The International Dimension

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The CAP operates in a global context. The design of policy measures within the CAP is guided to a certain extent by the rules established through the WTO. In addition, the impacts of the CAP are geographically diffuse, arising not only within Europe, but also in other continents and countries.

The impact of the CAP on developing countries, for example, is rather mixed. Certain practices, such as the use of export subsidies, have been blamed by a range of development advocacy groups for impoverishing farmers in the developing world. The EU has expressed its commitment to eradicate export subsidies over the course of the WTO Doha Development Round. Others have argued that further CAP reform may not necessarily result in pro-poor outcomes. One line of debate is that the structure of farming in some developing countries means that large scale commercial producers are better placed to reap the benefits of liberalisation than semi-subsistence farmers, for example. Certain developing countries may also come to benefit from the negotiation of preferential trade agreements with the EU, such as the African, Caribbean and Pacific countries (ACP) currently negotiating Economic Partnership Agreements (EPAs). The impacts of the CAP on the developing world are therefore difficult to disentangle, partly because of the heterogeneous nature of the farming sectors in developing countries, and, partly because of the status of their trading relationship with the EU.

The present WTO Doha round has a pro-development remit, however, the agricultural component of the negotiations, which are critical to the successful conclusion of the talks, have repeatedly stalled, most recently in July 2008. This year, the European Commission also proposed to use up to €1 billion of unspent CAP funds for development aid, although this proposal has yet to be agreed to formally. The relative merits of providing aid on an ad hoc basis, as compared to further liberalising trade in agricultural products, or by developing a formal programme of providing regular aid, tied to specific outcomes such as the development of sustainable and competitive agriculture in developing countries, may need further consideration.

In relation to the environment, the Agreement on Agriculture, with specific reference to ‘payments under environmental programmes’ states that ‘eligibility for such payments shall be determined as part of a clearly-defined government environmental or conservation programme and be dependent on the fulfilment of specific conditions under the government programme, including conditions related to production methods or inputs.’ In addition, ‘the amount of payment shall be limited to the extra costs or loss of income involved in complying with the government programme.’ These payment terms are critical. For example if, in the future, it is deemed appropriate for public payments to be targeted at the provision of public goods through agriculture, the payment made should have, at most, a minimal effect on production. This is an important consideration for any potential proposals relating to the support of specific farming systems that provide public goods, where agriculture jointly provides commodities (that are priced by the market) and public goods (that are also consumable, but not priced by the market). In the EU context, the support of public goods may imply a shift to more extensive farming systems. This may increase the reliance of the EU on imports from elsewhere where environmental safeguards are comparatively weak.

We invite you to share your views on this issue. You may wish to consider the following questions:

  • How can the CAP evolve in a way that is sensitive to the needs of developing countries?
  • Given that changes to the CAP may result in benefits to some developing countries and to certain groups of producers, and potentially disadvantage others, what is the most development friendly CAP reform scenario?
  • To what extent is a pro-development CAP dependent on the conclusion of the Doha Round?
  • What are the likely implications of a Doha Round agreement for the future of direct support to farmers in the EU?
  • What changes to EU farming policy would be beneficial to developing countries without increasing the prospect of environmental degradation in those countries that export agricultural products to the EU?
  • Is reform of the CAP to meet environmental goals dependent on similar reform in other countries which support their farm sectors to a high degree, such as Japan, the USA and Canada?
  • In what ways do the WTO rules for payments under environmental programmes restrict the introduction of support payments within the EU that can incentivise beneficial environmental outcomes?

Please do not feel bound by these questions. If there are other key questions that you feel need addressing, then please feel free to do so.

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PUBLICATION DATE

12 Nov 2008

AUTHOR

IEEP