The Commission sets out the EU position pre-Cancun
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CTA. 2003. The Commission sets out the EU position pre-Cancun. Agritrade, October 2003. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52660
In a cluster of three documents released on September 4th 2003 prior to...
In a cluster of three documents released on September 4th 2003 prior to departure for Cancun, the European Commission set out its position on agricultural issues in the WTO. The first of these documents was a memorandum addressing a number of frequently asked question on EU agriculture and the WTO. The areas covered included: a summary of the EU position on modalities; a summary of the EU/US framework proposal; the relationship between the June 2003 CAP-reform measures and the WTO negotiations; the meaning of the term 'decoupling' and its relevance to WTO negotiations; the impact of CAP reform on developing countries; the justification for high EU agricultural expenditures; the case for GIs ; the trade-distorting effects of export credits; the trade-distorting effects of single-desk selling; how systems of food-aid delivery can distort trade; the EU's approach to the 'precautionary principle'; the impact of the CAP on developing countries; the extent to which EU market-access concessions have brought benefits to developing countries; the extent to which European agricultural markets are still a fortress; the EU position on tariff escalation; why EU cotton subsidies do not harm developing countries. The second of these documents was a speech by Agriculture Commissioner Franz Fischler which set out ten key ingredients for success in Cancun: slashing trade-distorting forms of support; cutting export subsidies substantially; giving developing countries a better deal; not being over-ambitious; opening up markets to agricultural imports; maintaining the direction of policy reform and not back-tracking; avoiding recourse to cheap propaganda; abandoning extreme positions; having realistic expectations; avoiding piracy of partners' names. Commissioner Fischler was extremely critical of what he termed extreme positions and those who stoop to low propaganda. He maintained forcefully that 'not all farm spending is evil' and defined the common objective at the WTO as to 'reduce all farm subsidies which distort international trade and harm the interests of developing countries'. He stated that the EU would 'vigorously defend our right to support our farmers' arguing that no one had the right to 'wipe out European agriculture will all the jobs, the environmental benefits, the cultural heritage our farmers provide'. Finally Commissioner Fischler placed considerable emphasis on seeking protection for geographical indications. The third of these documents was the Commission's press pack ' EU Agriculture and the WTO'. In the foreword to this text Commissioner Fischler maintained that as a result of the process of CAP reform the EU has 'essentially said goodbye to the old system of trade-distorting agricultural support'. As a consequence the EU had set itself to 'negotiate offensively at the WTO', with the EU demanding 'something in return' for the reforms it was committed to implementing. Once again the point was emphasised that not all forms of farm support are bad and that the overall level of agricultural support is irrelevant. The relevant issue is the trade-distorting nature of the support being extended. Within this logic, the EU argues that WTO rules should encourage less trade-distorting and non-trade-distorting forms of support whilst progressively imposing disciplines on trade-distorting forms of support. Here, in the Commission's view, Europe has made major strides. The Commission also believes that the EU has made significant progress in opening up its markets to developing countries (although the impact is questionable - see the accompanying news item on the impact of the EU's EBA scheme). The first section of the press pack sets out the justification for the CAP (mainly with reference to the multifunctional nature of agriculture in the EU), the impact of reform to date and the on-going direction of reform. The second section looks at the EU's approach to agricultural negotiations in Cancun with an emphasis on: the importance of addressing non-trade concerns; the importance of negotiated liberalisation of agricultural markets; the need to substantially cut trade-distorting forms of support (by 55%); the EU's willingness to cut agricultural tariffs by an average of 36% and a minimum of 15%; the need to reduce all forms of export support by 45% and the phasing-out of export subsidies of particular interest to developing countries; renewing the 'peace clause'; establishing special safeguards; protection of geographical indications. In this section the EU acknowledged its interest in securing an opening up of third-country markets and called for full and complete duty-free access for all originating LDC products to all developed and advanced developing country markets. In section 3 the press pack looks at the EU's approach to developing countries in the WTO. It reiterates the EU's wider development co-operation policy objectives and the openness of EU agricultural markets to developing country exports compared to other OECD importers. It sets out the different multilateral trade regimes that the EU applies to developing countries. It highlights the importance the EU attaches to special and differential treatment for developing countries, particularly with regard to longer time frames for the implementation of commitments made and the provisions for trade-related technical assistance. This section also seeks to explain why undifferentiated agricultural trade liberalisation does not help the poorest developing countries. Finally the press pack provides a useful glossary of terms used in the WTO trade debates. Comment: While the EU has put forward proposals for stricter disciplines on 'amber' and 'blue box' support it made no reference to disciplining 'green box' support, the category of support into which the EU is seeking to shift the vast majority of its support to agriculture. This basic reality was not lost on developing countries and the Cairns Group. The EU's commitment to cutting export subsidies was seen by many as going back on the Doha agreement to the eventual elimination of export subsidies. New Zealand's trade minister, Jim Sutton, summed up the response to this aspect of the EU proposals by declaring ' we're after fundamental reform in these areas. Export subsidies must go in this round'. While on market-access commitments the EU was willing to allow a special safeguard to protect sensitive products from excessive imports, this was clearly seen as inadequate in the face of EU efforts to make green-box support untouchable. Overall it was clear that few developing country representatives accepted the EU's view of the non-trade-distorting nature of the new forms of agricultural support brought about by the June 2003 round of CAP reforms. The EU 'offensive' negotiating approach thus laid the seeds for disagreement, since there was little consensus on the fundamentals underpinning the EU's approach, with many seeing the new round of CAP reform as a vehicle for making trade distortions more efficient rather than a vehicle for removing or reducing trade distortions. The Commission press pack contained certain discrepancies. For example it claimed that 'the latest CAP reforms will bring about a reduction in trade-distorting subsidies of the order of US$80 billion per year (the equivalent of € 72.5 billion), compared to the pre-reform situation, as EU amber and blue box subsidies will fall substantially'. What makes this claim remarkable is that the EU annual agricultural budget for 2004 totals only € 45.8 billion. It is therefore difficult to see how CAP reform can lead to annual reductions in trade-distorting forms of support of € 72.5 billion, a full 33% more than total annual EU agricultural budget expenditures. Highlighting figures such as this scarcely makes EU claims credible. Other aspects of the press pack were also misleading, with the references to improved market access neglecting to mention the declining price attractiveness of the EU market in the face of CAP-reform led price reductions.