Select Committee on European Union Tenth Report


25 February 2003

By the Select Committee appointed to consider European Union documents and other matters relating to the European Union.




10879/02  Communication of 10 July 2002 from the Commission to the Council and the European Parliament on the mid-term review of the common agricultural policy (COM (2002) 394)

COM(03)23  Legislative proposals[1] of 21 January 2003

PART 1: summary

1.  The European Union is committed to a mid-term review of the Common Agricultural Policy (CAP) in 2003. Proposals made by the Commission in June 2002 for reforming an increasingly unsustainable CAP, although diluted by recent Council decisions, need to be implemented urgently.

2.  Imminent enlargement of the EU and forthcoming World Trade Organisation negotiations have increased the urgency of reaching agreement on the proposals.

3.  The principal features of the reform package are:

·  a single farm payment, independent from production (decoupling)

·  linking those payments to respect for environmental, food safety, animal welfare, health and occupational safety standards, as well as the requirement to keep all farmland in good condition (cross-compliance)

·  a revised rural development policy with some increases in resources; new measures to promote quality and animal welfare; and help for farmers (through a farm advisory scheme) in meeting EU production standards

·  a reduction in direct payments (degressive modulation) for bigger farms, to generate additional money for rural development and savings to finance further reforms

·  revisions to the market policy of the CAP in relation to certain sectors (including milk and cereals).

4.  The Report comments on the proposals under four headings:

EU enlargement

5.  The proposals on decoupling are essential, to avoid compounding overproduction and market distortions in the enlarged Community, and should be reinforced by progressive abolition of market intervention and export subsidisation, particularly in the sugar and dairy sectors. Modulation (i.e. transfers from direct subsidies into structural measures) should be at a higher rate than proposed and possibly higher still for new Member States.

Implications for the World Trade Organisation Doha Round

6.  Decoupling is also essential to a credible EU negotiating position in the WTO, as are urgent reforms to the sugar and dairy regimes.

Impact on Less Developed Countries

7.  The CAP has for long had damaging effects on the economies of less developed countries, although the impact has varied from one country to another. In the worst cases it has led to impoverishment and the collapse of rural industries. The EU must abandon its direct subsidisation of exports and scale down its import tariffs.


8.  Cross-compliance and higher levels of modulation are the key to environmental improvement and to reducing pressures for intensification. The Commission's proposals for a new farm advisory system should be used to promote best practice.

1   COM (2003) 23, (21 January 2003): (i) Proposal for a Council Regulation establishing common rules for direct support schemes under the common agricultural policy and support schemes for producers of certain crops; (ii) Proposal for a Council Regulation amending Regulation (EC) No.1257/1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and repealing Regulation (EC) No.2826/2000; (iii) Proposal for a Council Regulation on the common organisation of the market in cereals; (iv) Proposal for a Council Regulation on the common organisation of the market in rice; (v) Proposal for a Council Regulation on the common organisation of the market in dried fodder for the marketing years 2004/05 to 2007/08; (vi) Proposal for a Council Regulation amending Regulation (EC) No.1255/1999 on the common organisation of the market in milk and milk products; and (vii) Proposal for a Council Regulation establishing a levy in the milk and milk-products sector. Back

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