Opinion of the Committee of the Regions on the "Negotiation position on agriculture for the next WTO round"
Date: 2003-04-09
Institutions: European Committee of the Regions
Subjects: World Trade Organisation, agricultural policy, farming sector, international negotiations

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Opinion of the Committee of the Regions on the ‘Negotiation position on agriculture for the
next WTO round’

(2003/C 244/06)

THE COMMITTEE OF THE REGIONS,

having regard to its Bureau’s decision of 12 March 2002, under the fifth paragraph of Article 265 of the
Treaty establishing the European Community, to instruct its Commission for Sustainable Development
to draw up an opinion on the Negotiation position on agriculture for the next WTO round;

having regard to the Communication from the Commission to the Council and the European Parliament
on the EU approach to the WTO Millennium Round (COM(1999) 331 final);

having regard to its opinion on Agenda 2000 — CAP reform (CdR 273/98 fin (1));

having regard to its opinion on the Negotiation position on agriculture for the next WTO round (CdR
527/99 fin (2));

having regard to the Doha development agenda adopted on 14 November 2001 for a new global round
of trade agreements;

having regard to the recently adopted US Farm Bill;

having regard to the Council conclusions of 26 October 1999 on the EU’s position at the WTO
conference in Seattle from 30 November to 3 December 1999;

having regard to the outcome of the ministerial conference in Seattle from 30 November to 3 December
1999;

having regard to the Commission’s proposals of 22 January 2003 in connection with the mid-term
review;

having regard to the Commission’s proposal of 16 December 2002 on the further liberalisation of trade
in agricultural products and the Council of Ministers’ decision of 27 January 2003;

having regard to the compromise proposal submitted on 13 February 2003 by the chairman of the WTO
agriculture negotiations, Stuart Harbinson, which was emphatically rejected by the Commission;

having regard to the provisions of the Marrakesh final act which brought the eighth GATT trade round
to a conclusion and the resultant arrangement to press ahead with the reform process from 1999
(Millennium Round);

having regard to the unanimous decisions on Agenda 2000 taken at the Berlin European Council meeting
on 25 March 1999;

having regard to the draft opinion adopted by the Commission for Sustainable Development on
20 February 2003 (CdR 181/2002 rev.) (rapporteur: Mr Bocklet, Bavarian Minister of State for Federal
and European Affairs, Germany, (D-EPP)),

unanimously adopted the following opinion at its 49th plenary session of 9 and 10 April 2003 (meeting
of 9 April).

(1) OJ C 93, 6.4.1999, p. 1.
(2) OJ C 317, 6.11.2000, p. 12.

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1.

Introduction

— no cuts required.

1.1.
Since the failure of the Seattle conference, political
discussions in all the regions of the EU have focused on the
WTO negotiations and globalisation. As the WTO negotiations
it is vital — against the backdrop of
enter a new phase,
ongoing globalisation — that the Committee of the Regions
should examine the importance of these negotiations from a
European regional perspective.

— green box (support with no direct — or with very little
— impact on production and trade, e.g. measures to
adapt agricultural structures, compensatory payments
relating to environmental requirements or for disadvan-
taged areas);

— no cuts required.

1.2.
The agreement signed by 117 countries in Marrakesh
in 1994 was the culmination of almost eight years of
multilateral trade talks within the GATT Uruguay Round.
Among other things, participants in the Uruguay Round
agreed to set up a new and stronger international organisation
to monitor world trade. On 1 January 1995, the World
Trade Organisation (WTO) replaced GATT as the forum for
multilateral trade relations.

146 countries are now members of

1.3.
the WTO.
Together, they account for well over 90 % of international
trade flows. More countries are striving to join the organisation,
the purpose of which is to establish a common framework for
trade relations.

1.4.
The Uruguay Round was the first in GATT’s history to
seek a comprehensive agreement on agricultural trade. The
result was an Agreement on Agriculture and an Agreement on
Sanitary and Phytosanitary Measures. The Agreement on
Agriculture was a major achievement.
is divided into
three main areas: market access, internal support and export
competition.

It

1.5.
On the issue of market access, Member States agreed
to convert all non-tariff import barriers (e.g. variable import
levies)
into maximum tariffs which were to be brought
down over a six-year implementation period (1995-2000).
Agreement was also reached on a minimum level of market
access (minimum access or current access), based, in practice,
on tariff quotas with reduced customs duties. Restrictions were
placed on both the amounts of export subsidies and the
volume of exports subsidised in this way.

1.6.

Domestic support is divided into three categories:

— amber box (support with a direct impact on product
levels, e.g. price support via institutional prices, customs
duties);

— agreed cuts of 20 % over six years.

trade agreements. The aim of

1.7.
In November 2001, following the failure of the 1999
WTO negotiations, the 142 members of the World Trade
Organisation agreed on the Doha development agenda for a
the
new global round of
agricultural negotiations is to progress towards the establish-
ment of a fair and market-oriented trading system. At the same
time, however, it is essential to recognise the progress already
made on the agricultural
front under the existing WTO
agreement. The Doha timeframe provides for an agreement on
the ‘modalities’ of the negotiations by 31 March 2003 and the
conclusion of the entire round by 2005.

Apart from trade matters, other issues have come to

1.8.
the fore over the past few years:

— Concerns about food safety and quality have become
increasingly prominent, not least in the light of recent
food scandals.

— Europeans are more aware than in the past of the wide-

ranging environmental impact of farming.

— There are new considerations too, such as animal welfare

and the use of genetically modified organisms.

2. Communication from the Commission to the Council
and the European Parliament on the EU approach to
the WTO Millennium Round

In Doha, the European Commission submitted a paper

2.1.
on the WTO Millennium Round.

On the agriculture front, the EU’s negotiation position

2.2.
reflects the need:

— to secure the EU’s share of the global market and improve

access to third-country markets;

— blue box (support with a less substantial but still real
impact on product levels, e.g. price compensation pay-
ments under the Agenda 2000 EU agricultural policy
reform);

— to maintain a number of existing provisions of the
Uruguay Round Agreement on Agriculture on which key
elements of the EU’s agricultural policy is built, e.g.
retaining the ‘blue box’ and ‘green box’;

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— to ensure the compatibility of certain rural and environ-
mental policies in agriculture by recognising agriculture’s
multifunctional role;

— to protect geographical indications and protect against

the misuse of food and beverage names;

— to secure more effective consumer protection.

2.3.
On 16 December 2002, the European Commission
submitted a proposal for the WTO agricultural negotiations,
which was adopted by the Council of Ministers with only
minor changes on 27 January 2003.

This proposal focuses on the following objectives and

2.4.
key points:

— Further substantial liberalisation on a fair and equitable
basis. This is to be achieved by cutting trade-distorting
farm subsidies by 55 % and budgetary outlays on export
subsidies by an average of 45 %. In addition, the further
opening of agricultural markets is to be achieved by
reducing the tariffs for agriculture by an average of 36 %,
with a minimum reduction of 15 % per tariff line.

2.5.
On 12 February 2002, the chairman of the WTO
Agricultural Negotiations Committee, Stuart Harbinson, sub-
mitted his first compromise proposal, followed by a second,
revised version on 18 March 2003, for WTO negotiations on
agriculture. This proposal by Harbinson was flatly rejected,
both by Commissioners Fischler and Lamy and by European
agriculture ministers in the March 2003 Agriculture Council.

The Harbinson compromise proposal was also rejected by a
majority of WTO members. The gist of this proposal is as
follows:

— facilitating market access in all Member States by reducing
customs duties in all three tariff groups by 40-60 %;

— reducing blue box measures by 50 %;

— reducing amber box measures by 60 %;

— reducing export refunds by 50 %;

— reduction from 5 % to 2,5 % in the de minimis rule in

industrial countries.

The Committee’s conclusions, reached in the light of these
proposals and the WTO draft for an agreement on agriculture,
are set out below.

— A fair,

just and effective reform process to promote
burden-sharing: Export credits are to be disciplined. It is
essential to specifically include (i) the misuse of food aid
as a means of disposing of surpluses and (ii) state trading
enterprises. The ‘de minimis’ rule must not be retained.

3. The CoR’s conclusions

— Addressing the special needs of the developing countries:
facilitating market access and improving food security.
All the industrialised countries should also subscribe to
the EU’s ‘Everything but arms’ initiative (EBA) and allow
the duty-free import of all agricultural products from the
poorest countries of the world. Moreover, the industrial-
ised countries should ensure that zero duty applies to at
least 50 % of their farm imports from all developing
countries. Also,
by
developing countries in the interests of food security
should be exempted from the cuts. In their pursuit of the
Doha agenda, the developing countries should be entitled
to smaller cuts and a longer implementation period.

support measures

domestic

3.1.
The European Union must continue to play a leading
role in the upcoming WTO negotiations and adopt a coherent
and pro-active strategy to promote non-commercial consider-
ations and the commitment to development, without losing
sight of
the EU’s basic policy objectives with regard to
multifunctional agriculture.

3.2.
All Member States should support the Commission’s
brief and be guided by its stance. The European Union can
best defend its overall interests only by presenting a united
front.

— Recognition of

the EU agriculture model: Domestic
support measures in the interests, for instance, of main-
taining biodiversity or fostering rural development, ani-
mal welfare or consumer protection should be exempted
from the reduction requirements since such measures
reflect both social demands and consumer expectations
in the EU.

The negotiations must consistently focus on main-
3.3.
taining genetic diversity and biodiversity in particular by
implementing the Cartagena Protocol on Biosafety, annexed
to the Convention on Biological Diversity. However, there
should be no moves to prevent the use of approved biotechno-
logy in farming, as European farmers must not be denied the
long-term economic benefits involved. The WTO partners
decide for themselves about biotechnology use.

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The outcome of

3.4.
the WTO negotiations must
adequately reflect regional differences with regard to use of
resources, choice of instruments and framing of measures. A
global framework must be established in which account can be
taken of specific regional requirements without discriminating
against others.

3.9.
The aims of the EU’s sustainable development strategy
as adopted at the 2001 Gothenburg European Council must
also become a basic element of any regulation of global
agricultural trade. Everyone across the whole world benefits
from compliance with environmental norms and the introduc-
tion of minimum social standards.

European agriculture and forestry must continue to be

3.5.
able:

— to ensure a safe and stable supply of healthy, high-quality

food and non-food products;

— to pursue an export policy which secures a competitive

place for EU farmers on the world markets;

— to retain rural jobs and secure an adequate income for
agricultural workers and those employed in the upstream
and downstream sectors.

The EU’s brief for the WTO negotiations must be tied
3.6.
to the Agenda 2000 decisions and the continuation of the
milk quota arrangements and the sugar regime as well as those
arrangements concerning other important sectors such as olive
oil, rice and cotton beyond 2008 and must tie in with the
guidelines proposed by the European Commission with regard
to the common agricultural policy and rural development.

3.7.
The Committee echoes the European Parliament’s call
to make the Doha round a genuine development round in the
fight against poverty. It therefore supports the formulation of
specific, ambitious provisions for the developing countries,
while not losing sight of the EU’s basic policy objectives
regarding multifunctional agriculture and sustainable develop-
ment. Beyond the new tariff concessions under the ‘Everything
but arms’ initiative for the 48 LDCs, no further opening of the
EU agricultural market can be permitted, as this would
otherwise pose a serious threat
to key areas of market
organisation (e.g. the existing sugar and rice regime).

3.8.
Care must be taken to ensure the comparability of
support measures, including policy tools such as agricultural
insurance against loss of income, transport
export credits,
subsidy schemes and marketing boards, the nominal use of
Food Aid and granting loans to third countries on condition
that they purchase certain, essentially agricultural products
from the granting country. These are increasingly being used
as support measures by some trading partners (e.g. the USA
and Australia) and have hitherto not been subject to WTO
rules.

3.10.
The European Union should therefore take account
of European consumer demands by seeking the rapid and
mandatory inclusion of consumer, environmental, social,
sanitary, phytosanitary and animal welfare standards in inter-
national agreements. These agreements must be adequately
linked to the WTO agreement in order to secure compliance.
The mandatory inclusion of animal welfare concerns is a
welcome development.

international

3.11.
EU norms and controls in relation to food safety and
the standards mentioned above must be recognised and
protected at
level. Imports must meet these
European — or comparable — standards and must be
monitored on that basis. Where scientific opinion differs
from one country to another, countries should apply the
precautionary principle to imported products.

3.12.
Under WTO rules, full compensation must be permit-
ted to offset the higher costs attributable to stricter European
production standards which are not adopted by the WTO.
These costs must not be taken into account when working out
the Producer Subsidy Equivalent (PSE).

3.13.
As part of the Uruguay Round, an understanding was
reached that other WTO partners would not be able to
challenge the agreements reached until 2003 (the so-called
‘peace clause’). This clause is nearing expiry and must be
extended so that the commencing negotiations are not dis-
rupted by unilateral action on the part of WTO partners.
Furthermore, a new peace clause will need to be negotiated as
part of the Millennium Round.

3.14.
The unilateral decision not to use the marketing and
pricing tools still possible under current WTO rules inevitably
involves a scaling-down of external protection. Such action
represents concessions to WTO partners without any adequate
and specific concessions in return, such as recognition of and
compliance with the principle of Community preference and
of the distinctive nature of most of European agriculture as a
result of its multifunctional role.

The Committee of the Regions would point out that any
further reduction in existing agricultural market regimes in the
EU may potentially result in increased fluctuations in both
quantities and prices, which in turn runs counter to the aim of
safeguarding and stabilising incomes. For that reason, the
Committee would ask the Commission to refrain from need-
lessly making any advance proposals for further cuts in market
regimes.

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3.15.
The Committee of the Regions supports the Com-
mission in its efforts to secure a balanced outcome of the
the
WTO negotiations and to take adequate account of
interests of European agriculture. The Committee of
the
Regions calls on the Commission to put the following issues
at the forefront of the negotiations:

— to stand by the Council of Ministers’ decisions of 26 Janu-
ary 2003, when a joint position was reached concerning
the Community’s negotiation brief;

— to also take account of non-trade concerns;

— to resist the added pressure for liberalisation from the

Cairns Group.

In May 2002, President Bush signed the new US Farm
3.16.
Bill that had been passed by both US houses. The bill provides
for an additional increase in US agricultural spending of more
than US$80 billion over the next 10 years. The Committee of
the Regions would ask the Commission to examine this bill
with a critical eye and to place it on the agenda of the WTO
negotiations. Recent developments in US agricultural policy
are regrettable as they mark a retreat from the Doha objectives.

The Committee of the Regions encourages the Com-
3.17.
mission to press ahead with its adopted strategy of incorporat-
ing the European agricultural model into the WTO agreements,
as this is the only way to maintain long-term rural viability in
Europe’s regions.

3.18.
The Committee of the Regions is pleased that, in
order to promote urgently needed economic development in
the LDCs, the poorest developing countries have gained duty-
free access to the European Union under the ‘Everything but
arms’ initiative. At the same time, the CoR would ask the
Commission to leave the sensitive sugar market out of

Brussels, 9 April 2003.

future negotiations because falling prices would cause severe
difficulties for sugar producers not only in the EU but in the
ACP countries as well.

3.19.
In July 2002, the Council of Ministers gave the
Commission a mandate to negotiate a new import regime for
cereals with the WTO partners. The aim is that real world-
market prices should reflect prices not only on the Chicago
commodity exchange, but in other regions of the world as
well. The idea is to prevent the EU being inundated with cheap
imports from other regions. Given the low cereal prices in the
EU, the Commission is asked to make every effort in the
negotiations to defend the interests of European cereal pro-
ducers.

3.20.
The Committee of the Regions proposes working
closely with the Commission to ensure that the distinctive
regional features of European agriculture are duly brought to
bear in the WTO negotiations.

The Committee of the Regions notes that the liberalis-
3.21.
ation concessions mentioned above go beyond the framework
of the Uruguay Round final act. The outcome of the WTO
negotiations must not, however, go further than the decisions
taken in Berlin. The EU’s negotiation position must not be
weakened by overly generous concessions in the early stages.

3.22. With regard to opening up the farming sector to
genetically modified organisms (GMOs), the Committee of the
Regions calls on the Commission to ensure adequate safety for
conventional and organic agricultural production.

3.23.
No bilateral trade agreements should be concluded
between the EU and third countries until the outcome of the
WTO negotiations is known. They must not result in any
further concessions that are detrimental to European agri-
culture.

The President

of the Committee of the Regions

Albert BORE