The Doha Development Agenda, Taking Stock

A European Perspective

Rolf Moehler

former Deputy Director-General for Agriculture of the European Commission

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The European Union in 2004

Enlargement of the Union in May: 10 new member states 450 million European citizens 10 mio more agricultural holdings Agricultural area up by 50%

A Constitutional Treaty has been agreed in June

Elections of the European Parliament in June

New Commission with President Barroso in November

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Reaction to the Framework Agreement

The Framework Agreement was well received because

on agriculture the EU locked in reform and obtained reform of US agricultural policy

on industrial products guidelines to cut tariffs have been established

On services a new round of negotiations has been agreed

There is disappointment, however, that progress in agriculture has not been matched by more progress in industrial tariff and in services

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Agriculture in the Framework Agreement

Why has the EU welcomed the outcome on agriculture?

Parallelism between phasing out of export subsidies and other forms of export subsidisation

“Blue Box” and “Green Box” have been preserved

The impact of improved market access on the CAP can be cushioned by choosing “sensitive products”

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Future Negotiating Position of the European Union

The EU will insist on parallelism in phasing

out all forms of export subsidisation

have little flexibility on the “green box” and

be rather defensive on market access

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The Basis of this Position is the CAP Reform 2003

Mr. Fischler wanted CAP reform to drive the WTO negotiations,

The CAP reform means Reduction of market price support Single farm payment Rural developmentThis gives flexibility on export subsidies and

market access and crucial role to “green” and “blue box”

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Will the New Commission Make a Difference?

The new Commission has no choice but to build on the CAP as shaped by recent reforms

But further adjustments are necessary to meet the requirements of the Framework Agreement

Non-trade concerns will not go away

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The Framework Agreement and the CAP

Eventual elimination of export subsidies will require

further reduction of market price support for dairy, beef, probably cereals and rice although margin of manoeuvre for income compensation will shrink

reform of the sugar market organisation

The combination of reduced AMS, “blue box” and “green box” is likely to keep the CAP afloat but the cotton panel has created a problem

Market access will remain a difficult issue because

of structural weaknesses that have been compounded by enlargement

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Reform of the Sugar Market Organisation

The reform of the sugar market organisation is overdue

So far it has resisted reform because of

Negligible budget expenditure US sugar policy Powerful lobby Reform has been triggered by

“Everything but Arms” initiative not the Doha Round

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The Proposal of the Commission

Reduction of market price support by 33%; no intervention buying any more

Sugar production quotas (17.4 mio t) should be reduced by 2.8 million t

60% income compensation of sugar beet producers by single farm payments

Preferential access for African, Caribbean, Pacific and Indian producers for 1. 3 mio t maintained but at reduced prices

Sugar production is expected to fall to 14.5 mio t and exports with export subsidies from 2.8 mio t to 0.8 mio t

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The sugar case in the WTO

The Panel has found that sugar exported without export

subsidies (around 3 mio t so-called C-sugar) had benefited from export subsidisation

Export subsidies for sugar imported from African, Caribbean and Pacific countries and India were illegal.

The EU has appealed Pending the appeal no decision will be

taken on the reform proposal of the Commission

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How Can the EU Be Expected to Deal with the WTO Sugar Case?

If the Appellate Body confirms the ruling of the Panel

the proposal of the Commission shows already the way to go

quotas will have to be cut further to make up for the 3 mio t of C-sugar exports to disappear

Further price cuts are likely Sugar production in a number of

member states may disappear

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How to deal with the ACP countries?

This is a major problem as many of these countries will not be competitive any more

A major restructuring programme is required

Assistance should not be left to the EU alone

It would be helpful if it could be agreed that ACP sugar could continue to be exported with export subsidies for a transitional period

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Conclusion

CAP reform will remain the basis of the EU negotiating position

Structural weakness compounded by enlargement will limit flexibility on market access

The WTO sugar case can be dealt with in this framework

The special needs of ACP countries have to be addressed