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openDemocracy - Maeve Doran-Schiratti
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Maeve Doran-Schiratti
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Maeve Doran-Schiratti is deputy head of Cabinet for Franz Fischler, Commissioner for Agriculture, Rural Development and Fisheries. She has worked intensively on the implementation of the Uruguay Round and the development of the Common Agricultural Policy.

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Maeve Doran-Schiratti is deputy head of Cabinet for Franz Fischler, Commissioner for Agriculture, Rural Development and Fisheries. She has worked intensively on the implementation of the Uruguay Round and the development of the Common Agricultural Policy.

Dieter Helm is of course right to see the GM controversy as simply one part of the wider debate over agribusiness and the globalisation of the food chain, and he is right to see the issue of trade distorting subsidies as absolutely fundamental to the re-structuring of the agricultural sector, both locally and globally. That is why, in the run-up to the World Trade Organisation (WTO) Ministerial meeting in Cancun, we propose a further reform to the Common Agricultural Policy (CAP).

The two elements of our policy (internal and external) are intimately linked. I hope it will be useful to the readers of openDemocracy in this much-needed debate over the production, consumption and culture of food, that I summarise the European Union’s current position.

The first key element of our reforms is a consistent and continued move away from price-support measures that distort trade and production, towards income support for the farmer. The second key element, especially since the 2000 reform, is the greater stress on rural development.

In a recent analysis of our current policy we came to the conclusion that our policy objectives (a competitive farm sector, stable incomes for farmers, the provision of public goods such as environmental protection and the maintenance of biodiversity) remain valid. We need, however, with a minimum of bureaucracy, to give the policy instruments a major overhaul, which will enable us to give consumers and taxpayers what they want, and to give farmers the possibility to plan and to use their entrepreneurial skills more effectively.

In short, we need a single farm payment, not linked to production (‘decoupling’).

This is nevertheless to be linked to respect for standards (environmental, food safety, animal welfare, occupational safety), and to the obligation to maintain the land in a good condition.

There is to be a stronger rural development policy, better funded, and with some additional measures to help to meet our very stringent standards.

These measures are to be funded by a reduction in direct payments, which should also pay for new reforms (‘degressivity’).

This reduction in direct payments will be greater for the large farms, and of less impact for the smaller farms (‘modulation’).

Finally, we need some further price reduction, especially for dairy products and rice, along with a final cut in cereal prices.

The effect of these proposals will be as follows:

  • Farmers will be free to respond to market signals rather than subsidies, with income stability assured by the decoupled payments, as well as by safety net support to protect against major price volatility.
  • There will be fewer bureaucratic forms to fill in.
  • Taxpayers and consumers will see that farmers are paid for what society wants, not for over-production. Sustainable farming, maintenance of rural areas, high welfare standards, top-quality food: these all involve costs to the farmer, and recognition of these costs are what the ‘decoupled’ support will represent.

Clearly, all this is very much in the interest not only of our existing members but also of the new members as they adapt to the single market. Although we are clearly carrying out this reform for internal reasons, it is important to note that these measures

  • are not trade distorting;
  • will lead to less need for export refunds to sell our products on the world market;
  • and they will be in the interests, also, of the developing countries.

The proposed reforms are therefore consistent with the reform of the international agricultural trading system pursued in the WTO, and particularly in the current round of negotiations known as the Doha Development Round.

We see the Doha Round as a continuation of the process started in the Uruguay Round. At the ministerial meeting in Doha eighteen months ago, two more elements were agreed: an emphasis on the need for special and differential treatment for developing countries; and a requirement to deal with ‘non-trade’ concerns, to ensure consistency between trade rules and policies relating to socially and environmentally sustainable agriculture.

I will also give you a brief reminder of what we put forward at the Doha Round. We proposed:

  • reductions in import duties, of 36% on average with a minimum of 15% (Note that we are the largest agricultural importer in the world, and by far the largest importer of agricultural products from the developing countries.);
  • a reduction of trade-distorting support, by a very significant 55%. Already we are making these reductions, but many of our partners are not, in particular the US, which has actually increased trade distorting support enormously;
  • a reduction of all forms of export subsidies, including dumping under the guise of food aid, export credits, and unfair pricing policies of state trading enterprises;
  • special conditions for developing countries, including increased market access. For example, we proposed that 50% of imports into developed countries from developing countries should be at zero duty, and that the least developed countries should get duty-free and quota-free access for all products to all developed markets;
  • action to deal with non-trade concerns, in particular related to food safety, consumer information, animal welfare and rural development. However, we proposed to address them in ways that do not imply greater protection.

We frequently hear accusations that our emphasis on non-trade concerns is a way to justify protectionism. But nobody has explained in what way this accusation can be justified. In fact, in no case is border protection a consequence of our non-trade concern proposals.

We consider that our package of proposals is a pragmatic, realistic one, which contributes to further progressive reform without harming the more vulnerable developing countries. We have also taken into account that not only in the EU, but elsewhere, consumers do not necessarily seek untrammelled free trade at the cost of the environment, food safety, or the maintenance and prosperity of the rural sector.

However, others with quite diverse agendas will challenge our proposals. For example:

  • Some propose reductions of agricultural support, irrespective of whether it is trade-distorting or not. This respects neither the Doha declaration, nor the role of the WTO.
  • Some call for far greater market access, in particular when the countries concerned export, but do not normally import.
  • Many of these proposals offer no help to the less competitive developing countries, and indeed work against their interests.
  • And in spite of the recognition in the Doha Development Round that non-trade concerns should be addressed, many anti-subsidy proposals ignore these aspects completely.
  • Finally, there are the positions of a few developing countries, who see no reason whatsoever to open their markets, but every reason to demand that the rich countries eliminate their support for agriculture, whether trade-distorting or not.

No-one can deny that while an agreement on agriculture is not a sufficient condition to ensure that the WTO Ministerial meeting in Cancun in September is successful, it is a necessary condition: without agriculture, the possibility of progress on all the other chapters of the Doha Development Round is slight.

For us, the way forward is to recognise that liberalisation and elimination of trade-distorting support in agriculture is a process, which should therefore continue progressively; and it is a process which must benefit all the participants, and especially the developing countries. This means the form of support that most distorts trade must be significantly cut, while less trade-distorting forms should be treated according to their merits.

It means that the disciplines on export subsidies should continue; but they should be matched by equivalent disciplines on other forms of support for exports, which arguably distort the market, and impede local production in developing countries, considerably more than export refunds do. We have shown readiness to move; others should do likewise.

The process of reform cannot be at the cost of the most vulnerable developing countries. So increased market access should not be to the benefit of only a few competitive exporters, but should also ensure that the weaker exporters can start, or continue to participate in export trade, through preferential systems such as Everything but Arms.

This implies that preferential margins should not be cut brutally, but should rather decrease gradually, leaving the more vulnerable exporting countries some time to adapt. And it means that WTO policies cannot and should not prevent any WTO member from maintaining domestic policies to support its agriculture, to respond to the real concerns of its citizens, and to compensate its farmers, particularly when those farmers are subject to higher standards, and more demands to provide public services, than their competitors.

Our proposal is honest, coherent with our wider policy sustainable on development, consistent with the direction of international reform, and offers a path to further reforms we think the WTO should take. If adopted, it would enable us to find common cause with all our trading partners in establishing a food economy that is both locally healthy and globally sustainable.

This is an edited version of a speech given at the Royal Institute of International Affairs conference on Food Produtcion 19-20 May 2003.

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