Wednesday, 14 November 2007

CAP basics

The Common Agricultural Policy (CAP) is still the biggest area of expenditure in the EU budget. The basic principles of the CAP were written 50 years ago into the Rome Treaty establishing the then EEC. In half a century the world has changed a lot, but not the structure of the CAP.

In 1957 the war was still a living memory, and food scarcity a concern. Today obesity is a greater problem in Europe.

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According to article 33 of the Treaty Establishing the European Community, the objectives of the common agricultural policy shall be:

(a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour;
(b) thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;
(c) to stabilise markets;
(d) to assure the availability of supplies;
(e) to ensure that supplies reach consumers at reasonable prices.

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The living standards of farmers outweigh the interests of consumers and tax payers.

The Commission runs the CAP along the lines drawn up by the Member States (the Council). The Council makes regulations, directives and decisions; the European Parliament is only consulted.

The European Parliament can only present wishes concerning the agricultural budget, since these expenses are seen as mandatory. (The Reform Treaty or Lisbon Treaty would extend the powers of the EP by abolishing the difference between mandatory and non-compulsory spending.)

The Commission is soon going to present its views on the CAP review 2008, commonly called the health check.

Leaked information does not promise any radical policy shift. This has implications for the expectations that the 2008/9 review of the whole EU budget could lead to major improvements.

Despite much talk about CAP reform, the 2002 agreement between Jacques Chirac of France and Gerhard Schröder of Germany, later included in the present financial perspective (long term budget), guarantees CAP spending until the end of 2013.

France has been keen enough to defend the present CAP to forego the possibilities offered to European industry and services by a WTO agreement during the Doha development round.

Finland is an interesting case. On the one hand Finnish political leaders stress the opportunities offered by globalisation and the need to enhance European competitiveness by implementing Lisbon strategy reforms. On the other hand they have repeatedly sided with France to shield agriculture from reform and competition pressures.


Ralf Grahn