The Common Agricultural Policy The CAP

1
The Common Agricultural Policy (The CAP)

• What did change after 2. World War?
• ? of productivity, ? of employment... BUT
• ...still the same demand ? governmental support
• What to do to achieve a higher efectivity in the
  agricultural production?

2
The CAP - History

• Pierre Pfimlin vs. Sicco Mansholt
• P.P. common market for key commodities (sugar,
  vine, dairy products, wheat)
• S.M. more efectivity and specialization
• Green Pool Talks (Paris 52-54) moving the
  discussion towards supranational level

3
Towards the nowadays CAP

• Basic compromises
• France Netherlands ? import quotas
• France Germany ? high guaranteed prices

4
Legislative base of the CAP

• Art. 39 TEC (Goals of the CAP)
• 1. to increase agricultural productivity through
  the promotion of technical progress and the
  optimum utilisation of factors of production,
  especially labour
• 2. to ensure a fair standard of living for the
  agricultural community, in particular by
  encreasing the individual earnings of persons
  engaged in agriculture

5
Legislative base of the CAP

• Art. 39 TEC
• 3. to stabilise markets
• 4. to assure the avalaibility of supplises
• 5. to ensure that supplies reach consumers at
  reasonable prices
• Art. 43 TEC ...the Commission shall, immediatly
  this Treaty enters into force, convene a
  conference of the M.S.,.....

6
STRESA Conference

• Sets out 3 basic CAP principles
• Creation of a Common Market (?COMs direct
  payments, export subsidies, price regulation,
  intervention stores)
• Community preference (?import tariffs)
• Financial solidarity (?EAGGF)

7
The system of prices

• TARGET PRICE basic reference point from which
  the other prices are derived satisfactory level
  of farmers return
• TRESHOLD PRICE minimum entry price for imports
  and are designed to ensure, that target prices
  cannot be undercut
• INTERVENTION PRICE provides a floor to the
  market by providing a price at which national
  agencies have to buy products offered to them
  into intervention stores
• OTHER PRICE PROTECTIONS export refunds, import
  levies

8
Mansholt plan the first attempt at reform

• KEY POINTS
• agri - surpluses cuts
• EEC budget expenditure limits
• MODERN FARM ENTERPRISE
• less agri-workers (5ml.)
• less agri-land (20ml. Ha)
• lower number of beef (3ml.)

9
Reforms in 70s and 80s

• Butter Mountains and Wine Lakes
• (COM(85)333) Maximum Guaranteed Quantity, new
  structural funds measures, early retirement,
  compensation for leaving the land

10
MacSharry reform

• cuts in institutional prices (beef, cereals,
  oilseeds, butter)
• introduction of DIRECT PAYMENTS (economic
  efficiencytransparency)
• Accompayining measures early retirement,
  reforestation, protection of the environment
• correction of the inequity in the distribution of
  the CAP budget?
• ...but an overcompensation

11
Agenda 2000 and the Fischler reform

• The Buckwell Group reorientation of the
  agri-financing cuts in payments and financing
  of the rural development, social economic
  measures, measures of enviroprotection,....
• Moving towards structural support?

12
Agenda 2000

• new cuts in institutional prices (compensations
  through direct payments)
• Cross compliance (29 legislative acts GAEC)
• Modulation higher responsibility for member
  states
• Single Area Payment Scheme ? Single Payment
  Scheme

13
Fischler reform

• decoupled payments (SFP)
• reinforcement of the II. pillar of the CAP
• revision of the market support
• financial discipline

14
Nowadays Changes

• Coord. (EC) 1290/2005
• European Agriculture Guarantee Fund (EAGF)
• European Agriculture Fund for Rural Development
  (EAFRD)

15
EU budget 2005

• CAP
• Structural Operations
• Internal Policies
• Administration
• External Policies
• Pre-Accession Policies
• Compensations
• Reserves

16
The CAP and the WTO

• EUJapan vs. USACairns Group
• Uruguay Round URAA
• reduction of the domestic support (20)
• reduction of the export support (21)
• transformation of the Non-Tariff Barriers onto
  customs and their reductions (36)
• Peace Clause
• The Sanitary and Phytosanitary Agreement

17
The CAP and the WTO

• System of 3 boxes
• The amber box domestic measures that have a
  direct effect on production and that distort
  trade
• The green box measures with a minimal impact
  on trade BUT they must be decoupled from
  production
• The blue box payments linked to programmes
  that limit production

18
The CAP and the WTO

• Doha Agenda (Doha 01 Cancún 03 Genéve 04
  Hong Kong 05)
• 3 key points
• I. market access (import barriers)
• II. domestic support
• III. export subsidies
• Allready agreed elimination of export subsidies
  till 2013, reform of the CAP, domestic support
  progressive cuts in market distorting subsidies
  BUT the cotton

19
The CAP and the WTO

• Limits of the post Hong Kong WTO era
• G20/G110 vs. USA and EU
• USA Fast Track Negotiating Authority new
  presidential electionsNew Farm Act?
• France new presidential elections
• EU problems in commissioners competences
  M.F.Boel vs. P. Mandelson
• DAVOS 2007 mini agreement between USA and EU on
  market access and domestic support