural policies, especially inthe prospect of enlargement, as well as the financial framework of the EU after 1999;
ii) a certain number of general questions linked to the enlargement process ( pre-accession strategy,conditions for the opening of negotiations, etc);
iii) the Commission’s opinions on each country applying for membership.
The detailed report was submitted to the European Council of Luxembourg on 13-14 December1997. Before this final draft a working method was followed as approved by the EU15 during the GeneralAffairs Council of 22 July 1997 to follow as closely as possible the precedent set by negotiation on theDelors II package.
i) The Committee of Permanent Representatives (COREPER) has a mandate to examine all theitems composing Agenda 2000 assisted by a “Group of Friends” examining matters related to theevolution of Community policies and the financial framework and by an “Enlargement Group” formatters related to membership applications.
ii) the Ecofin and Agricultural Councils being kept informed of the development of discussions andable to address the issues concerning them more particularly.
This initial investigation phase began with a policy debate during the General Affairs Council of 15September 1997, an outline of the final report was presented to the General Affairs Committee on 10November 1997, and a draft final report was submitted the General Affairs Council on 24-25 November1997. The Agricultural Council convened at an informal meeting at Echternach on 7-9 September1997 where Agricultural Ministers voiced very diverse opinions on the Agenda 2000. The conclusionsof the Agricultural Council of 17-18 November 1997 (the fourth version of the draft initially suggested bythe Luxembourg Presidency) were endorsed by fourteen of the fifteen Member States as Spain refusedto agree to the future financing of the CAP, and was accepted at the European Summit on 13-14December 1997.
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Within the European Parliament Draft Opinions from all Committees were submitted to the Committeefor Foreign Affairs, Security and Defence Policy, where a joint report on "A Strategy forEnlargement" was proposed by M. Oostlander and "The Impact on EU policies" by M. Baron Crespoon 17 November 1997 in preparation of a Common Resolution voted on 3-4 December 1997 by theParliament in Brussels “Report on Preparation of the Countries of Central and Eastern Europefor Accession to the Union, on the basis of the White Paper on the Subject (COM(95)0163- C4-0166/95)” (A4-0101/96- OJ C141- PE215.521). The report was approved by 373 votes for, 28against and 58 abstentions and presented at the European Summit on 13-14 December 1997 inLuxembourg (see 2.4).
Similarly draft opinions were submitted to the Committee on Budgets, Rapporteur M. Joan ColomI Naval, for his report on Agenda 2000: the 2000-2006 financial framework for the Union and the futurefinancing system "Future financing of the European Union (Agenda 2000)" (A4-0331/97-PE223.701).
2. European Parliament
The European Parliament has dealt with the agricultural aspects of the 5th enlargement on severaloccasions.
2.1 Report Oostlander (A4-0101/96)
In March 1996, the Committee on Foreign Affairs, Security and Defence Policy (Rapporteur: M.A.Oostlander) submitted a "Report on Preparation of the Countries of Central and Eastern Europe forAccession to the Union, on the Basis of the White Paper on the Subject (COM (95) 0163 - C4 -0166/95" (A4-0101/96 - OJ C 141 - PE 215.521) containing amongst others an opinion from theCommittee on Agriculture and Rural Development. In its opinion the Committee on Agriculture welcomesthe White Paper as an important practical step within the integration strategy, regrets, however, that in itsWhite Paper the Commission has only dealt with particular sectors of agricultural policy (e.g. veterinary,plant health and animal nutrition provisions and the marketing of individual products), considers itpreferable to tackle the key problems for agriculture posed by enlargement and considers theCommission's views on the scale and form of the extension of the EAGGF to the new Member States andthe timetable therefore as of particular interest.
2.2 Report Christodoulou (A4-0353/96)
In November 1996, the Oostlander report was followed by the Committee on Budgets “ Report on theFinancing of the Enlargement of the European Union” (A4-0353/96-PE 218.268), Rapporteur MrChristodoulou. In its resolution (OJ C20, 1997) the Parliament considers the differences between theCEEC and the EU in the importance of agriculture as an economic sector, current prices for agriculturalproduce, portion of family income spent on food and current farm subsidies. In addition the discrepanciesin the analyses of the cost of enlargement are noted, the absolute necessity of a further CAP reform isemphasised and it is stressed that the CAP must take into account the foreseeable world market demand
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increase for agricultural products, demands regarding product quality and environmentally sound farmingmethods, the next round of WTO negotiations and the new financial framework for the EU budget from1999. Mr Christodoulou stresses the need for a flexible rather than a rigid framework for financialperspectives form 2002 to 2006 and supports the proposal by Mr Van den Broek to create a fundintended to make up for delays on the part of certain applicant countries.
2.3 Report Rehder (A4-0384/96)
In December 1996 Parliament debated and voted the Committee on Agriculture and Rural Development’s(Rapporteur: Mr K. Rehder) “Report on the Commission study on Alternative Strategies for theDevelopment of Relations in the Field of Agriculture between the EU and the AssociatedCountries with a view to Future Accession of these Countries” (A4-0384/96-PE 218.441- OJ C20/1997). Apart from outlining the basic structural differences between the EU and the CEEC and theproblems persisting in the CEEC, this resolution deals more specifically with the situation in the EU,highlighting the importance of consumer protection aspects, the problem of the decline of rural areas, therole of European Farmers for society and environment, considering the important contribution tomodernisation through the PHARE programme ( ECU 578 million granted to the agricultural sector) theas yet incomplete CAP reform, the objective of simplification of agricultural policy.
Considering the Commission’s intention to develop a “strategy toward more market orientation andcompetitiveness”, to decouple market policy and income support, to reduce the gap between internal andworld market prices and to buffer the adverse impact on incomes by accompanying measures, theexpiration of the Structural Funds and the financing arrangements of the EU in 1999 and the GATTagreements in 2003, the EP calls for an assessment of the 1992 CAP-reform, for the CAP to take intoaccount future developments of the world market, environmental aspects, WTO negotiations, the new EU-budget framework and the broad outlines of a CAP-adjustment to be established before the end ofspecific negotiations with the applicant countries.
Enlargement should not call into question the current level of support to agriculture; the current principles(subsidiarily, financial solidarity, Community preference and unity of the market) must be retained.
Parliament must be granted the full right of co-decision in connection with the CAP. Long-term viabilityof rural areas and sustainable husbandry are seen as important aims.
Farmer’s services in the sphere of environment and conservancy are to be properly remunerated andalternative employment to be fostered. A high level of food quality must be achieved and customers mustbe informed about the respective efforts made by farmers. Future WTO negotiations should take intoaccount environmental and social aspects.
As a basis for accession to the EU Parliament calls for more contact between the EU and the CEECsat all levels and full transparency of reforms pending in the Union for the applicants as well as forassistance aimed at restructuring, modernising and diversification of their agricultural sector and ruralinfrastructure. Regarding the cost of enlargement the EP warns against further forecasts based on uncertainassumptions and suggests that the costs of non-integration should be considered. The EP calls for a
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clarification of the future financial perspective and suggests a stronger organisation of CEEC farmers ona cooperative basis, to represent their economic interests more effectively.
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2.4 Report Oostlander Baron Crespo (A4-368/97)
On 3-4 December 1997 in Brussels, the European Parliament discussed and voted on a commonresolution concerning Enlargement. Rapporteurs on "A Strategy on Enlargement" and "The Impacton EU policies" were Mr. Oostlander and Mr. Baron Crespo.
Various Committees have submitted their opinions (PE 224.339/Part C) on this subject, partly alsomentioning agricultural aspects:
The Committee for Employment and Social Affairs, Rapporteur Harald Ettl warns that too rapidrestructuring of agriculture in the applicant countries" could well cause social structures to break downirrevocably" leading to migratory pressures and mass impoverishment.
Rapporteur M. Fernando Moniz for the Committee for External Economic Relations criticisesan overly optimistic working hypotheses regarding prospects for growth and reform of the CAP andproposals regarding Mediterranean products for being too vague and shrouded in uncertainty.
Moreover, if the aim is to ensure that people can continue living in a renewed rural environment capableof taking on new ecological and recreational functions, the new CAP should establish a maximum limit onthe size of undertakings which qualify for aid, and without jeopardizing the overall competitiveness ofEuropean agriculture, should adjust the amount of aid inversely to the size of undertakings, with incentivesdepending on the number of people employed on those undertakings. Your draftsman believes that thesuccess of future enlargements to include the countries of Central and Eastern Europe will be largelydependent on the degree of technical preparation of and thought given to the agricultural question.
The Commission's proposed strategy is seen to be flawed in pre-selecting candidates and consequentlygenerating "new tensions between the applicant countries". The additional cost to the budget for financingthe reinforced pre-accession strategy should not result in a decrease in the aid allocated to third countriesof the Mediterranean region and special attention must continue to be paid to the northern regions of theUnion, which have small populations and specific agricultural and regional planning characteristics. TheCommission is asked to draw up studies on the sectoral and regional impact of future enlargement in termsof its effects on production and employment, which are of great importance to the forthcomingnegotiations, and to inform the EP of these studies' results.
The Committee for Development and Cooperation Rapporteur, Mrs Maj-Lis Loow, Rapporteursuggests that the CAP should be restructured parallel to the process of enlargement and reiterates that thereform of the CAP should be a response to the objectives of the political development of the Union.
The Committee for Regional Policy, Rapporteur Juergen Schroeder, urges a “cautious, step by stepapproach to enlargement”, and calls for an increase in the limit of a 0.46% of GNP for structural policymeasures.
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The Committee on Agriculture and Rural Development in its meeting of 20 October 1997considered two draft opinions drawn up by Mr. E. Des Places “On the Enlargement of the EuropeanUnion in the context of Agenda 2000 (COM(97)2000)" on the enlargement (A/332/332116- PE223.650) and the future financing of the European Union (PE 223.646). The vote on these opinions tookplace on the 28/29 October 1997 and its conclusions presented as amendments to the report of theForeign Affairs Committee who presented their joint report (PE 224.339) on 17 November 1997 for acommon resolution on 3-4 December 1997 voted by the Parliament in Brussels during which Mr desPlaces expressed that “without doubt” the European Commission had “surpassed” its mandate by turninga "technical analysis into a true policy programme without any consultation".
These reports were preceded by two working documents:
In the first (PE 223.637) the practical problems of enlargement are highlighted in a series of questions.Regarding the agricultural proposals a review of the basis for the agricultural guideline in the light of eachnew accession is called for. The impact of the proposed reform on farmer’s incomes is calculated asfollows:
Arable crops - ECU 2.8 billionBeef - ECU 2.6 billionMilk - ECU 0.2 billionMaize Silage premium - ECU 1.1 billionStructural Policy (5a, 5b) - ECU 2.4 billionTotal Losses for European agriculture - ECU 9.1 billion
Concerning operational considerations it is suggested that the ceiling on aids could be modulated on thebasis of the principle of compensation for natural disadvantages and the principle of a ceiling on aid perholding could be replaced by the principle of a ceiling per employed person, giving priority to agriculturalsectors which are labour intensive and encouraging the processing of agricultural products in the regionsof production.
In the second working document (PE 223.641) a brief scale of the agricultural economy in the EU-15 isgiven but also illustrates the difference that the basis for calculations, i.e current or constant prices and aidlevels makes in terms of agricultural incomes. The data given in Agenda 2000 is compared withagricultural incomes for the year 2006, constant prices calculated on the assumption of a deflator of 2%per year from 1996 to 2000. The Commission is asked to specify whether or not the constants indicatedin Agenda 2000 are indexed to take account of inflation-induced monetary depreciation. If prices and aidare calculated in today’s money the losses for agriculture in 2006 are calculated to amount to nearly 20%of the EU’s agricultural GVA.
Concerning the financing of the EU enlargement (PE223.646) the fact that the Commission has proposedfinancing planned to cover the entire period from 1999 to 2006 is welcomed but three presentation errorsare noted;
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C The agricultural guideline is calculated to be a total of ECU 12.8 billion but the Committeeemphasizes that the method used for this calculation must be reviewed upon accession of eachnew member state and it should not include specific pre-accession and structural measures, whichit presently does and which account for a total of ECU 2.6 billion.
C not taking account of the monetary erosion (which the Commission itself estimates at 2% per year)affecting the agricultural sector.
C underestimating the (agricultural) requirements of the Member States vis-a-vis the CAP.
In the draft opinion to the Committee on Foreign Affairs, Security and Defence Policy, Des Placesemphasises that there is no causal link between the Commission's proposals for the CAP and theprospect for enlargement within the Agenda 2000 and regrets that the Commission underestimates thedifficulties for the new Member States based on the following arguments;
C The opinions submitted on 16 July 1997 reproduce the Commission's 1995 series ofcommunications on each of the applicant countries which have not been updated or discussed.Using the 1996 harvest and 1997 forecast the Commission’s proposals are optimistic.
C The Commission's opinions on the applicant states fails to mention the conditions in the agriculturalsector. Examples of individual states are not addressed, for example agricultural structuralproblems in Poland that will lead to increased unemployment under the proposals or Hungary witha net surplus for which the Commissions export subsidies would be too high.
C The Commission starts from the assumption that the gap between prices in the CEEC and the EU15,which is wider for main arable crops than for the livestock sector, will continue to narrow. Pricedifferentials might disappear for cereals and beef and veal by the time of accession but disparitiesof between 20% and 30% will remain for milk, sugar and vegetables.
Regarding Rural Policy the creation of three specific and independent sub-objectives underObjective 2 are proposed, covering “rural areas”, “urban areas” and “maritime and costal areas”respectively. The Commission proposes to reduce the number of regional policy objectives from sevento three which can be seen to lead to two problems. Firstly, as Objective 1 and 2 areas must cover nomore than between 35 and 40% of Europe’s population, if an active rural policy is to be maintained,account should be taken of the actual number of rural inhabitants directly or indirectly involved in farmingor fisheries in declining rural areas. In the case of the structural funds , the Community budget forObjective 5a and 5b areas amounts to ECU 4.5 billion, however the Commission proposes to transferonly ECU 2.1 billion from the structural funds to the agricultural line.
Questions concerning the practical aspects of enlargement are seen to be too numerous to address. TheCommissions proposals are seen as very precise and it is asked whether the Commission could be seento be using the Agenda 2000 as a vehicle to establish a new reform of the CAP without extensivediscussion. Largely the agricultural proposals within the Agenda 2000 are rejected. It is proposed that they
Europe, No.7113 4 December 1997, p.2.1
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can be used as reference document for the Commission and the Council even before the start ofnegotiations within the WTO.
Concerning agriculture in its motion for a resolution the European Parliament, convinced that the reformof the CAP (specifically in those sectors that were excluded from the 1992 reform) and of the regional andcohesion policy is imperative independently of the accession of one or more new Member States andstressing that the enlargement to include the 11 applicant countries will bring about a considerable increasein the Union's agricultural potential and will extend the market in raw and processed produce to anadditional 100 million consumers, recalls that the EU as a whole must be successfully overhauled andstructural reforms, especially reform of the CAP must be successfully concluded if the integration of theCEECs, which has been decided and makes sense, is to be a success for both sides; regrets that, in thesector of Agenda 2000 which deals with agriculture, the Commission has put forward only piecemealdetailed proposals for individual production sectors instead of developing an overall approach which couldhave formed the basis for the orientation of all sectors of agricultural production; regrets that theCommission has not developed a specific policy framework for the rural community, as announced at theCork Conference; fears that the effectiveness of using agricultural structural funds will be diminishedbecause they are to be split between various objectives and support frameworks. It points out that theeconomic situation is not identical in all applicant countries, especially in the farm sector and that thespecific situations in those countries must be taken into account when drawing up the measures and timetables for preparations for accession and the transitional measures and timetables that are to applyfollowing integration, and believes that, given the considerable difference in prices and the appropriatenessof encouraging a rural development, the common agricultural policy in its current form should not beextended to the new members, and that perhaps it would be appropriate to consider whether to set longtransitional periods for the application of the common agricultural policy to the new Member States. TheEP considers that there is an urgent need to include in the "1992 reform" all those market sectors whichhave so far been excluded from this reform (eg. the sugar regime), as the 1992 reform is a prerequisite forextending the common agricultural policy to the accession countries.
2.5 Report Colom I Naval (A4-0331/97)
Criticism set out in the Oostlander Baron resolution to the Commission's proposals concerning futurefinancing was taken up in full detail in the resolution by the Committee of the Budgets, Rapporteur M.Joan Colom I Naval (A4-0331/97), on Agenda 2000: the 2000-2006 financial framework for the Unionand the future financing system "Future financing of the European Union (Agenda 2000)" (A4-0331/97-PE 223.701) (COM (97) 2000-C4-0372/97), which the committee had adopted 27 October1997, who expressed that irrespective of enlargement the CAP must be reformed by 2003 and essentiallyconsiders it too early to set a ceiling for own resources at 1.27% at the present time . During the debate1
for a common resolution Mr Colom criticised the approach taken by the Commission in Agenda 2000consisting, he argued, of setting a fixed own resources ceiling and then “doing everything possible to staywithin it”. He accepts the Commission’s proposals on the future financing system as a “starting point”, butrequests it to formally present new financial perspectives of the EU15 with an enlargement chapter and
National Agricultural Ministers highlighted in following table.1
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an interinstitutional agreement covering budgetary discipline, with a revision clause following case-by-caseevaluation of the budgetary implications of each accession.
The Commission’s proposed strategy is seen to be flawed in pre-selecting candidates and consequentlygenerating “new tensions between the applicant countries”. The additional cost to the budget to financethe reinforced pre-accession strategy should not result in a decrease in the aid allocated to third countriesof the Mediterranean region and special attention must continue to be paid to the northern regions of theUnion, which have small populations and specific agricultural and regional planning characteristics. TheCommission is asked to draw up studies on the sectoral and regional impact of future enlargement in termsof its effects on production and employment, which are of great importance to the forthcomingnegotiations, and to inform the EP of these studies results.
3. Council of Agricultural Ministers 1
a. Agricultural Ministers Positions regarding Cap reform and Enlargement
The Agricultural Ministers voiced their opinions on the Agenda 2000 at the informal meeting atEchternach from 7-9 September 1997. In general the Swedish, Danish and UK delegations called forthe reforms to go even further whilst the Belgian, Austrian and Finish delegations voiced specificreservations. The following summary outlines the positions of the Member States on the Agenda 2000Agricultural Reform proposals with regard to the impact on CEEC accession.
Member PositionState
France Mr. Louis Le Pensec considered the Commission had not put enough emphasis onthe objectives of independent supply, community preference and land occupancy. Hecalled for full consultation and economic and structural impact analyses beforedefining the instruments of the new CAP. He criticised the 1992 reform for undulyfavouring intensive beef production and urged caution this time around.
Agra Europe, 21 November 1997. EP/9.1
25
Germany For cereals in particular, Mr. Borchert questioned the projections used by theCommission. He argues that emphasis must now be maintained on productivity,because the reform proposed , especially the ceiling on aid per farm is going topenalise the most efficient producers and lead to ( through partial compensations fromdeclining prices) a loss of income of the order of 15% to 20 % for all Germanfarmers. On the other hand Germany is in favour of reforming the beef sector andmaintaining the system of dairy quotas until 2006.
Dr Deterd Goeman, deputy director general, market policy affairs at the FederalMinistry of Food, Agriculture and Forestry Conference gave full support to theproposals to extend the milk quota system until the year 2000 but criticised the 10%price reduction. He claimed that abandoning the quota regime would lead to abreakdown not only of the European market but also of world markets within 2 to 3years, with repercussions also felt in New Zealand and Australia. Goeman supportsproposals to manage the milk system in a more flexible manner and in particular tostrengthen the dairy farmer’s position on the quota market and to pay compensationper cow to dairy farmers for declining beef prices which could be managed in virtuallythe same way as the suckler cow premium.
EnlargementDr. Goeman favours price adjustment implemented over a transition period with milkprices gradually adjusted to the EU price level. He criticises income support per cowto dairy farmers. 1
Austria Mr. Wilhelm Molterer approved the financial framework and general objectivesand especially the strategy of anticipation and enlargement of the Agenda 2000reform. However he had reservations concerning the reduction of prices and wasconcerned about the system of single arable premiums for oilseed production.
Denmark Generally in favour of proposals, welcoming enlargement and the potential of newmarkets. The Commission’s budgetary calculation of the CEEC integration are seenas realistic.
Denmark supports a development towards the dismantling of the CAP, and a removalof international trade barriers so that agriculture can act as a free enterprise.
Removal of the price support will be a further advantage in relation to accession ofthe Central European Countries (CEE) in the EU, because due to the economic andenvironmental development of the consumers of these countries it is seen as morefavourable to involve these countries in the traditional high-price policy of the EU.Enlargement negotiations should not be impeded by agricultural considerations.
Europe Agri no.8-October 24,1997.1
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Spain Spain refused to sign a blueprint clearing the way for detailed negotiations,concerned that the CAP funds will be diverted to central and easternEuropean states (CEEC). Spanish Minister Loyola de Palacio criticised theCommission for giving too much importance to the enlargement where periods oftransition will be inevitable. She voted against the final agreement on instructions fromthe Spanish prime minister after she failed to win a commitment to reserve the entireagricultural budget up to 2006 for the current fifteen Member States.
The delegation demanded for an amendment clearly stipulating that the agriculturalguideline would be exclusively reserved to the Fifteen and demanded the creation ofa separate funds for the financing of pre-accession costs and the integration ofapplicants for admission to the European Union. Generally against the Agenda 2000 proposals for agriculture which are judged asincoherent as they are targeted at the northern countries and risk mixing the funds ofthe EU15 and the CEEC. Spain is the largest recipient of agricultural and structuralfunds of the EU15.
Finland 2 years after accession to the EU, Finland suffers from the shock of the CAP. Mr.Kalevi Hemila criticised the approach proposed to reform the arable systems and,in particular opposed the drop in prices which would lead to the destruction of certainareas of production. He was also concerned about the consequences of this reformon oilseed production. He approved the mechanism proposed to redistribute cerealaid more fairly and also favoured the extension of the milk quotas.
Ireland Reduction of prices seen as inevitable in view of the next negotiations for enlargement,which should not entail a loss of revenue for Irish farmers. Mr. Joe Walsh insistedon the protection of small farmers, underscoring the need for fair treatment of allsectors and regions and guarantees for the income of farmers and food safety.
Italy Mr. Michele Pinto welcomed the objectives defined by the Commission, althoughfor him the reform does not go far enough with regard to the regionalisation of aid andeven less so regarding milk quotas which should be dismantled over 6 years withcompensation, until then he calls for a further increase in Italy's national quota. Pintosees the cuts as unacceptable on the whole and would like to see the proposedreduction in support prices modulated according to different cereal types. Heopposes the Commission’s proposal to align the oilseed aid regime with that forcereals, and strongly criticises its proposals to retain the compulsory set-asidemechanism, even if its rate is set at zero for the foreseeable future. 1
Demands measures to protect aid to Italian farmers in view of enlargement.
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Holland General support of proposals. Dutch Agricultural Minister Mr. Van Aartsenfavours reduction of agricultural prices and increased liberalisation but argues thatcompensation should be proportional to total production. He warned that theproposed price cuts would only be acceptable if the current favourable marketsituation persists.
UK Support of the proposal to reduce support prices by 20% in the cereals sector.Crop sector should be liberalised prior to the accession of the CEEC. Propose newreduction of intervention prices, total decoupling through adjustment aids to bereduced by 10% per year and eliminated after 10 years. Wish to see a reform whichplaces greater emphasis on structural arrangements rather than prices.
Sweden Overall approval of Santer package. Propose deregulation as protection andregulation of agro-food industry is one of the principle causes of inflation.
Belgium Reform proposal criticised, Mrs. Karen Pinxten argued that the reform would leadto a decline in Belgian farm income of 10% and even 35 % for specialised producers.
Greece Critical of the reform Mr. Stephen Tzoumakas insisted on small farms, theguarantees of fair income and cohesion. He feared that too much subsidiarily willdistort competition but favoured a rebalancing of aid through the ceiling proposed.Tzoumakas denounced the discrimination against Mediterranean products and calledfor an increase of the national dairy quota.
Portugal Mr. Fernando Gomez Da Silva stressed Mediterranean products and called for areform of the rice sector. He wanted farmers to be given the opportunity and time tochange activities rather than impose penalising measures on them and to have theirincome guaranteed. In the November 18/19 meeting the delegation called for theinclusion of additional structural measures in the agricultural guidelines.
Luxembourg
Acceptance of general guidelines , approval of extension of the system of milk quotasand compensated fall in prices, but with reservations because this measure could beirrevocable in the international context.
The conclusions of the Agricultural Council of 17-18 November 1997 were endorsed by fourteenMember States despite considerable discord, for submission to the European Summit. The potentialimpact of the six-page text ( the fourth version of the draft initially suggested to the LuxembourgPresidency) was nevertheless weakened by the lack of consensus as fifteen due to Spain’s fearsconcerning the future financing of the CAP. The delegations opposition concerned in fact only thechapter on the agricultural budgetary guideline which was seen not to suffice to cover theFifteen’s agricultural expenditure beyond 2006.
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b. Position of National Delegations regarding CAP reform proposals in the Agenda 2000Communication
Position of national delegations regarding reform of the CAP UUstrongly for U for W against W W strongly against
Horizontal Questions
B Den Ger Gre Sp Fr Ir It L Holl Au Por Fin S Uux st w K
e
compatibility between W W W W W reform and next WTOnegotiations
U U U U U U U U U
direct aid ceilings per W W W W W W small holding
U U U U U U U
ceilings for direct aids at W national level
U U U
direct aids for W environmental criteria
U U U
transfer of structural funds W W W W W W W W W W to agricultural budget
U U U U
abolition of Objective 5b W W W W W W W W W (rural development)
Sectoral questions
crop sector W W W W W W W W W W W W reduction of price withpartial compensation
U U U U
reduction of price withcomplete compensation
U U U U U U UU
alignment of oil seeds aid W W W W W W W W W with cereals aid.
U U U U
exclusion of silage cereals W W W W W W W W U U U
reference for set aside fixed W at 0%
U U U U UU U U U U U
maintenance of W
supplements for durumwheat
U U U U U U U
Beef Sector W W W price reduction withcompensatory payments
U U U U U U U U U
reduction of direct income W W W payments
U U
Milk Sector W W W W W W Price reduction withcompensatory payments
U U U U U U U U U
new payment for dairy W W W cows
U UU U UU
Continuation of quota W W W W W regime
U UU U U U U U U U U
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introduction of double W quota
U U
Source: Etude du Bureau d’Agra ( Paris and Bonn) and Agra Facts in Brussels. Agra Europe. No.2636 Friday 31 October1997.
c. Budget Debate
Concerning the budgetary aspect of Agenda 2000, all delegations considered it necessary to maintain theagricultural guideline” in principle and in its current calculation arrangements”. Regarding the future financialframework some Member States, Germany in particular, argue that a number of principles should beestablished, in particular the balanced sharing of national contributions to spending and fixing theceiling of 1.27 % of EU GNP for own resources. The requirement of this ceiling is shared by severalother Member States. Some feel that it should be valid not only for the period covered by Agenda 2000(until 2006) but also beyond.
On the other hand , Spain and Portugal consider that the financial framework based on the 1.27% ceilingis not sufficient. At any rate it can not be retained from now on. It could be taken into consideration as anobjective, basing, however, the Community budget on real needs. Spain considers that , if, when the timecomes, the EU does not have the essential resources available, it will not welcome the new states.Germany and the Netherlands were adamant about the need to address the imbalance between the netcontributions of the various Member States to the Community budget; they are calling for a politicalcommitment to avoid excessive imbalances in the future.
4. Economic and Social Committee
On 22 February 1996 the Economic and Social Committee decided, in accordance with the thirdparagraph of Rule 23 of its Rule of Procedure, to draw up an "Own-Initiative Opinion of the Economicand Social Committee on the Implications for CAP of the Accession of Countries of Central andEastern Europe" (CES1505/96). The Committee's Section for Agriculture and Fisheries which wasasked to prepare this document, drew up its opinion on 5 November 1996. The rapporteur was MrBastian. The opinion was adopted on 18 December 1996.
The ESC suggests that one of the main challenges of enlargement in the agricultural sector is helpingthe CEEC restructure their agriculture , harmonise standards and improve the quality of their productsfor which the EU will have to apply an agricultural and structural policy geared to the needs of the CEEC.
The Committee points out that the Commission embraces an accelerated enlargement hypothesisand takes the view that all in all the EU does not have to fear a "catastrophe scenario" of run-awayproduction in the CEEC, that nonetheless the CEEC production potential in certain basic sectors(cereals, beef/veal, milk, poultrymeat) might eventually cause imbalances in Community markets followingenlargement and that this will have to be taken into account during accession negotiations and in pursuingthe CAP reforms embarked upon in 1992. Given the large pool of cheap labour and the lower pressureon land production costs in the CEEC will probably remain lower than in the EU in the foreseeable future.
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The real cost of extending the CAP to the CEEC will depend on a whole range of factors (world pricetrends; monetary fluctuations; developments within the EU; macro-economic situation of CEEC; tradebetween CEEC and CIS; development of agricultural potential; CEEC price guarantees; compensatorypayments; direct aid). According to the Committee a little too much attention has been focused on the costof enlargement to be borne by the EAGGF Guarantee Section leaving Structural Funds in the shade.
The Uruguay Round commitments entered into by the EU and the CEEC to limit their subsidizedexports are seen as a cause of greater concern.
Transitional periods will be necessary and characterized by accession compensatory payments andcomplementary trade mechanisms in order to gradually eliminate the price differential. During thesephases the CEEC would be able to benefit from institutionally agreed prices at a level corresponding totheir situation.
Restructuring of agriculture in the CEEC will most likely lead to a reduction in the agriculturalworkforce, which will have to be counterbalanced by an adequate social policy. The human aspect ofintegrating the agricultures of the CEEC need to be taken into account, i.e. by creating independent socio-economic organizations.
The Committee further proposes to transfer financial assistance for agriculture provided under PHAREto an Agricultural Pre-Accession Fund (APAF), and concerning the crucial issue of animal health thatthe Commission draw up a list of animal diseases in the CEEC.
5. Committee of the Regions
The CoR gives a positive opinion on the proposed reform of the Common Agricultural Policy approvesof the allocation of ECU 74.8 billion for enlargement, to drive forward preparations for adhesion. TheCommittee welcomes the fact that the Commission is proposing a financial framework which retains theexpenditure ceiling of 1.27% of EU GNP laid down in the decision on own resources currently in force.
During the 4-5 December 1997 plenary session in Brussels the Committee of the Regions presented threeDraft Opinions on the Agenda 2000 proposals:
The first opinion (CdR 303/97) on "Agenda 2000: the financing of the EU after 1999 taking accountof enlargement prospects and the challenges of the 21st century" (Rapporteurs Rembert Behrendtand Bente Nielsen) demands clarification over the new objective 2 of the structural funds.
The second opinion (CdR 280/97) on "The effect on the Union's policies of enlargement to theapplicant countries of Central and Eastern Europe" (Rapporteurs Waltraud Klasnic and BettyCoffey) explains that the enlargement of the EU will reinforce its competitiveness in world trade.
Europe Agro, No.11, 5 December 1997.1
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The third opinion (CdR 131/97) concerns structural policy (Mr. Rembert Behrendt and Mr. Manuel FragaIribarne) and calls for a simplification of regional aid with resources privileging regions most in need. 1
In the Draft Opinion (CdR 300/97) with regard to financial planning the Committee of the regions arguesthat planned compensatory aid would mean an economically and socially unacceptable loss of income forfarmers and would not justify the planned increase in agricultural spending.
B. Responses from Agricultural Organisations, Specialist Press and Others
1. COPA ( Committee of Agricultural Organisations within the EU), COGECA (GeneralCommittee of Agricultural Cooperation in the EU)
In their General Declaration the 600 delegates from CEA, COPA, COGECA attending the “Congrès del’Agriculture Européenne” in Lausanne from 10-12 September 1997, express that the proposals areunacceptable in their current form, as they would entail a drop in farmers incomes and include no measuresfor improving the competitive position of farmers.
On 6 October 1997, the COPA, in conjunction with the COGECA, published an analysis of the EuropeanCommission’s Agenda 2000 package revealing a real-term drop in farm spending of ECU 3.6 billionbetween 1999 and 2006. COPA also predicts annual aggregate losses of up to ECU 6.5 billion for thebeef and dairy sectors if the commission’s proposals are implemented.
COPA and COGECA claim that this budgetary shortfall will result form the pressures of EU enlargement,the transfer of some of the structural measures ( such as rural development support) to the farm spendingguideline, and the costs of implementing the reforms themselves. As the farm spending guideline is set toincrease by only 74% of average annual growth (estimated at 2.6% by the Commission), and theCommission’s projections provide for a spending margin of ECU 4 billion, COPA argues that these threekey elements of the Commissions strategy will necessitate a fall in spending on existing measures fromECU 38 billion in 1999 to ECU 34.4 billion in 2006 (expressed in constant 1997 prices). This wouldaffect all day to day market management measures, and would result in particular hardship in the under-developed Southern regions that are most dependent on market support, claim the farmers and theircooperatives.
Most seriously the COPA accuses the Commission of masking these unpalatable facts by using figuresadjusted for an estimated rate of inflation of 2% in calculating the projected levels of farm spending set outin the Agenda 2000. COPA's own analysis cites all figures at constant 1997 prices therefore revealinggrowth in budgetary expenditure. Noting that the Commission followed the same method in all the Agenda2000 budgetary headings except those relating to agriculture, COPA expresses concern at the “lack oftransparency” in the Commission’s budgetary calculations.
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With regard to other aspects of the Agenda 2000 reforms the COPA has not modified the stance itadopted last July, when the strategy was last revealed.
COPA terms the reform plans as “unacceptable” estimating that the proposed support cuts would arable,bring about an annual drop in farm income of about of between ECU 5.5 and 6.5 billion, in the beef andmilk sectors.
In the cereals sector, where the Commission's wants to see further price cuts of up to 30%, COPApredicts an annual loss of income of ECU 2.2 billion and insists that any price cuts must be fullycompensated.
Finally COPA deplores the Commissions neglect of all but three main sectors ( beef , cereals and milk)pointing out that this approach has effectively excluded 40% of agricultural production, notably the entireMediterranean products sector. This, argues COA, will undermine the Commission’s oft-stated objectiveof achieving greater regional cohesion.
COPA and COGECA's overall assessment of the reforms is that they are driven more by budgetaryconstraints and the need to avoid further US/EU trade conflict than by the requirements of EuropeanAgriculture, and will have the effect only of bringing EU farming closer to the US model where, as COPASecretary-General Risto Volanen explains "the family farm has ceased to exist”.
The Commission’s proposals would mean that expenditure on agricultural measures to assist the CEECto modernise ( i.e other than the cost of implementing the CAP after accession) would rise from 0.5 BECUin 2000 to 2.5 BECU in 2006 ( for both member and non-member CEEC) . This increase seems to belinked to the rise in availability of funds under the guideline rather than the fact that the needs of the CEECwill be increasing over time. In addition the cost of applying CMO measures in these countries wouldamount to 1.1 BECU in 2002 rising to 1.4 BECU in 2006.
In total, therefore, the costs of enlargement to be covered by the guideline would amount to 4.5 BECUby 2006.
2. The European Farmers' Coordination (CPE)
The Agenda 2000 agricultural proposals are seen as unacceptable as the “race towards subsidy-able land”is currently decimating small farmers, the quality of production and the rural landscape.The method and the haste of the reform is criticised for leaving no time to debate the essential aspects andthe “policy gives the management the lead” with a “deliberately contradictory instrumental menu, whereeach of the players concerned may find a very small part of what he is looking for”. The CPE considersthat reform needs to be fundamental to provide.
1. a fair income for the work of agricultural production and price supplements differentiated regionally,with ceilings per farm, in the form of direct payments, market prices and a price supplement thatcovers production costs (including labour) for a limited volume of production per farm;
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2. controlled production and a respected environment with: balanced employment (especially withpremiums for job creation) and, with regional ceilings (flexibility for all small family farms); financialassistance for adaption for intensive family farms; the lifting of compulsory set-aside; the promotionof biological methods of production; incorporation of imported animal feed in the common marketorganisation for cereals; an absorption tax beyond a certain volume of production per farm (withoutpublic funding);
3. a balanced rural world, comprising: an end to the process of concentrating production in certainspecialised regions; support for local processing, regional marketing of agricultural products anddirect sales.
4. international trade, void of dumping; the EU has to refocus its agriculture on the internal market,rejecting the practice of dumping on the international market (end of direct subsidies to exports andindirect ones in the form of a drop in supplement prices) and refusing to suffer social and ecologicaldumping (border protection).
The CPE argues that such a CAP already exists and calls for a minimum of instruments to “reduce theharm” of the Agenda 2000 including, i) a ceiling to aid, which is “essential” from 1998 already and has tobe on a farm per farm basis, taking account of the number of workers and all premiums; ii) replacementof the premium for corn/ fodder by a premium for grass/fodder, to encourage less intensive forms ofproduction and get more out of the territory iii) systematic ban on antibiotics in animal feed, iv) furtherdevelopment of support for sustainable forms of production and local marketing.
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3. National Organisations
Agricultural Agricultural Proposals, Enlargement, BudgetGroups
France: Agricultural ProposalsAPCA- Assemblée Criticise the absence of compensation for Mediterranean products.Permanente des EnlargementChambres Approve the Commission's approach to the accession of the CEEC but contend thed'Agriculture predicted costs. Emphasise the problem of phytosanitary measures with enlargement
FNSEA
BudgetThe cos ts of enlargement must be identified separately within the EU budget.Negotiations must be carried out for each country and each product. In 1997 theEAGGF represented 49% of the budget of the EU, it must constitute part of thestructural funds.
Germany: In general see a negative outcome for German farmers as a result of Agenda 2000,Deutscher calculating that price reduction will lead to a reduction in revenue for farmers of 15-Bauernverband 20% in real terms for which they want to reclaim compensation.(DBV)
Austria: the Austrian Chamber of Agriculture demandsLandwirtschafts- the maintenance of set aside and reject the reform of the milk sectorkammernÖsterreich
ÖsterreichischerBauernbund
Denmark: Agricultural ProposalsCDA- Conseil de Support the general direction of the reform but criticise reform in the beef sectorL’Agriculture which should be reviewed.Danois Arable crops - CDA demands full compensation for price reduction, wants the
intervention system continued and would consider variable ha-premiums along thelines of the model presently in use for oilseeds. Milk - full compensation for reduction in prices.Beef - measures for better market balance including EU buy out for suckler cowpremium rights.BudgetThe CDA can not accept that all the expenditures in relation to:- the reorientation from price support to direct support- Eastern enlargement and- the partial transfer of structural expenditures to the agricultural budget are to befinanced under the present agricultural guideline, therefore it must be increased. Thebudget does not take account of reforms for a number of Mediterranean products.
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Spain: Agricultural ReformASAJA- Emphasise the need for complete compensation for any loss of revenue from priceAssociacion reductions.Agraria- Jovenes EnlargementAgricultores emphasise that poorer regions should not support the cost of enlargement
COAG Agricultural Reform
BudgetA distinction should be made between the budget allocated for price subsidies and thatfor rural and structural policy.
Al l sectors should be aided in an equal manner, COAG states that Mediterraneanproducts suffer discrimination in comparison with other sectors.The EAGGF for the new CAP should be directed at measures to create employment.The COAG opposes the reform of the financing of the EAGGF. Reform of the CAP should take place before 2000 before enlargement and WTOnegotiations begin.
Finland: Agricultural ReformMTK- Central Union Find the reform unacceptable as Finish agricultural problems will be accentuated andof Agricultural reject the proposals for the milk sector, the quota system should be maintained.Producers and EnlargementForest owners Regarding enlargement MTK demand an impact study.
BudgetCompensatory payments should be calculated taking into account the supplementarycosts as a result of unfavourable climatic conditions.
Ireland: Agricultural ReformIFA-Irish Farmers Reject the proposals, calculating that the reform in the cereals sector will result inAssociation a loss of £20 million per year and £100 million losses in the beef sector.
Italy: Reject the Agenda 2000 proposals and demand total compensation with direct aid.Coldiretti
CIA- Confederazione Opposes direct ceilings for compensatory aidItaliana Agricoltori Supports the continuation of minimum intervention prices and set aside.
Confagricoltura
Budget
Netherlands: Agricultural ReformLTO- Land en Support maintenance of price intervention, but argue that principle of set-aside shouldTuinbouworganiatie be preserved.Nederland Enlargement
Question the absence of a study of the future productions of the CEEC and theconsequences for sectors of production in the EU15.BudgetOppose the financing of 5a and 5b of the structural funds by the agricultural budget.
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United Kingdom: Agricultural Reforms NFU- National In general favour the reforms increasing the competitiveness of the CAP but favourFarmers Union of total decoupling of compensation payments and suggest the introduction of paymentEngland and Wales by hectare for arable crops.
EnlargementThe NFU welcomes the Commission’s statement that the priority is structuraldevelopment and that it would be mistaken to implement the compensatory mechanismsdirectly in those countries.The NFU underlines the WTO aspects of EU enlargement and asks for a degree ofinternational solidarity from international partners during the negotiationsThe accession of the CEEC will aggravate the problem of aligning milk prices to EUlevels and will hit demand. Milk surpluses will double to 2 million tonnes by 2005.BudgetSeen that the EU will pay the price of enlargement and that the impact on the CEEC willbe considerable leading to increased agricultural output, depressed home consumptionand an addition to in exportable CAP surpluses. The Union recognises the financialcost to European taxpayers. The NFU demands a higher level of compensation and opposes ceilings for direct aidor modulation which discriminates against British agriculture. The NFU proposes thatthe Commission increase set aside or lower quotas.
Sweden: Agricultural ReformLRF- Confederation Generally in favour of progressive liberalisation. The proposal not to fully compensateof Swedish Farmers, a reduced intervention price for cereals does not comply with the objective for farmer’sSvenska standard of living and income. A reduced compensation for set-aside would beLantmännen particularly difficult in Sweden, compensation in the dairy sector should be linked to
national quotas.Price reductions should be compensated for by payments per hectare withoutmodulation.The LRF hopes for a reform that will allow prices to be aligned with world marketprices in 10 to 15 years.
Belgium: EnlargementAlliance Agricole Accession of the CEEC can be based purely on a reduction of agricultural prices.Belge
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Greece: Agricultural ProposalsPASEGES Expresses its objections to the proposals of the European Commission in the AgendaPanhellenic 2000 concerning the agricultural sector.Confederation of Argues that the structural interventions suggested in the Agenda 2000 cannot beUnions of financed by the agricultural line of CAP, unless its limited funds are considerablyAgricultural increased.Cooperatives The CAP requires sufficient and constant funding, so that its economic and social
goals can be achieved, also taking into account the necessary compensation forMediterranean products.Thus, compensatory aid as a measure taken to cover the lost income of farmers, mustnot only be maintained but also reinforced.EnlargementEnlargement must not take funding away from disadvantaged agricultural areas. Inorder to keep a balance, its impact on all agricultural sectors and regions must beassessed.Moreover, the cost of Enlargement has to be covered by the total sum of EU funds andnot just by the agricultural and structural funds.BudgetConsiders that the agricultural expenditure to support those sectors and regions thatwill not be able to deal with the globalization of agricultural commerce should beobligatory.The limitations on community financial aid from the structural funds based on theGDP of each country (4%) is against the principle of economic solidarity and alsosustains existing inequalities.
Portugal: Agricultural ProposalsCAP Confederaco The present proposals of the Commission will serve to reinforce inequality indos Agricolteurs de Europe.Portugal
Luxembourg:Centrale PaysanneLuxembourgeoise
Europe-Agri no7-10 October 1997.1
Professor Allan Buckwell, Wye College. “Towards a Common Agricultural and Rural Policy for2
Europe”. Working group report by European Commission DGVI and DGII.
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4. Specialist Press and Others
i. CEJA (Jeunes Agriculteurs Europeens - European Young Farmers)
On 29 September 1997, the European Parliament’s Agriculture and Rural Development Committee helda hearing on the problems facing young farmers. John Lee, President of the European Young FarmersCouncil described the Agenda 2000 proposals for the Common Agricultural Policy as “tainted by afundamentally pessimistic attitude”. 1
The group support the accession of the CEEC but demand to be included in the enlargement debate andcriticise the use of outdated statistics in the Agenda 2000 proposal and the lack of reference anywherein the report to young farmers.
ii. Allan Buckwell, European Parliament conference “Agriculture and Society”13-14 November, Parliamentary Group of the Party of European Socialists
Buckwell criticises the notion of modulation or placing an upper ceiling on aid payments to individualfarmers, which he described as a “messy admission of a failed policy”. During the conference he pointedto his own proposal for a Common Agricultural and Rural Policy for Europe (CARPE), which he believesshould turn the CAP away from being a sectoral policy for agriculture to become part of a set of territorialpolicies for rural areas as a whole.
Buckwell argues that CEEC farmers should get to grips with the EU’s agri-environmental and ruraldevelopment instruments, which he claimed would be the only means of support from a reformed CAPduring the pre-accession and transition periods. He characterised these Agenda 2000 instrumentsas broadly imaginative but “obscure in detail”. The CAP would come under increasing pressure after2003 when the WTO “peace clause” ends as the current payment system is not decoupled fromproduction.
Buckwell warns that the EU can not encourage the acceding Central and Eastern European countries tomaximise production and yet he argues that this is precisely the message being sent to the prospectiveMember States, which are inevitably preparing for accession on the basis of existing market supportregimes.
The CEECs are being encouraged to “gear up” their sugar and milk sectors as quickly as possible to takeadvantage of the Commission’s failure to address the issue of production quotas before 2006, allowingCEEC Member States to profit “form the highest possible base”. 2
WWF position paper.1
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iii. CEPS - Centre for European Policy Studies
The CEPS recommends a “clear” strategy on the part of the Commission regarding the abolition of supplycontrol and concerning the accession negotiations with countries of Central and Eastern Europe, the EUbeing called upon to “take immediate measures to bring its agricultural systems into line with this strategy”.
iv. Agri Contact - Belgium
A sufficiently long transition period and pre-accession period are invaluable, especially regarding normativeaspects, sanitary measures and the quality of products.
According to Agricontact's estimations the cost of applying the price reductions envisaged in the Agenda2000 will lead to an average reduction in agricultural revenues of 10% in Belgium. This newreduction will further aggravate the reduction of revenue which has fallen by 5% between 1992 and 1996with an acute reduction in the beef sector of 30%. The beef sector in Belgium will particularly suffer . TheAgenda 2000 proposals do not take into account the agro-food industry in Belgium which is the secondlargest industry employing 7% of the population. Rural policy should not be substituted by structural oragricultural policy but should compliment them.
v. World Wide Fund for Nature
The EU’s direct compensatory payments should be phased out over time and be made dependent onfarmers meeting basic environmental standards according to the World Wide Fund for Nature (WWF).In a position paper on the Commission’s Agenda 2000 proposals the WWF says it is “alarmed” that theCommission has not proposed to phase out compensatory payments by 2006, and it is “even moreconcerned” that some farm ministers are arguing for full compensation for price cuts. The Agenda 2000“does not go far enough to shift policy from production related support towards environmental andsustainable rural development measures” according to the conservation group.
The WWF recommends that 25% of the CAP Guarantee budget should be shifted to agri-environmentalmeasures and 50% to sustainable rural development by 2006.
Regarding Enlargement the WWF calls for the EU to earmark 25% of the proposed agricultural budgetfor the CEECs to agri-environmental programmes and to provide 100% funding for pre-accession aid. 1
"Agricultural Policy i the European Union and other market economies” published by the1
Agricultural Policy Studies.
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vi. Agricultural Policy Studies
In the study “ Agricultural Policy in the European Union and other market economies” by Michael Tracy,the failure to consider phasing out compensatory payments under the Agenda 2000 reforms is also singledout. The report notes that the policy of price cuts with compensation raises major problems for thetreatment of new Member States. Tracy warns that the Commission’s solution of transitional periods fornew Member States after accession could lead to a difference in price levels which could lead to“accession compensatory amounts”. The analyst concludes that phasing out compensation would be theeasiest way to deal with the claims to be entitled to the payments. Tracy suggests a “modulated phasingout” under which an upper limit for payments could be progressively reduced so that a smaller farmreceived the payment for a longer period.1
vii. Edith Muller, German Green Party
Edith Muller presented a “Green Agenda 2000" as an alternative to the Commission's communication. Sheargues that the Green version would make it possible to reduce the net cost of EU enlargement for theyears 2000-2006 by 60 billion ECUs from the amount indicated in the financing scheme proposed by theCommission. Mrs Muller proposes inter alia: a ceiling on agricultural spending for the period 2000-2006at 1999 level; a greater concentration of structural aid in Objective 1 regions ; greater co-financing ofstructural aid by beneficiary countries and a drastic reduction in the number of eligible regions. Theseproposals are based on the assumption that the EU own resources ceiling will remain unchanged at 1.27%of GNP, that economic growth will be slower (1.8%) than forecast by the Commission (2.5%) and thatthe unspent budget resources will be paid into a reserve fund in the EU’s budget.
viii. Food Policy International, Vol.6. no.4 July/August 1997
The most important broad conclusion is that the CAP is seen as a common agricultural policy, with noteven the beginnings of a movement towards the “integrated rural policy” promised by AgriculturalCommissioner Franz Fischler. Concerning Eastward Enlargement proposals are seen as vague.
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PART 3
1. The Agricultural Council's Text 17-18 November 1997
In the final analysis the conclusions for submission to the General Affairs Council and the DecemberSummit stress:
1. The specific nature of agriculture in the European Union, “linked to the extent of its territory and theexistence of diverse regions which can have very specific situations.., the importance of its ruralpopulation and the large number of family farms, the diversity of its productions and differences ofyield and its increasingly multi functional nature.”
2. The recognition of European agriculture as an economic sector which, as such, must be multifunctional, sustainable, competitive, present throughout the European Territory.
3. Recognition of the positive result of the 1992 reform in several regards, in spite of its “unequal efforts”in the different sectors concerned from one region to another and between types of farms.
4. The globality of the reform exercise, which must therefore also cover Mediterranean products.
5. The necessity of taking into account the implications of enlargement and of the EU’s externalcommitments while conducting the reform “in terms of the objectives assigned to EuropeanAgriculture and the characteristics and problems inherent to each sector of production.”
6. As a complement to market policies, which remain “essential”, the important role of the definition ofa rural development policy for the assertion of the European agricultural identity and for themaintenance of sustainable jobs both within and outside of cultural undertakings.
7. The advisability of simplifying agricultural regulations and procedures, further decentralising theimplementation of measures defined at community level while avoiding distortions of competition, arenationalisation of the CAP or a transfer of spending to the Member States.
8. The firm will to continue managing the CAP and respecting budget discipline.
2. Presidency Conclusions of the Summit of Luxembourg
General orientations of the CAP were discussed during the summit rather than any decisions being takenwith the focus of the discussions being the political appraisal of the Commission's opinions on the applicantcountries, reinforcement of the pre-accession strategy and the European Conference.
a. The Evolution of Union Policies: Agenda 2000
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The European Council welcomed the Commission's communication Agenda 2000 concerning thedevelopment of the Union's policies and the future financial framework. It confirmed the need to ensurein advance of enlargement that the Union is in a position to cope with it under the best conditions bymaking the adjustments deemed necessary to its policies and their financing, bearing in mind that it isessential to set a financial framework for the Union's policies. The imperative of budgetary discipline andefficient expenditure must prevail at Union level just as it prevails at the level of the Member States.
The European Council considers that the Commission proposals contained in Agenda 2000 are anappropriate working basis for further negotiations for an agreement on the Union's policies and the financialframework. It invites the Commission to submit its proposals on all of these questions as soon as possiblein the light of the initial discussions and these guidelines. The European Council takes note of theCommission's intention to submit its report on the functioning of the system of own resources by autumn1998 at the latest.
It is important for reasons of transparency to make a clear distinction in the presentation andimplementation of the future financial framework between expenditure relating to the Union as currentlyconstituted and that reserved for the future acceding countries as pre-accession or accession aid.
b. The Common Agricultural Policy
The European Council took note of the outcome of proceedings of the Agriculture Council. The Unionis determined to continue developing the present European model of agriculture while seeking greaterinternal and external competitiveness. European agriculture must, as an economic sector, be versatile,sustainable, competitive and spread throughout European territory, including regions with specificproblems. The process of reform begun in 1992 should be continued, deepened, adapted and completed,extending it to Mediterranean production. The reform should lead to economically sound, viable solutionswhich are socially acceptable and make it possible to ensure fair income, to strike a fair balance betweenproduction sectors, producers and regions and to avoid distortion of competition. The financial resourcesneeded to implement the common agricultural policy will be determined on the basis of the agriculturalguideline.
c. Accession of the Countries of Central and Eastern Europe
Regarding Enlargement the main points from the agreement at the EU summit are that the process forjoining the EU will begin in 11 applicant countries on March 30, forming part of Article 0 of the Treaty ofthe European Union.
Bilateral negotiations will begin in spring 1998 between the EU and the six applicant countries- Hungary,the Czech Republic, Poland, Estonia, Slovenia and Cyprus. At the same time the EU will launch a processof pre-accession talks and preparatory help with five candidates- Slovakia, Bulgaria, Slovenia, Estoniaand Cyprus.
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The enhanced pre-accession strategy is intended to enable all the applicant States of Central and EasternEurope eventually to become members of the EU , with “accession partnerships” which will cover in detailfor each applicant the priorities to be observed in adopting the Union acquit and the financial resourcesavailable for that purpose. The Council will decide, by qualified majority and by 15 March 1998 at thelatest, the principles, priorities, intermediate objectives, significant adjustments and conditions applicableto each individual partnership.
Pre-accession aid will be increased substantially alongside the PHARE programme, which will alreadyhave been refocused on accession priorities, it will, as from the year 2000, comprise aid for agricultureand a structural instrument which will give priority to measures similar to those of the Cohesion Fund.Without prejudice to decisions on the financial perspective for 2000-2006, the PHARE programme willfocus on accession by setting two priority aims: the reinforcement of administrative and judicial capacity(about 30% of the overall amount) and investments related to the adoption and application of the acquit(about 70%).
d. Budgetary Reform
The European Council takes note of the Commission’s intention to submit its report on the functioning ofthe system of own resources by autumn 1998 at the latest. It is stated in the presidency conclusions thatit is important for reasons of transparency to make a clear distinction in the presentation andimplementation of the future financial framework between expenditure relating to the Union as constitutedand that reserved for the future acceding countries.
The European Council welcomes the progress made in implementing the Action Plan on the InternalMarket since the Amsterdam European Council and reaffirms that completion and stabilization of theInternal Market is a major contribution to strengthening competitiveness and economic growth and creatingjobs in the European Union.
The European Council welcomes the fact that the Commission has taken action on the request of theAmsterdam European Council to examine ways of effectively guaranteeing free movement of goods andit asks the Council and the European Parliament to examine this proposal promptly.
3. Future Outlook for the reform of the Common Agricultural Policy
It can be seen that criticism has been drawn over the lack of a causal link between the reform of the CAPand Eastern Enlargement. Complications for the CEEC arise in two main areas. Firstly direct paymentswhich have created a complex system of subsidy eligible areas and livestock numbers, that has been addedto the longer established quota system for sugar and milk production. These measures will be hard toremove without major market effects and political and social consequences. Secondly regulations overfood safety and quality have proliferated.
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It can be argued that the Agenda 2000 proposals do not aim to adjust the CAP to accommodate theCEEC. Whilst the proposals on commodity regimes do help as they reduce prices and obviate the needfor set-aside, the redefined arable payments are no more suitable for CEEC farmers, and the dairy cowpayments similarly offer nothing for the farmers in the CEEC. Under the reform milk and sugar quotas willnot change before 2006 which will arguably lead to increased production in these sectors.
Whilst the budgetary cost of enlargement is significant, the real problem of enlargement can be seen as notthe budgetary cost but WTO commitments made in the Marrakech agreement, for which stricter supplycontrol is needed to prevent large stocks accumulating especially in cereals, beef and for some dairyproducts which cannot be disposed within the aggregate export subsidy commitments of the enlargedUnion. One can therefore argue that whilst the Agenda 2000 reform was based on a deepening of the1992 reform, rural policy and agri-environmental measures have been largely overshadowed byinternational trade concerns. Criticism has been raised over the financing of the transfer of structural funds(5a and 5b) by the agricultural budget. According to the Commission the cost of the new reform of theCAP will be 4 Billion ECU per year within which concern has been raised that a distinction must be madebetween the budget allocated for price subsidies and that for rural and structural policy.
The European Council decided to set up a European Conference which will bring together the MemberStates of the European Union and the European States aspiring to accede to it. The Commission willsubmit proposals on 25 March 1998 on the reform of the CAP.
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BIBLIOGRAPHY
Part 1
"Agenda 2000- For a stronger and wider Union", European Commission, 1997.
"Agenda 2000-The Challenge of Enlargement". European Commission, 1997.
"The Agricultural Situation within the European Union" Reports 1994-1996, European Commission.
“CAP 2000, Long Term Prospects, Grains, Milk and Meat Markets”, European Commission, 1997.
“CAP 2000, Situation and Outlook, Dairy Sector”, European Commission, 1997.
“CAP 2000, Situation and Outlook, Beef Sector”, SEC(97) 819 final, European Commission, 1997.
“Les Perspectives agricoles 1997-2001" OCDE, 1997.
“La Politique viti-vinicole de L’Union Européene”. European Parliament DGIV, 1997.
“Fiches Techniques: aspects réglementaires et évolution des marchés des principaux produits agricoles”European Parliament DG IV, 1997.
Part 2
European Council
Luxembourg European Council 12 and 13 December 1997 - Presidency Conclusions.
Report by the Council to the European Council on Enlargement and Agenda 2000 (13241/97).
Council of Ministers
Agricultural Special Committee (SN 3916/97).
European Parliament
DebatesParliamentary Debate, 12 December 1996.” Alternative Stategies for the Development of Relations in theField of Agriculture between the EU and the Associated Countries with a view to the future accession ofthese countries” OJ /97.
46
Committee Reports
Committee of Agriculture and Rural DevelopmentM. Edouard C.M.P. des Places-
- Working Document (PE 223.637) 13 August 1997.- Second Working Document (PE 223.641) 11 September 1997. - Second Working Document (PE 223.641)- Draft Opinion for the Committee on Foreign Affairs, Security and Defence Policy. ( PE 223.650) 7
October 1997
Committee on BudgetsM Joan Colom I Naval
- Rapport Part C:Opinions of the other Committees.(A4-0331/97/Part C).
Committee on Foreign Affairs, Security and Defence Policy on the Communication from the Commission"Agenda 2000"-for a stronger and wider Union (COM (97) 2000 final). Adoption of Draft AgendaPE 224.354( JO du 17.11.1997).
Parliamentary Services
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“Agricultural Strategies for the Enlargement of the EU to include CEECs-Critical review of four studiesordered by the Commission of the European Communities (E-4, March 1995-EN, translated into FR/DE)
“The situation of agriculture in Poland-Perspectives in view of an EU integration”(Working Document W-21, April 1995-EN)
“The situation of Agriculture in Hungary: perspectives in view of EU-integration”(III.100, August 1996-EN)
“The Situation of agriculture in Romania”(III.108, March 1997-EN)
“Agriculture within the PHARE and TACIS programmes” (III.97, August 1996-EN).PHARE ( Poland -Hungary Aid for the Reconstruction of the Economy) TACIS(Technical Assistance to the Commonwealth of Independent States)
“State, prospects and implications of EU-CEEC agricultural integration”.
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Economic and Social Committee
Own Initiative Opinion of the Economic and Social Committee on the Implications for CAP of theaccession of the countries of central and eastern Europe. Rapporteur Mr Bastian, Brussels, 18 December1996. AGR/567a, CES 1505/96 F/AG/ss.
Opinion on the Implications for CAP of the Accession of Countries of Central and Eastern Europe (owninitiative opinion) CES 1505/96, Brussels, 18 December 1996.
Committee of the Regions
Draft Opinion- Agenda 2000: the financing of the European Union after 1999 taking into accountenlargement prospects and the challenges of the 21st centuary. (COM(97) 2000 final). Mr Behrendt andMrs Nielson.(CdR 303/97).
Part 3
Agricultural Organisations
APCA-Chambres d'Agriculture Assemblée Permanente- "Les Etats-Membres et les Propositions Santer2000-2006", October 1997.
COPA (Committee of Agricultural Organisations in the EU) and COGECA (General Committee ofAgricultural Cooperation in the EU).
Pr (97)53 Premières Réactions du COPA et COGECA aux propositions de la Commission concernantl’agriculture presentées dans l’Agenda 2000, Bruxelles, 3 October 1997.
Specialist Press
World Perspectives: AG Review.Vol. 9 No. 7 August 1997
Bima-Ministère de l'Agriculture et de la Pêche
Food Policy International, Vol. 6.no. 4 July/August 1997
NFU - British Farmer and Grower Business. Vol 1 , No. 11, August 1997.Agrarpolitische Mitteilung 2 Juli 1997.N.7/97 Bundesministerium fur Ernahrung, Landwirtschaft undForsten.
Agrarische Rundschau, Sept 1997, 4.Deutsche Bauern Korrespondenz, 9/97
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Blätter für Deutsche Internationale Politik 1997. Heft 9 , Marks Andrea, Techen Silke.La Tierra, 144, September 1997
H. Nallet, A. Van Stolk, “Relations between the European Union and the Central and Eastern EuropeanCountries in matters concerning Agriculture and Food production”, European Commission , 15 June 1994.
Other References
T.E. Josling, S.Tangermann and T.K. Warley, “ Agriculture in the GATT”, Macmillan Press, Basingstoke,November 1996.
Ministry of Agriculture, Fisheries and Food, UK Agricultural Select Committee - "Inquiry into CAPReform: Agenda 2000".
J.Rollo, “ EU enlargement and the world trade system”in European Economic Review 39 (1995) 467-473, Elsevier Science 1995.
S.Tangerman, “ Eastern Enlargement of the EU: Will Agricultural Policy be an Obstacle?”inIntereconomics, November/December 1995. A. Matthews, “ The disappearing budget constaint on EU agricultural policy” in Food Policy, Volume 21Number 6, December 1996.
“Enlargement to Transform European Agriculture”, Economic Research Service, USDA January 1997.
Professor Allan Buckwell, Wye College. “Towards a Common Agricultural and Rural Policy for Europe.”Working Group Report by European Commission DGVI and DGII, forthcoming.
WWF position paper. Contact Fax: (0035) 2 734-8819.
"Agricultural Policy in the European Union and other Market Economies”, Michael Tracy, AgriculturalPolicy Studies. Fax. (0032) 2 633 2371.
