CAP and Competitiveness - Reforming the EU Budget

'From the CAP to Competitiveness: The Common Agricultural Policy and the European Budget' was the subject of a conference held in Brussels this week on 23 June (agenda available here). The conference was intended to contribute to the on-going public debate on the future of the EU Budget beyond 2013. The event was organised by the German Marshall Fund of the United States in cooperation with Groupe d’Économie Mondiale (GEM), Sciences Po; the Association of Swedish Chambers of Commerce and the Confederation of Swedish Enterprise. It was attended by over 100 representatives from the Commission, Member States, business and stakeholder organisations.

Whilst informal discussions on the future of the CAP post-2013 have taken place under the French and Czech Presidencies, it was noted that there has been a reluctance amongst the EU Institutions to publicly discuss reform of the EU Budget since the public consultation was concluded last year. However, the need for CAP expenditure (currently more than 40% of the total EU budget) to be justified and effectively targeted – given competing spending priorities such as competitiveness and R&D in line with the Lisbon Agenda – is more pressing than ever.

The EU Budget and the Future CAP

The focus of the first half of the conference was the EU Budget and the CAP, presented by researchers from the Groupe d’Économie Mondiale (GEM), Sciences Po in Paris. Presenters on the panel included Patrick Messerlin, Pierre Boulanger and Patrick Jomini from Groupe D’Economie Mondiale (Sciences-Po).

Presentations included an overview of the French experience of distributing CAP funds and the government's strategy for reforming the CAP after 2013. In regards to the latter, the presentation concludes that 'A re-legitimised CAP is [viewed in France as] a way to preserve direct payments in the future'.

Following this, the results of research based on the GTAP model to assess the economic impacts of the CAP (border protection and export subsidies) both in France and at the EU level, was presented. The study concludes that support for EU agriculture through the CAP is done to the detriment of the parts of the economy that do not benefit from support, including parts of the agricultural sectors in France and in the EU. This has resulted in an inefficient allocation of resources in the French and EU economies and large net costs to both economies.

The final presentation in this session started by maintaining that climate change and water scarcity will require further liberalisation and increased international trade in order to 'increase [the] global resilience of agriculture' to unpredictable climate and water stresses. Then, the presentation described the dramatic emergence of new policies which will be needed within the CAP whilst existing market and income support declines significantly — the new policies being much less demanding in budgetary terms. Lastly, it sheds some light on the political economy of the reform of the CAP by showing how much the current CAP curbs the comparative advantages of French farmers and by suggesting that (many) more French farmers would lose from a Doha Round failure than the number of French farmers who would gain from such a failure.

However, there were some concerns raised at the meeting about the extent to which liberalisation could impact on broader environmental and land use factors, linked to greenhouse gas emissions, biodiversity and externalities resulting from increased potential concentration and intensification of production.

EU Budget and Competitiveness - Alternatives to CAP Expenditure?

‘Fostering EU Competitiveness’ was the theme for the final half of the conference. The presentations led by Charlotte Nyberg of the Swedish Chambers of Commerce and with interventions of Signhild Arnegård Hansen, Chairman of the Confederation of Swedish Enterprise and CEP of Svenska Lantchips outlined alternative EU spending priorities from a business perspective. It was highlighted that whilst increasing competitiveness is one of the EU's priorities outlined in the Lisbon Agenda, expenditure on research and development, growth and employment is currently dwarfed by the CAP Budget (8.6% compared to 43%). A new report presented at the conference, ' From CAP to Competitiveness - Reforming the EU Budget' by the Confederation of Swedish Enterprise, calls for:

  • a reallocation of resources to measures which support competitiveness in the wider economy;
  • increased investment in redesigned Research and Development programmes (such as FP7);
  • use of the Structural Funds for innovative procurement;
  • greater effectiveness and efficiency in the delivery of the EU budget;
  • a proper assessment of the 'European value added' of EU projects.

The final presentation by Dr. Jan van den Biesen from Philips, outlined the experiences of Philips Research department in Public Private Partnerships (PPPs) for promoting research and development (R&D). The presentation included an overview of the EU's instruments for enhancing competitiveness through R&D, such as DG Research's Framework Programmes (FP6 & FP7), European Technology Platforms (ETPs), and Joint Technology Initiatives (JTIs), with recommendations for the future reform of PPPs to increase the EU's competitiveness. The EU also needs to consider the fact that R&D and innovation for many businesses today are built on global an open networks.

All of the presentations from the conference can be downloaded below:

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PUBLICATION DATE

26 Jun 2009

AUTHOR

IEEP

FURTHER INFORMATION

The Institute for European Environmental Policy coordinates CAP2020. It is an independent not for profit institute which undertakes research in a number of policy areas including agriculture and rural development.