Liberalisation of the trade in farm products is not the answer either for European or developing world farmers, writes Seán Ó Neachtain
After a full year of negotiations, the EU Agriculture Ministers 10 days ago finally reached agreement on a reform package to the Common Agricultural Policy (CAP). Whatever one's view of the final outcome, it is important not to ignore the bigger picture.
We only need to look to the arguments of EU Farm Commissioner Dr Franz Fischler in pushing a radical reform agenda that was never required by the Agenda 2000 agreement of 1999 in Berlin. He has argued that these changes are an absolute necessity due to the current "Doha Round" of World Trade Organisation (WTO) talks, and in particular this September's Ministerial Conference in Cancun.
The Commission claims that the new agreement strengthens the position of the EU in the WTO since full decoupling of aids from production would change the nature of direct payments. They would no longer be classified as "blue box", but as "green box", i.e. forms of domestic support which are not, or only minimally, trade-distorting. This would substantially increase the chances of exempting them from the reduction commitments to be agreed in the Doha Round.
However, the Commission's proposed opening bid submitted to the WTO earlier this year, went far beyond what was required by the original "Doha Declaration" that launched the round. Taken together with what ministers have now agreed, the Commission's strategy in dealing with our global trading competitors is seriously flawed.
If we look at what our competitors, in particular the US, have done since the previous "Uruguay Round" of WTO talks, we see a very uneven playing field. The recent US farm bill greatly increased the level of supports given to American farmers. European negotiators in Cancun need to vigorously defend the European system of agriculture and rural development and not be making concessions in advance. Nobody can dispute the need to create a fair global trading system. But we should not delude ourselves in thinking that fully liberalised trade in agricultural goods will bring about fairness. The reality is that the very unique model of agriculture which predominates in Europe involves self-imposed restrictions to which our competitors are not subject.
Policy makers in Europe have long factored in wider concerns such as balanced regional development, socio-economic aims, environmental protection, food safety and animal welfare. All of these aspects carry a price which is borne by society because of the inherent benefits to society as a whole. Even Dr Fischler has admitted that abolishing all market support and protection would clear about two-thirds of farmers from the land. This is in nobody's interest, in either rural or urban areas. The EU must resist pressure from the Cairns group and the US to rush headlong into unregulated trade in agriculture. The sector has always been treated differently from other economic sectors in the WTO and must remain so.
The Doha Round is being heralded as the "Development Round". Special attention is being given to the needs of developing countries and their desire to integrate themselves better into the global trading system. This is positive and should be fully supported. At the same time we need to be wary of a false argument that is being put out by the liberalisers that fully deregulated agricultural trade will solve all the problems of the developing world.
World trade in agricultural products represented less than 6 per cent of total world trade in 2000. Economic growth in the initial stages depends more on developing countries' internal market than access to markets elsewhere.
The CAP is often accused of damaging the interests of developing countries, and in particular the use of export subsidies. Yet export subsidies have fallen by two-thirds over the last decade. If we take Irish dairy exports, their total value in 2002 was €1.8 billion. Of this, only €50 million came through export refunds for products sold outside the EU.
The EU already imports more agricultural products from the developing countries (€36 billion) than the US, Canada, Australia, New Zealand and Japan put together (€31 billion). In 2001, the EU went even further, opening up full access to the EU market for the world's 49 least developed countries for all products except arms.
The experience of agricultural trade liberalisation in Mexico should serve as a warning against promoting full opening of markets as a solution to developing countries' needs. Two decades of this policy under the North American Free Trade Area have led to an increase in rural poverty, malnutrition, and emigration.
Increased profits and market control by multinationals has been at the expense of small family farmers. If we add to this lost national revenues and damage to the environment and biodiversity, we see that Mexico's experience of seeking to develop its agricultural sector through trade liberalisation has had devastating consequences.
For developing countries, safeguarding food supplies and protecting their rural way of life is vital if poverty is to be alleviated and there is to be social stability. Even optimal international trade rules will not solve problems of rural development, due to the complexity of local and regional conditions. Only national integral development policies can do this.
Indeed, the European model of integrated sustainable rural development can serve as a model for the developing world. In the forthcoming WTO talks, the EU can do much more for developing countries if it fights to maintain their right to use domestic policy to improve the lot of their rural communities. Imposing a global free-trade system would tie the hands of national governments, exacerbate the crisis in the countryside and bring about huge human and environmental cost.
Connacht-Ulster MEP Seán Ó Neachtain is a member of the European Parliament's Trade Committee and will be part of the EU's delegation to the World Trade Talks in Cancun, Mexico, this September