3 April 1998

CAP reforms needed…

By Philip Clarke,

Europe Editor

AGENDA 2000 does not go far enough and further reform of the common agricultural policy will be needed after the next round of world trade talks, warns Reading University economist, Prof Alan Swinbank.

Speaking at a Centre for European Policy Studies seminar in Brussels last week, he said commission plans to get new policies into the so-called "blue box" of measures (exempt from cuts in the last GATT round) were flawed.

To qualify, direct payments to farmers had to be linked to production limiting programmes, based on fixed areas and strict headage limits.

By retaining set-aside – albeit at 0% – the commission could claim new area aids as blue box payments, said Prof Swinbank. And the new dairy cow premium, clearly linked to milk quotas, could also qualify.

But Prof Swinbank believed those claims were irrelevant. "It seems improbable the EUs trading partners will be willing to see the blue box exemption rolled forward." With Australia and others adamant that blue box payments were insufficiently decoupled from production (see below), and the USA adopting decoupled compensation under the FAIR Act, the EUs position was marginalised.

Escape cuts

"Green box" measures, linking support to genuine environmental schemes, would escape cuts. But Prof Swinbank suggested the commissions proposals in this area would not meet the criteria.

At best, Agenda 2000 was a "timid step in the right direction". Further reforms would be needed to dispose of surpluses and expand eastwards next century.

The benefits of such reform were spelled out by US agriculture counsellor to the EU, Mary Revelt.

US legislation aimed to increase the competitiveness of its products on world markets, and take advantage of openings negotiated under the last GATT round, she said. US exports reached $57bn in 1997 – double the level of the mid-1980s.

"Fortunately for us, the EU is only participating in a limited way in new export opportunities, due to export subsidy restrictions."

&#8226 EU farm body, COPA, believes the latest Agenda 2000 proposals will cost European farmers 8bn ecu (£5.6bn). That is some 1.5bn ecu (£1bn) worse than when the policy was first published last summer, due to proposed elimination of monthly increments for cereal intervention, the delay in arable area payments and the extra 5% cut in dairy prices.