Diapositiva 1

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ENARPRI Trade Agreements and EU Agriculture
Brussels, 8 June 2006
European agriculture, the future of the CAP and
the WTO negotiations
Giovanni Anania Department of Economics and
Statistics University of Calabria, Italy
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the plan (all in 20 )

• the agricultural negotiations in the WTO Doha
  Development Agenda round where are we?
  what may happen? how relevant for EU
  agriculture and the CAP?

• meanwhile, whats happening in international
  markets?

• the future of the CAP where is it likely to
  be heading? where should it be heading?

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the WTO negotiations on agriculture, where are
we?

• a quick review of the status of the negotiations
  on agriculture

• the main elements of the agreement yet to be
  decided in italics and underlined

• colors used as indicators of the sensitivity for
  the EU (as I see it ) of the decisions left to
  be made, from green (not a problem for the EU) to
  red (sensitive)

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where are we on domestic support?

• linear reduction of the overall (amber box blue
  box de minimis) trade distorting support three
  tiers, the EU alone in the first one
• linear reduction of the amber box support, three
  tiers, the EU alone in the first one
• product-specific caps on amber box support
• reduction of the de minimis support
• blue box modified, support capped at 5 (2.5?)
  of value of production
• formula(s) coefficients in the formula(s)
• 20 cut in the first year of implementation
• green box reviewed and clarified

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where are we on export competition?

• parallel elimination of export subsidies,
  subsidized export credit, trade distorting
  practices of exporting STEs, and improper forms
  of food aid which displace commercial purchases
• end date 31 December 2013
• operational commitments for export credits, STEs
  and food aid
• flexibility phasing will take into account
  internal reform steps of members

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where are we on market access?

• four tiers
• the thresholds
• the tariff reduction formula (Swiss? UR-type?
  tariff caps? )
• the coefficients in the formula
• sensitive products (how many? which deviation
  from tariff reductions for normal products? how
  large the TRQ expansion?)
• TRQs (volume, in-quota tariff, administration)
• preference erosion, tariff escalation

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where are we on the other issues relevant for
agriculture?
in the agricultural negotiations

• geographical indications (?)
• the cotton initiative
• other sectoral initiatives
• export taxes
• tropical products
• SDT for developing countries

at the other tables of the negotiation

• TRIPS (GIs)

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the WTO negotiations on agriculture, what may
happen?

• whats the cost of not reaching an agreement?
• many believe an agreement is needed, but that
  no agreement is better than a bad agreement
• and what is seen as bad by some is seen as
  good by others the ambitiousness of the agreement

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the WTO negotiations on agriculture, what may
happen?

• what I would see as an ambitious DDA Agreement on
  agriculture
• - current domestic support reduced
• - current market access increased
• - effective SDT component for poor
• developing and least developed
• countries, and a less far reaching SDT
• for more developed developing countries
• - ambitious cotton initiative
• - geographical indications on board

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the WTO negotiations on agriculture, what may
happen?

• whats the cost of not reaching an agreement?
• many believe an agreement is needed, but that
  no agreement is better than a bad agreement
• and what is seen as bad by some is seen as
  good by others the ambitiousness of the agreement

• if an agreement is reached before the summer
  recess it will not be ambitious

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the WTO negotiations on agriculture, what may
happen?

• modalities by the end of June?
• I doubt it

• modalities by the end of July?
• it is possible but, in my opinion, unlikely
• positions on some of the relevant elements
• of the agreements remain distant
• a huge amount of details has to be agreed
• on some elements of the agreement
• final-stages-type negotiations did not even
• start yet

• the who is to be blamed for the failure game

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the WTO negotiations on agriculture, how
relevant?

• how sensitive a DDA agreement would be for EU
  agricultures and CAP?
• for the defensive interests not a problem
• (it will be within the Commission negotiating
  mandate)
• for the offensive interests (in and outside
  agriculture) little or no gains

• if an agreement is not reached, relevant
  components of the reformed CAP will likely be
  subjected to WTO disputes

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meanwhile, whats happening in international
markets?
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meanwhile, whats happening in international
markets?
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meanwhile, whats happening in international
markets?
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meanwhile, whats happening in international
markets?
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meanwhile, whats happening in international
markets?
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meanwhile, whats happening in international
markets?
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meanwhile, whats happening in international
markets?
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meanwhile, whats happening in international
markets?
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meanwhile, whats happening in international
markets?
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meanwhile, whats happening in international
markets?
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meanwhile, whats happening in international
markets?
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meanwhile, whats happening in international
markets?

• agricultural markets expand

• imports exports both grow, and do so in
  developed as well as in developing countries

• net trade position of developing countries does
  not show any significant change

• China net deficit expands, India surplus
  declines, while Brazil surplus expands rapidly

• EU net trade position improves (while the
  contrary is true for the US)

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whats important for the future of European
agricultures?

• the conclusion of the DDA round is important, but
  the agreement, when it will occur, likely will
  not be so ambitious to significantly affect
  current CAP and EU competitiveness

• implications of (recent and future) rulings in
  the WTO dispute settlement system seem
  potentially more relevant

• the most important game field for the future
  of the CAP is the domestic one the definition of
  the post-2013 (post-2009?) EU agricultural and
  rural development policies

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looking at the past to understand what may be
ahead

• from fully coupled support, linked to how much
  the farm produced (pre-1992), to

partially decoupled support, linked to what
the farm produced (1992-2003)
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looking at the past to understand what may be
ahead
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looking at the past to understand what may be
ahead

• from fully coupled support, linked to how much
  the farm produced (pre-1992), to

partially decoupled support, linked to what
the farm produced (1992-2003), to
decoupled support (post-2003), linked to
farming/land management

• declining support

• declining financial resources for the CAP

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whats ahead?

• with respect to income support, we should expect
  more of the same - more decoupling -
  less financial resources - less support -
  support to become more selective - more space
  for implementation choices at the national
  level - more cross-compliance constraints (?)
  - more farm payments in exchange for the
  production of specific non-market goods and
  services

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whats ahead?

• how much more of the same and at which speed?
  it remains to be seen

• plus, possibly, something a little different from
  what we have already seen - new safety net
  policy instruments - partial (re)nationalization
  

• is something missing? - more (and more
  effective) policies to strengthen the
  competitiveness of EU agri-food system,
  domestically and abroad

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strengthening the competitive wedge
the farm structure adjustment issue (for
certain agricultures is a prerequisite) the
technological innovation wedge - product
innovation - innovation in the production
process - innovation in the services sold with
the product - from farm competitiveness to
chain/territory competitivenessthe quality
wedge quality ? qualities (consumer
driven) including origin, food safety
standards, organic, animal welfare standards,
no GMOs,
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(No Transcript)
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strengthening the competitive wedge
the farm structure adjustment issue (for
certain agricultures is a prerequisite) the
technological innovation wedge - product
innovation - innovation in the production
process - innovation in the services sold with
the product - from farm competitiveness to
chain/territory competitivenessthe quality
wedge quality ? qualities (consumer
driven) including origin, food safety
standards, organic, animal welfare standards,
no GMOs, made in Europe is
different!