Blair and Cap reform

The Taoiseach has insisted the Government will resist British pressure for further reforms of the Common Agricultural Policy, …

The Taoiseach has insisted the Government will resist British pressure for further reforms of the Common Agricultural Policy, either as a means of securing agreement on the forthcoming 2007-2013 EU budget or as part of the current round of World Trade Organisation (WTO) talks.

That is as it should be. Irish farmers are facing into difficult times and need reassurance from the highest level. The certainty about farm incomes, provided through a system of "decoupling" and direct payments under the Cap reforms of 2003, should not be abandoned before the agreed renegotiation date of 2013.

For the second time in as many months, Mr Ahern has disagreed publicly with Tony Blair over the tactics being used to defend Britain's special rebate, worth €5.1 billion, and drawn from EU coffers. The refund was secured many years ago and under different economic circumstances by Margaret Thatcher. French president Jacques Chirac sought to phase out the rebate as part of current budget negotiations for an expanded EU. But Mr Blair responded he would only agree to negotiate on the issue in the context of further Cap reforms. In a parallel development, EU Commissioner Peter Mandelson further antagonised the agricultural sector by offering cuts in EU agricultural subsidies, in return for the liberalisation of trade in industrial goods, at the WTO talks.

Budgetary negotiations have provided the British government - which holds the EU presidency - with an opportunity to target Cap reforms and reductions in cohesion funding as part of a package that would include changes in its own special rebate. The great majority of member states do not wish to become embroiled in Cap reform at this time. And the 10 accession states could lose heavily from delays in structural funding if members fail to reach agreement next month.

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There are risks involved in such abrasive negotiations, which were reflected in the Taoiseach's obvious anger at the reopening of Cap issues. EU cohesion could be damaged. And the concept of community solidarity that has underpinned its development may be undermined. Accession states have joined on the understanding that they will benefit from significant development funds. Seeking to reduce expected benefits at this time would amount to a breach of trust. The same holds true for the farming community. It has accepted painful change under current Cap reforms. A massive fall in sugar prices as a result of WTO negotiations will hurt all growers and may end sugar processing in Ireland. Change is necessary and, indeed, inevitable. But a sense of proportion has to be maintained in plotting the way ahead.