sou · GLB3151 · 1998-01-01 00:00:00 — However, special attention must be paid to consumer interests in maintaining a certain import. However, reform of the CAP is a process which is influenced by many factors. Ultimately it is a matter for negotiation between Member States, in which various interests within the Union must be taken into consideration. Union is also a negotiating party in a number of international organizations, whereof the negotiations in the WTO are of major significance to any reform of the CAP. International agreements, mainly from the 1992 UN Conference on Environment and Development in and the 1996 Summit in involve commitments which must be borne in mind in a reform of the CAP. Negotiations concerning an enlargement of Union to the East also have a major influence on Common Agricultural Policy. A reform of the CAP would also be affected by other factors such as market developments, economic developments, etc. both inside and outside the Union. When and how the CAP can be reformed is thus a matter for negotiation both inside Union and at international level. On an international level it is likely that the WTO negotiations will have the largest direct effect on Common Agricultural Policy. The latest negotiations influenced the EUs process of reform, even though there were internal factors, including budget issues, which also helped to initiate the reform. If, instead, Union had preceded the negotiations by an earlier reform of the CAP, there would have been greater opportunities for reform in line with EU interests. The same reasoning can be applied to the forthcoming WTO negotiations. As mentioned earlier there will be pressure on Union for a further liberalisation of trade and reduction in agricultural subsidies from the and the . By being the driving force of the reform process within the framework for the next round of WTO negotiations, the Member States would be able to change the CAP in ways which correspond to the interests of the Union instead of being forced to make reforms along the lines put forward by other countries in the WTO. In this way Union would probably achieve a better negotiating position and greater opportunities to press for important issues of consumer and environmental interest within the framework for the WTO work. By assuming a driving role in the WTO Changes to the Common Agricultural Policy 103 Union would also be acting in line with the commitments which Member States signed up to at the 1996 FAO conference in on world food supply and the 1992 UN environment conference in . An enlargement of Union to the East is a high priority issue since it would favour peaceful, democratic and economic development in both Central and Eastern Europe and Union. Even if certain problems could be solved with the help of interim measures, an enlargement without any changes to the CAP would cause a series of problems such as economic imbalance, impaired structural development in Central and Eastern Europe and increased budget costs for Union. In order to assist the new Member States in their planning prior to EU entry it is important to make some relatively quick decisions on new directions for a common agricultural policy. The CAP reform carried out by Union in 1992 as a result of the negotiations and internal budget pressures mainly affected the cereals sector. Market prices were reduced as levels of export refunds, border protection, intervention prices, etc., were lowered. So as to compensate for these prices reductions, direct payments, payable per hectare, was introduced. This reform was a step in the direction of increased market adaptation, although there were a number of shortcomings in the reform. No time limit was set for the direct payments intended to compensate for the price reduction, with the result that cereal producers today are over-compensated since world cereals prices have been high in recent years. Prices in Union have not fallen so much as predicted. For this reason it is important that in any new reform of the CAP, the advantages and disadvantages of earlier reforms should be carefully considered, The EUs work towards changing the CAP has been marked by compromises, and as such can be compared to an evolutionary process, in which reforms are carried out successively, rather than a revolutionary one. Market regulating measures have been reduced in scope to the advantage of environmental and regional support. Within market regulation there has been a transition from market price support to direct payments as a direct consequence of the CAP reform. It is likely that in the future the CAP will continue to be changed successively. However, in our opinion it is important that we should strive to reform the CAP in ways which lead to the fulfilment in time of the objectives we have proposed. In order to have the opportunity to apply pressure in the areas we consider important, both inside and 104 Changes to the Common Agricultural Policy outside Union, it would be desirable for the reform process to be started immediately. 9.4 Consequences of a new agricultural policy The proposed instruments should be able to provide us with the things we want - safe food at reasonable prices, sustainable and environmentally friendly agriculture with stringent animal welfare requirements, regional balance and viable rural areas. We would get rid of unnecessary costs, and producers would be given the chance to be more flexible in their production. We would have structural adaptation leading to a production structure better equipped to produce the things which society and consumers require. The sooner the agricultural policy is changed, the better the chances for agriculture and the food industry to steer production towards becoming more efficient and more environmentally friendly. Wherever profitable, production of agricultural goods will increase. Measures should be adopted to support the environment and viable rural areas. However, it will probably become less profitable to produce beef, milk and sugar in certain areas inside Union. The proposed agricultural policy, including removal of market regulation, will mean that the EU price level for agricultural goods will be adapted to world market prices. Food prices inside Union will thus be lower than they are today, thereby giving the developing countries a chance to compete on level terms with producers in Union. On goods for which Union has high levels of support together with high levels of production, world market prices are expected to increase. This primarily concerns prices for dairy products, beef, sugar and cereals. Exactly what price levels will apply following a reform of the CAP is impossible to predict, since they are dependent on a series of factors such as climate and weather conditions, market development, other countries agricultural policy, and general world developments in politics and economics. However, it is important to consider factors other than low prices. Production methods, geographical origin, levels of processing, quality, labelling, etc., are also of major significance in choice of food. Agricultural production in Union already aims at quality and further processing. In a new situation with a new agricultural policy Union should have Changes to the Common Agricultural Policy 105 good opportunities for increased production of high quality foods using more environmentally and animal-friendly production methods. A new Common Agricultural Policy would also help to fulfil other important objectives which have an effect on all sectors in society. The proposed agricultural policy can be of crucial importance in a future sustainable society which is a goal for society as a whole. The same can be applied to regional development, which is also an overriding objective for several sectors in society. Measures of the new policy will lead to an increase in free trade, which is also a basic Swedish objective. This will facilitate agricultural imports and exports of food on the part of many developing countries, thereby promoting development in those countries, which is also an important objective. Another major objective is to enlarge Union towards the East for reasons of security. This would promote peaceful and economic developments in Central and Eastern Europe. The new agricultural policy which we propose will facilitate an enlargement of Union both for the countries inside the existing European Union and for the central and eastern European countries. These measures were introduced with the 1992 CAP reform to supplement market measures and support for afforestation. The variety of living organisms, comprising diversity of and between species and ecosystems. Union and the in 1992 within the framework of the Round, resulting in European Union area and headage payments plus US deficiency payments being excluded from cut backs in support (blue box). Measures which restrict imports. are tariffs or charges applied to the price of imported goods and various quantitative , , , , , , , , , , , the , and Common Agricultural Policy. common agricultural policy. The ten countries of Central and Eastern Europe which have applied for EU membership, , the , Estonia, , , , , , Goods and services for which one persons individuals opportunities to consume the same goods and or for which it is not possible to exclude individuals from consuming the goods or services, e.g. biodiversity and varied farming Consumer Subsidy Equivalent. uses this to estimate how much consumers pay for the agricultural policy via food prices. report mainly presents the proportion of the prices which is caused by agricultural policy. Support which is paid directly to the producer per hectare or the like, e.g. area or The EU agricultural fund, representing around half of the EU budget. comprises two parts, one Guarantee Section and one Guidance Section. Various types of support paid in relation to exports, intended to compensate between the difference in price between the world market and applies export refunds to exports to third countries for various agricultural goods (see table 1). Food and of the General on Tariffs and Trade Variation within species which facilitates further evolution such as the creation of new Genetically Modified Organisms. The Guarantee Section of the agricultural fund mainly finances measures of market In combination with national funding, the fund also finances environmental payments and other accompanying measures. The Guidance Section of the EAGGF, in combination with national funding, finances structural and regional policy measures relating See also EAGGF. Measures on the internal market aimed at influencing the price of agricultural products, e.g. storing. Intervention measures also include marketing support and consumption promotion Less favoured Areas, seen as having less natural capacity for agricultural production and which receive special regional support. Regulations aimed at supporting a certain price level, including border protection, export refunds, intervention measures and production instruments such as border protection, production quotas, export refunds, intervention measures and direct payments. Regulation (EC) No 258/97 establishes certain rules governing risk assessment and labelling of novel foods. food and ingredients which have not been previously used to any great extent for consumption inside Union. which contain or are produced using GMOs, foods produced using new methods and raw materials not previously used, are some Organization for Economic Cooperation some 20 industrialised countries for economic Polluter Pays Principle. Producer Subsidy Equivalent. to estimate the value of payments to agriculture which are the result of agricultural This report mainly presents PSE as a proportion of total agriculture revenue. Production can be limited by a quota, just as imports or exports can be limited to certain quantities via a quota. Quotas are often applied to limit the quantities covered by a reduced tariff EU name for countries outside the Union. Goods produced in Union shall be given preference over imported goods. Round of the Agreement which led to a series of measures on trade with and support to the agricultural sector. created in 1995 to supervise multilateral trade agreements in three areas, of which is European Commission, 1996. Unionen, Report 1995, . European Commission, 1997 (a). Sammanställningar över EU:s budget 1986-97. European Commission, 1997 (b). Compte de gestion et bilan financier, afférents aux opérations du budget de lexercise 1996.1997, . Agricultural Policies, Markets and Trade in Countries: Monitoring and Evaluation 1997. Proposition 1989/90:146, Livsmedelspolitiken. Rabinowicz, E., 1996. EU:s jordbrukspolitik och bönderna i öst. SOU 1996:136, Effekter av EU:s jordbrukspolitik. Konsekvenserna för CAP av WTO-åtgärdarna och en östutvidgning. Svensk mat på EU-fat. EU:s jordbrukspolitik och den globala livsmedelsförsöjningen. SOU 1997:50 Alternativa utvecklingsvägar för EU:s gemensamma jordbrukspolitik.Stockholm, 1997. EU:s jordbrukspolitik, miljön och regional utveckling. 112 Sources and references EU:s utvigning österut - Läget på jordbruksområdet. Report 1995:8, , . Fair Act - den amerikanska jordbruksreformen 1996. Report 1997:13, , . Special comment by (Centre Party), () (), (Liberal Party), (Left Party) and . (Moderate ) Unacceptable treatment of the committee When the parliament decided to set up an inquiry into the Common Agricultural Policy the aim was that the committee should present proposals for a Swedish position in the coming negotiations on CAP reform. As is apparent, the committee has worked very diligently to analyse thoroughly the issues from various points of view. Moreover, we have published five expert reports. Two weeks before the committee had its final meeting it became apparent that the Minister for Agriculture had already informed on position. This can be seen from a letter and a memo which sent to commissioner . The memo does indeed stress that the government had still not made a decision on the issue, but it is clearly apparent that the proposals represent the governments position. What is remarkable is that neither this committee nor the agriculture has been informed about the communication which was sent just a few weeks before the committee should present its report. From a democratic point of view it is very remarkable to disavow a parliamentary committee in such a flagrant , thereby making impossible an unconditional debate of this issue which is so important to the future of Union. We would strongly question the behaviour in which a committee is set up to propose a Swedish position if the Swedish position has already been determined. It can represent a good use of work and resources, nor of taxpayers money. 114 Reservations and comments Reservation by (Centre Party) I am in agreement with the majority of the overriding objectives for the common agricultural policy presented in this report. I consider it an important long term objective, at the same rate as the rest of the world, to reduce the support which produce imbalance in competition and trade. It is also necessary, as the majority says, for Union to become a driving force to create competetive markets and increased trade. I approve of the objectives for European agriculture and for the Common Agricultural Policy which the inquiry has agreed on: they tie in with my own beliefs and also with the existing objectives of Swedish agricultural policy. The objective for sustainable agriculture is necessary if we are to assume our responsibility for future generations. It is important that the right conditions are created to make it possible to operate a system of agricultural production which meets this objective. The demands for safe food at reasonable prices and that consumers should be assured of a wide and varied supply of goods are pivotal. There should also have been a formulated objective for the creation of viable conditions for agricultural enterprises. The overriding objectives are made concrete in the report in requirements for the purpose of agriculture. Yet in my opinion the proposals which the majority present here will not lead to the fulfilment of these objectives. The majority will not live up to the fine words on environmental consideration, animal welfare, preserved cultural landscape and viable rural areas presented in the report. By way of comment I would like to present my own, different view on the possibility to produce enough food in the world. My view of the EU attitude to the WTO and EU policy is that the CAP should be reformed. I do not, however, share the majoritys beliefs that the market and increased competition can lead to the fulfilment of the objective towards sustainable agriculture. The enlargement towards the East is another important issue on which I also consider that the majority has made the wrong judgements. In my view the majority is unfortunately captivated by notions of deregulation more than by the responsibility to maintain and develop Union and Swedish agriculture, although I agree with the objective of less market support and with the importance of establishing Reservations and comments 115 a better-functioning system of world trade. The changes to be made must be carried out in a careful way. It is my opinion that the current CAP can and should be changed, not with any sudden measure, but at a rate which all those concerned can follow. Deregulation which is too sudden would mean that many agricultural companies would disappear. Agricultural production in such a case would only be possible in the best agricultural areas. Forested and mixed areas would lose production, something which for would be very serious. Such a development would not fulfil the objectives which the committee proposes. It would mean that regional development would take a back seat and that agriculture would not be given the opportunity to take the necessary environmental consideration. From a consumer point of view I see such a development as very negative, even if it might produce somewhat lower food prices. It is also important to note that in questions of price, it is not only the price paid to farmers which is important. My conclusion is that a change of the CAP must be allowed to take place at a rate which the EU negotiations with the rest of the world will allow. I think it would be difficult to carry out the recommendation in the report that Union should remove its market support before the next WTO negotiations. It would provide no guarantees and only put Union in a weaker negotiating position. Neither, in my opinion, would time allow for any major reform before the next WTO round. However, in the future market regulation should be replaced by direct payments, mainly to environmental and regional initiatives. A prerequisite for receiving support should be that it is linked to some form of production. The systems of support should be as uniform as possible. This would make it easier for a farmer to change to other forms of production. This would help to minimize the unfortunate lock-up effects of the current system. Border protection should remain in place as an outer protection for agriculture in Union. In time, trade between countries and trading blocks will increase and prices will be levelled out. It is then that border protection can gradually be reduced. I see it as natural that within Union should work towards a reform of the CAP. But this change should be based on consideration both for producers and consumers, starting from the agricultural policy objectives proposed in the report. The proposed reforms must not involve impaired opportunities for carrying out 116 Reservations and comments agricultural production in . It is also important that should press for Union to have a clear strategy in advance of the WTO negotiations. Consideration for the environment and for animal welfare The objective towards good food free from poisons and medicines and without resistant bacteria is well described in the report and I share in this part the conclusions of the committee. Objectives for environmental consideration and the protection of animals in food production are important starting points for changes to the CAP. In these respects, Swedish demands on the Common Agricultural Policy must be tightened. It must be possible to have demands for environmental consideration, animal welfare and food quality without these being seen as trade barriers. This is important for trade inside Union, and it should also be applied to world trade. The majority place their faith in the market. Through increased competition, environmental-, animal welfare and regional issues will be solved. I do not believe this. As the rules are set out today, requirements can be put into place as long as they do not prevent trade. The market is placed on a pedestal and consumer safety, the environment, animal welfare and regional balance often come lower down the order. In a deregulated market it will be very difficult to maintain the stringent demands we currently have in place. I believe that we need to change the trading rules so that the basic principle for the market and competition is that the objectives which were agreed for safe food, the environment, animal welfare and regional balance should primarily be fulfilled. The market should work within the proposed framework only when fair competition has been established. Enlargement to the East There are those who fear that it would be a bad thing for current members agriculture to mix the agriculture of the countries of Central and Eastern Europe into the CAP. However, the major part of food consumption in Union takes place close to the source of production. Major volumes of food are and will continue to be produced close to the consumers. The economic development in the eastern European countries will lead to an increase in the standard of living and increased consumption of food. Increased production of food in the East Reservations and comments 117 will be met, even if not entirely, by an equivalent increase in consumption. One can also study what happened when and became members of Union. Many at the time feared that products from those countries would swamp the other Member States. Such was not the case. Instead, those products continued to be consumed principally in their country of origin. Structural changes in the agriculture of the new Member States also took longer than people believed at the time of entry. Agricultural policy should also include those countries which would join in the case of enlargement. That the Common Agricultural Policy has become too bound up in details and costly is one thing, but it is not a reason to make it into a bigger problem for enlargement than it actually is. The CAP is in need of reform and must be reformed, but mainly for other reasons, i.e. on its own merits. If one places the costs for the CAP in relation to Member States total budget turnover, the share is very small. This means that an enlargement would not have the dramatic consequences for the EU economy that the majority describes. Enlargement to the East must not be made conditional on a reform of the CAP. World supply of food The world population is growing strongly and an economic development is taking place which means changing patterns of consumption. At the same time agricultural land is disappearing for various reasons, making the situation for world food supply even more problematic. Many people today are starving, many are suffering from malnutrition, mainly as a result of our non-existent ability to distribute the food which is available. The majority take their views from the FAO report that there is sufficient food if it were distributed fairly. In my opinion this is merely wishful thinking. I share the somewhat different views of .