Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Examination of Witnesses (Questions 60-72)



  60. In that case, are any discussions between the candidate countries and the WTO always conducted in the context of agreeing through the EU as well?
  (Mr Roberts) As I said earlier, I maintain regular contact with their negotiators so that as far as possible we take a common line. We discuss the line we are going to take on the business of the day, with a view to ironing out as many differences as we can. It is clear that the discussion on direct payments, for example, presumes the continuance of the blue box because it is the blue box which means that the direct payments are not subject to WTO reduction commitments. There is a clear interface within the two negotiations. If the timetables which have been set in different places for the two negotiations hold, the first candidate will be joining at the beginning of 2004 and the WTO negotiations will end at the end of 2004, so we will have a period where we are merging our existing obligations. When the new WTO agreement comes into force, we, the enlarged Community, will have to conform to our new obligations.

  61. Do you foresee any particular problems with the WTO in respect of the EU enlarged area?
  (Mr Roberts) That depends, of course, on the outcome of the WTO negotiations. When we frame proposals for the next stage in the enlargement negotiations, we will have in mind the need for the enlarged Community to respect our existing commitments. We cannot foresee how we fulfil our future commitments because we do not know exactly what they are.

  62. On the basis of our present commitments, do you foresee any particular problems in the enlarged Community applying the WTO obligations?
  (Mr Roberts) No, but I will be able to answer that question better when the Commission has decided what its proposal is. I am not playing with words here. The Commissioner has said in Berlin that we are considering a simplified area payment. Assuming that the proposal for that simplified area payment is adopted and assuming that the candidates like it and do it, and depending on how it works out in detail, then it would be a green box payment. If it is a green box payment, then some potential problems in relation to WTO commitments would be very much eased.

Mr Borrow

  63. I would like you to clarify my perception of how the question of accession of candidate states and the WTO and the CAP will fit together. As I understand it, at the moment the level of agricultural support within the EU is higher than the level of agricultural support within the candidate states. Therefore, any accession of new states would limit the amount of agricultural support that can be given by an enlarged EU to the total of the new Member States that exist in the EU now. Therefore, any new CAP regime will need to reflect that lower per-head amount than would be available with an enlarged EU as against the existing EU, which means there is pressure from the mechanics of that, let alone the WTO negotiations. There is pressure simply through enlargement to reduce the level of agricultural support within existing EU Member States. There is also pressure to reduce agricultural support from the budget mechanism within the EU itself in that there is an unwillingness amongst existing Member States to subsidise agriculture in new Member States to the existing level in any case, because that would have budget implications for the EU. Thirdly, if the WTO round itself was seeking to reduce market-distorting supports, then that is a further push in the same direction of reducing support for agriculture within the existing states within the EU. I am puzzled, if there are all these pressures moving in that direction to reduce support for agriculture within the existing Member States of the EU, how the combination of the WTO round and enlargement of the union—going back to your early remarks—lead to schism between Member States wanting a big bang reform and reduction in agricultural support, and at the same time can give support for a conservative position that is arguing for no change or minimal change in agricultural support. I cannot see, from the mechanism, any pressure to maintain the status quo.
  (Mr Roberts) You have put, very elegantly, the case for the change, but there are alternatives and there are nuances in what you say. First of all, the candidate countries do have a lower level of support and we have a higher level of support, so when you merge the two, there is less. But what is there less of? There is less margin in our amber box commitments. Thus there is not a necessity to reduce our amber box commitments, even within the enlarged Community. If however the amber box commitments are reduced by more than that margin, then we would indeed have to make changes. Those changes do not necessarily imply less support; they imply moving from trade-distorting support to non-trade-distorting support; that is, they imply that we have that option. Whether we would in fact take that option relates to the other point that you raised, which is the willingness of the existing Member States to face up to that budgetary consequence. That is not a WTO issue, that is a domestic issue. Those who would take a conservative position would say, "we have a mandate to the Commission to negotiate within the margins of Agenda 2000; we have enlargement; enlargement should not be at the cost of producers in the existing Community". If the Community wants to enlarge, then it has to find the financial means to do so, and the cost of enlargement should not fall just on those groups in the Community which happen to benefit from existing Community policy. I am not trying to take either position, I am simply saying that you can imagine that Member States in either position will use the enlargement process to justify their position, rather than imagine someone saying, "in the light of enlargement obviously everything I have ever said about the defence of agriculture in my country . . ." (and you put the name of the company as you like) "no longer applies". You do not logically have to change that position; you have to ensure that the balance of adjustment is placed somewhere other than on the backs of their producers.

Mr Martlew

  64. Turning to rural development, historically, the UK has done badly and gets about 3.5 per cent, whereas the Irish get 7 per cent of the EU budget and the French get towards 20 per cent. Why do we get such a low amount, and what do we have to do to increase our percentage of this very useful extra source of resources?
  (Mr Roberts) First of all, a consumer warning: I have never dealt with rural development and I have never been involved with the negotiation of the envelopes. Most of the other things I have been talking about I have been involved in. The amount one gets out of the structural funds is partly a function of how your countryside is classified. Any negotiation starts from where you were to begin with. Historically, the UK did not have a very great deal of land in the old objective 1 area, and that therefore limited the baseline for the British Government's negotiations when the national envelopes were distributed.

  65. Are you saying there is nothing we can do to constrain them, that it does not matter and there is no way we can tap into the extra resources?
  (Mr Roberts) There are extra resources which can be made available within the UK because we have the modulation provisions in the direct payments. If the British Government chooses, as indeed it has chosen, to reduce direct payments, it can switch that money into rural policy objectives.

  66. What do you think would be the consequences of moving money away from farming and allowing other people in the rural areas to access this money?
  (Mr Roberts) I think it would be using money in ways which were better targeted in terms of rural development objectives because the direct payments, as they now stand, give a lot of money to arable producers, and they are not targeted to some of the aspects of multi-functionality, which we normally talk about. It is a matter of national discretion. You can improve your agri-environmental schemes, for example, and devote more money to them, if you devote less to the arable payments.

  67. What assessment has the Commission made of the role of monies for specific environmental improvements, for example habitat improvements?
  (Mr Roberts) Again, I give a consumer warning, that I have not dealt with this personally. The UK has a good record in using the agri-environmental scheme, and it was my understanding that it was particularly in order to beef that up that it exercised the option of transferring some of the direct payments into that scheme.

Mr Todd

  68. You touched briefly on modulation. Only three countries are modulating at the moment. What assessment has been made by the Commissioner of the success or the implications of modulation?
  (Mr Roberts) I think we are disappointed that more countries have not taken the opportunity to do this. It is one of the issues that we have to look at in the mid-term review. We have to draw the conclusion that an optional scheme is attractive to only a few countries. Whether you conclude from that, that the proposal to make it compulsory would never get through, or whether you draw the conclusion it must be made compulsory in order to allow those countries that would like to do it but do not dare—to do so unless they can say they are constrained by the Community to do it—I do not know, but it is clear that until now anyway this option has not been attractive to many Member States.

  69. There has been no collective study of the three schemes that have been produced so far, which are all different, and what implications those have had?
  (Mr Roberts) To say there has been no study . . .

  70. Or do you think that is really down to the individual Member States to work that one out for themselves?
  (Mr Roberts) When we were dealing with Agenda 2000, one of the buzz-words was "subsidiarity", so we do think it is down to Member States, or at least that is our existing policy. If we are going to give it a big push, then we will have to consider the question as to whether it should be compulsory. I am not saying we are considering it; I am saying that that issue has to be addressed.

  71. If we are moving down that route, then clearly you need to do some studies of the schemes that have been done so far and what effects they have had on competitiveness and other rural outcomes.
  (Mr Roberts) We certainly keep in touch with what is going on, and we will use that experience in developing our proposal.


  72. In the past it has always been said that the budget will force change. Am I right in saying that the budget is rather well behaved at the moment and is not posing any great imperative? Can you give us a final burst on the state of the budget?
  (Mr Roberts) The budget is fairly well behaved at the moment and we had quite an under-spend last year, when we expected it to be very tight. That does not mean that it will continue to be okay. You can have effects with currency changes, or world prices moving against you, and you can have new animal health emergencies. But it is true that we do not face the kind of budgetary crisis that we did in the mid eighties, when the need to go beyond the 1 per cent VAT ceiling was a trigger for Agricultural Policy reform.

  Chairman: Mr Roberts, thank you very much. We are going to Brussels and I think that we will be seeing your Commissioner, which we are looking forward to very much indeed. You have been helpful, and you may even have been slightly more helpful than you thought! It has helped us to get a feel or the sort of territory we are venturing into, and you have given us a remarkably accurate feel for that territory: I think we will need to wear Wellington boots. Thank you for coming.

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