EU TFEU: Agricultural countervailing import and export charges

If EU agriculutural products are outside a common market organisation and the internal market is disrupted by national measures, the Commission can decide on countervailing charges to offset the imbalance.

***

Article 38 of the Treaty establishing the European Community (TEC) is one of those provisions, where the intergovernmental conference (IGC 2007) had nothing specific to say in the Treaty of Lisbon (ToL). Cf. OJ 17.12.2007 C 306/54.

We fetch the current Article 38 TEC from the latest consolidated version of the treaties (OJ 29.12.2006 C 321 E/57), add the numbering of the Tables of equivalences as well as the headings indicating the context of the provision (OJ 17.12.2007 C 306/207-208) and watch out for possible horizontal amendments (none, as far as I see). Here is what the Article should look like, before we check against a few earlier consolidations (IIEA, FCO, Statewatch and Fischer):

Part Three Policies and internal actions of the Union

Title II (renumbered Title III) Agriculture and fisheries

Article 38 TFEU (ToL), renumbered Article 44 TFEU

Where in a Member State a product is subject to a national market organisation or to internal rules having equivalent effect which affect the competitive position of similar production in another Member State, a countervailing charge shall be applied by Member States to imports of this product coming from the Member State where such organisation or rules exist, unless that State applies a countervailing charge on export.

The Commission shall fix the amount of these charges at the level required to redress the balance; it may also authorise other measures, the conditions and details of which it shall determine.

***

If we look at the draft Treaty establishing a Constitution for Europe, we notice only the more developed terminology for statutory instruments proposed by the European Convention and abandoned by the Lisbon Treaty as part of the ‘constitutional concept’ (OJ 18.7.2003 C 169/52):

Article III-128 Draft Constitution

Where in a Member State a product is subject to a national market organisation or to internal rules having equivalent effect which affect the competitive position of similar production in another Member State, a countervailing charge shall be applied by Member States to imports of this product coming from the Member State where such organisation or rules exist, unless that State applies a countervailing charge on export.

The Commission shall adopt European regulations or decisions fixing the amount of these charges at the level required to redress the balance; it may also authorise other measures, the conditions and details of which it shall determine.

***

The corresponding Article III-232 of the Treaty establishing a Constitution for Europe divided the last sentence into two (instead of using a semicolon), but otherwise adopted the draft text wholesale (OJ 16.12.2004 C 310/102).

***

Countervailing duties (counterbalancing or offsetting) are perhaps more generally known in international trade, but ‘duties’ and ‘charges’ are used interchangeably, and no customs duties were supposed to exist within the then common market (wholly replaced by the term ‘internal market’ by the Lisbon Treaty). And the common agricultural policy (CAP) aims at instituting a common market for agricultural goods, too.

The provision concerns only a small part of agricultural products, namely those outside a common market organisation.


Ralf Grahn

EU TFEU: Agricultural legislation and decisions

The Treaty of Lisbon enhances the powers of the European Parliament to co-legislate on the fundamental aspects of the common agricultural policy (CAP) of the European Union, but the Commission proposes and the Council disposes in all concrete matters concerning agriculture and fisheries even when the Lisbon Treaty has entered into force.

Once again we see a provision where the real originator of the amending Lisbon Treaty is the European Convention, chaired by Valéry Giscard d’Estaing.

***

Point 49 of the Treaty of Lisbon (ToL) takes on Article 37 of the Treaty establishing the European Community. Here is what the intergovernmental conference (IGC 20007) had to say about the provision, which becomes part of the renamed Treaty on the Functioning of the European Union (TFEU). See Official Journal (OJ) 17.12.2007 C 306/53-54:

49) Article 37 shall be amended as follows:

(a) paragraph 1 shall be deleted;

(b) paragraph 2 shall be renumbered 1; the words ‘Having taken into account the work of the Conference provided for in paragraph 1, after consulting the Economic and Social Committee and within two years of the entry into force of the Treaty, the Commission shall submit proposals’ shall be replaced by ‘The Commission shall submit proposals’, and the third subparagraph shall be deleted;

(c) the following paragraphs shall be inserted as new paragraphs 2 and 3, and the remaining paragraphs shall be renumbered accordingly:

‘2. The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall establish the common organisation of agricultural markets provided for in Article 34(1) and the other provisions necessary for the pursuit of the objectives of the common agricultural policy and the common fisheries policy;

3. The Council, on a proposal from the Commission, shall adopt measures on fixing prices, levies, aid and quantitative limitations and on the fixing and allocation of fishing opportunities.’;

(d) in the introductory words to paragraph 3 renumbered 4, the words ‘The Council may, acting by a qualified majority and in accordance with paragraph 2, replace the national market organisations by the common organisation’ shall be replaced by ‘In accordance with paragraph 2, the national market organisations may be replaced by the common organisation’;

(e) at the beginning of paragraph 4 renumbered 5, a change shall be made to the French which does not concern the English version.

***

Because nobody can be sure that the Lisbon Treaty will survive the ratification gauntlet, the IGC 2007 shows its paternal concern by stimulating our reading of the current treaties. The latest consolidated version of the treaties and, more precisely, the provision is found in OJ 29.12.2006 C 321 E/56, where it fills the whole page:

Article 37 TEC

1. In order to evolve the broad lines of a common agricultural policy, the Commission shall, immediately this Treaty enters into force, convene a conference of the Member States with a view to making a comparison of their agricultural policies, in particular by producing a statement of their resources and needs.

2. Having taken into account the work of the Conference provided for in paragraph 1, after consulting the Economic and Social Committee and within two years of the entry into force of this Treaty, the Commission shall submit proposals for working out and implementing the common agricultural policy, including the replacement of the national organisations by one of the forms of common organisation provided for in Article 34(1), and for implementing the measures specified in this title.

These proposals shall take account of the interdependence of the agricultural matters mentioned in this title.

The Council shall, on a proposal from the Commission and after consulting the European Parliament, acting by a qualified majority, make regulations, issue directives, or take decisions, without prejudice to any recommendations it may also make.

3. The Council may, acting by a qualified majority and in accordance with paragraph 2, replace the national market organisations by the common organisation provided for in Article 34(1) if:

(a) the common organisation offers Member States which are opposed to this measure and which have an organisation of their own for the production in question equivalent safeguards for the employment and standard of living of the producers concerned, account being taken of the adjustments that will be possible and the specialisation that will be needed with the passage of time;

(b) such an organisation ensures conditions for trade within the Community similar to those existing in a national market.

4. If a common organisation for certain raw materials is established before a common organisation exists for the corresponding processed products, such raw materials as are used for processed products intended for export to third countries may be imported from outside the Community.

***

Acquainted with the situation ‘de lege lata’ we have to consider the chance that an EU treaty reform could actually enter into force this time around. Express amendments, horizontal amendments and renumbering (including referrals) have to be joined to achieve the wording ‘de lege ferenda’, and we superimpose the context of the Article:

Part Three Policies and internal actions of the Union

Title II (renumbered Title III) Agriculture and fisheries

Article 37 TFEU (ToL), renumbered Article 43 TFEU


1. The Commission shall submit proposals for working out and implementing the common agricultural policy, including the replacement of the national organisations by one of the forms of common organisation provided for in Article 34(1) [ToL, renumbered Article 40(1) TFEU], and for implementing the measures specified in this title.

These proposals shall take account of the interdependence of the agricultural matters mentioned in this title.

2. The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall establish the common organisation of agricultural markets provided for in Article 34(1) [ToL, renumbered Article 40(1) TFEU] and the other provisions necessary for the pursuit of the objectives of the common agricultural policy and the common fisheries policy.

3. The Council, on a proposal from the Commission, shall adopt measures on fixing prices, levies, aid and quantitative limitations and on the fixing and allocation of fishing opportunities.

4. In accordance with paragraph 2, the national market organisations may be replaced by the common organisation provided for in Article 34(1) [ToL, renumbered Article 40(1) TFEU] if:

(a) the common organisation offers Member States which are opposed to this measure and which have an organisation of their own for the production in question equivalent safeguards for the employment and standard of living of the producers concerned, account being taken of the adjustments that will be possible and the specialisation that will be needed with the passage of time;

(b) such an organisation ensures conditions for trade within the Union similar to those existing in a national market.

5. If a common organisation for certain raw materials is established before a common organisation exists for the corresponding processed products, such raw materials as are used for processed products intended for export to third countries may be imported from outside the Union.

***

Even a short consolidation exercise easily leads to error, so I use the opportunity to check my result against some of those who have gone before me, namely the IIEA, FCO, Statewatch and Fischer consolidations.

More exact references to these and other existing as well as coming consolidated language versions are to be found in today’s earlier post ‘Consolidated EU Lisbon Treaty Update 29 March 2008’, including the Post Scriptum:

http://grahnlaw.blogspot.com/2008/03/consolidated-eu-lisbon-treaty-update-29.html

***

You are now offered the following piece in the jigsaw puzzle. The European Convention proposed the following Article III-127 of the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/52):

Article III-127 Draft Constitution

1. The Commission shall submit proposals for working out and implementing the common agricultural policy, including the replacement of the national organisations by one of the forms of common organisation provided for in Article III- 124(1), and for implementing the measures referred to in this Section.

These proposals shall take account of the interdependence of the agricultural matters mentioned in this Section.

2. European laws or framework laws shall establish the common organisation of the market provided for in Article III- 124(1) and the other provisions necessary for the achievement of the objectives of the common agricultural policy and the common fisheries policy. They shall be adopted after consultation of the Economic and Social Committee.

3. The Council of Ministers, on a proposal from the Commission, shall adopt the European regulations or decisions on fixing prices, levies, aid and quantitative limitations and on the fixing and allocation of fishing opportunities.

4. In accordance with paragraph 2, the national market organisations may be replaced by the common organisation provided for in Article III-124(1) if:

(a) the common organisation offers Member States which are opposed to this measure and which have an organisation of their own for the production in question equivalent safeguards for the employment and standard of living of the producers concerned, account being taken of the adjustments that will be possible and the specialisation that will be needed with the passage of time;

(b) such an organisation ensures conditions for trade within the Union similar to those existing in a national market.

5. If a common organisation for certain raw materials is established before a common organisation exists for the corresponding processed products, such raw materials as are used for processed products intended for export to third countries may be imported from outside the Union.

***

You can draw your own conclusions, but I would say that once more what little change there is between the current TEC and the ToL can essentially be credited to the European Convention.

Terminology and referrals apart, the structure of draft Constitution and the ToL provision is identical and the wording almost so. The visible or substantial amendments were the following:

Article 37(1) and the beginning of paragraph 2 had become obsolete by the Conference of Stresa (1958) and the subsequent decisions, at the beginning of the 1960’s, to launch the common agricultural policy (CAP). Deleting these references was a tidying up exercise.

The European Parliament was strengthened by giving it co-decision powers concerning the upper level of secondary norms, instead of mere consultative powers.

Although acting on proposals by the Commission, the Council retained its extensive powers to make the concrete CAP decisions.

***

There is not that much to add about the corresponding Article III-231 of the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/101-102). I counted four instances of different wording, but without material effect.

***

Curiosity has been a noteworthy human trait, at least from the Garden of Eden, so let us take a look at one change of no concern to us, as the IGC 2007 told us in point 49(e).

What happens to the French version without touching upon the English one?

Point 49(e) offers us the beginning of an answer (JO 17.12.2007 C 306/55):

e) dans le premier membre de phrase du paragraphe 4 renuméroté 5, le mot «existe» est remplacé par «n'existe».

Perhaps the rest will be evident if we look at the French version of Article 37 TEC (JO 29.12.2006 C 321 E/56):

4. S’il est créé une organisation commune pour certaines matières premières, sans qu’il existe encore une organisation commune pour les produits de transformation correspondants, les matières premières en cause utilisées pour les produits de transformation destinés à l’exportation vers les pays tiers peuvent être importées de l’extérieur de la Communauté.

So, we have been confronted with one of the wonders of French grammar; by the way, an error uncorrected in the draft Constitution but remedied in the Constitutional Treaty. The IGC 2004 did some good, after all. Now the ungrateful French have to wait at least until the beginning of 2009 to enjoy the fruits of its labours.


Ralf Grahn

EU TFEU: CAP competition rules and state aid

In principle, the common agricultural policy (CAP) is exempt from the rules on competition and state aid deemed beneficial for the internal market in general. The European Union’s Treaty of Lisbon extends the European Parliament’s power to co-legislate, but changes nothing in substance at the treaty level.

On the other hand, at the level of secondary legislation a more nuanced picture emerges regarding the role of competition and state aid in production of and trade in agricultural products.


***

We arrive at Article 36 of the Treaty establishing the European Community (TEC). The intergovernmental conference (IGC 2007) actually mentions amendments to be made in what becomes the Treaty on the Functioning of the European Union (TFEU). Here is what the Treaty of Lisbon (ToL) has to say (OJ 17.12.2007 C 306/53):

48) Article 36 shall be amended as follows:

(a) in the first paragraph, the words ‘the European Parliament and’ shall be inserted before ‘the Council’ and the words ‘and (3)’ shall be deleted;

(b) in the second paragraph, the introductory sentence shall be replaced by the following:
‘The Council, on a proposal from the Commission, may authorise the granting of aid:’.

***

Bringing the proposed amendments into context requires a trip to the current Article 36 TEC (found in the latest consolidated version of the existing treaties, OJ 29.12.2006 C 321 E/55):

Article 36 TEC

The provisions of the Chapter relating to rules on competition shall apply to production of and trade in agricultural products only to the extent determined by the Council within the framework of Article 37(2) and (3) and in accordance with the procedure laid down therein, account being taken of the objectives set out in Article 33.

The Council may, in particular, authorise the granting of aid:

(a) for the protection of enterprises handicapped by structural or natural conditions;

(b) within the framework of economic development programmes.

***

The new Lisbon Treaty wording is achieved by inserting the express amendments, adding the context of the provision and taking note of the future renumbering of the Article in question and its referrals (OJ 17.12.2007 C 306/207). No horizontal amendments seem to apply, so the amended Article 36 should look like this:

Part Three Policies and internal actions of the Union

Title II (renumbered Title III) Agriculture and fisheries

Article 36 TFEU (ToL), renumbered Article 42 TFEU




The provisions of the Chapter relating to rules on competition shall apply to production of and trade in agricultural products only to the extent determined by the European Parliament and the Council within the framework of Article 37(2) [ToL, renumbered Article 43(2) TFEU] and in accordance with the procedure laid down therein, account being taken of the objectives set out in Article 33 [ToL, renumbered Article 39 TFEU].

The Council, on a proposal from the Commission, may authorise the granting of aid:

(a) for the protection of enterprises handicapped by structural or natural conditions;

(b) within the framework of economic development programmes.

***

The European Convention presented its view in Article III-126 of the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/52):

Article III-126 Draft Constitution

1. The Section relating to rules on competition shall apply to production of and trade in agricultural products only to the extent determined by European laws or framework laws in accordance with Article III-127(2), having regard to the objectives set out in Article III-123.

2. The Council of Ministers, on a proposal from the Commission, may adopt a European regulation or decision authorising the granting of aid:

(a) for the protection of enterprises handicapped by structural or natural conditions;

(b) within the framework of economic development programmes.

***

European laws or framework laws meant the ordinary legislative procedure, where the Commission makes a proposal and the Council and the European Parliament acts as joint legislators. In the first paragraph the draft Constitution upgraded the European Parliament from being merely consulted.

The second paragraph added the mention that the Council authorises the granting of aid on a proposal from the Commission. But was this a real change, taking Article 37 TEC into account?

***

Article III-230 of the Treaty establishing a Constitution for Europe was practically the same as the draft Constitution (OJ 16.12.2004 C 310/101).

***

In principle, normal EC (EU) competition and state aid rules do not apply to agricultural production and trade within the context of the CAP. On the contrary, examples of state aid which can be authorised are mentioned.

A general search of EC competition policy can start from the Commission’s Competition web page:

http://ec.europa.eu/comm/competition/index_en.html

The reader who desires an introduction to state aid rules could take a look at the Commission’s web page ‘State Aid control – Overview’:

http://ec.europa.eu/comm/competition/state_aid/overview/index_en.cfm


‘Vademecum Community rules on state aid’, with a view to Structural Fund operations and last updated 15 February 2007:

http://ec.europa.eu/comm/competition/state_aid/studies_reports/vademecum_on_rules_2007_en.pdf

***

In practice, the common agricultural policy (CAP) is less averse to the competition and state aid rules of European Community (European Union) than the main principle mentioned above would lead one to believe.

Take note of Council Regulation (EC) No 1184/2006 of 24 July 2006 applying certain rules of competition to the production of, and trade in, agricultural products (OJ 4.8.2006 L 214/7):

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:214:0007:0009:EN:PDF

A presentation of state aid rules is found on the Commission’s web page Agriculture and Rural Development ‘State Aid: introduction’:

http://ec.europa.eu/agriculture/stateaid/index_en.htm

The Scadplus pages offer an introduction to ‘State aid in the agricultural sector’:

http://europa.eu/scadplus/leg/en/lvb/l11082.htm


Ralf Grahn

EU TFEU: CAP flanking measures

Can the dissemination of knowledge and the promotion of foodstuffs save European agriculture?

Yes or no, the Lisbon Treaty of the European Union preserves the supporting or flanking measures of the common agricultural policy (CAP) at treaty level.


***

Article 35 of the Treaty establishing the European Community (TEC) is one of those basic provisions left without specific mention by the Treaty of Lisbon (ToL). See OJ 17.12.2007 C 306/53. The intergovernmental conference (IGC 2007) only presents the future numbering in the Tables of equivalences annexed to the Lisbon Treaty (OJ 17.12.2007 C 306/207).

We fetch the present text from the latest consolidated version of the current treaties (OJ 29.12.2006 C 321 E/55), add the framework on top and note the future numbering of the referral:

Part Three Policies and internal actions of the Union

Title II (renumbered Title III) Agriculture and fisheries

Article 35 TFEU (ToL), renumbered Article 41 TFEU

To enable the objectives set out in Article 33 [ToL, renumbered Article 39 TFEU] to be attained, provision may be made within the framework of the common agricultural policy for measures such as:

(a) an effective coordination of efforts in the spheres of vocational training, of research and of the dissemination of agricultural knowledge; this may include joint financing of projects or institutions;

(b) joint measures to promote consumption of certain products.

***

The corresponding Article of the draft Treaty establishing a Constitution for Europe was III-125 (OJ 18.7.2003 C 169/52). Naturally, the referral was different, but otherwise the wording was the same as in the current TEC.

Article III-229 was home to the corresponding, unchanged provision of the Treaty establishing a Constitution for Europe.

***

We can see a hierarchy of norms within the Title on agriculture and fisheries if we look back at the provisions we have dealt with until today:

Article 32 TFEU (ToL), renumbered Article 38 TFEU, presents the scope of the common agricultural and fisheries policy (CAP).

Article 33 TFEU (ToL), renumbered Article 39 TFEU, lists the CAP objectives (in all their post-war glory).

Article 34 TFEU (ToL), renumbered Article 40 TFEU, adds the main means to attain the goals, namely the common agricultural markets organisation.

Article 35 TFEU (ToL), renumbered Article 41 TFEU, is rather the poor relation of the preceding strong-arm provision, allowing support or flanking measures supplementing the interventionist means.

Gaining and disseminating knowledge are time-honoured crafts of modernisation.

***

Now for a subjective discussion starter (or stopper):

Joint measures to promote consumption of certain products may raise a few eyebrows. If the Commission (ultimately the member states) finds that there are lakes of fatty milk or intoxicating wine hard to dispose of, they are at liberty to devise measures to ‘force-feed’ populations already obese or intemperate.

Given the framework of CAP decision making we can not rest assured that human health or consumer considerations will top the agenda.

***

Earlier CAP posts have suggested further reading for interested citizens. An additional CAP primer is offered by the Wikipedia article ‘Common Agricultural Policy’. The article has a UK perspective, and despite the latest modification on 25 March 2008 it is in need of editing and updating, but it is still a useful introduction:

http://en.wikipedia.org/wiki/Common_Agricultural_Policy


Ralf Grahn

EU TFEU: Common organisation of agricultural markets

The common agricultural policy of the European Community (European Union) progresses slowly towards an EU wide internal market in agricultural products instead of national markets, but it basically excludes the rest of the world from the benefits of free trade.

This post offers a look at the regulatory and budgetary ‘tools’ of the CAP in the light of the Lisbon Treaty, and it gives a few hints on further reading.

***

In the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) does not specifically mention Article 34 of the Treaty establishing the European Community (TEC) among the amendments (see OJ 17.12.2007 C 306/53).

The Treaty is renamed the Treaty on the Functioning of the European Union (TFEU). We indicate the new framework, look out for horizontal amendments (replacing ‘Community’ by ‘Union’) and take the coming renumbering into account concerning the provision and its referrals (Tables of equivalences, OJ 17.12.2007 C 306/207). This is how the provision should look according to the Lisbon Treaty, based on the latest consolidated version of the TEC (OJ 29.12.2006 C 321 E/54-55):

Part Three Policies and internal actions of the Union

Title II (renumbered Title III) Agriculture and fisheries

Article 34 TFEU (ToL), renumbered Article 40 TFEU

1. In order to attain the objectives set out in Article 33 [ToL, renumbered Article 39 TFEU] a common organisation of agricultural markets shall be established.

This organisation shall take one of the following forms, depending on the product concerned:

(a) common rules on competition;

(b) compulsory coordination of the various national market organisations;

(c) a European market organisation.

2. The common organisation established in accordance with paragraph 1 may include all measures required to attain the objectives set out in Article 33 [ToL, renumbered Article 39 TFEU], in particular regulation of prices, aids for the production and marketing of the various products, storage and carryover arrangements and common machinery for stabilising imports or exports.

The common organisation shall be limited to pursuit of the objectives set out in Article 33 [ToL, renumbered Article 39 TFEU] and shall exclude any discrimination between producers or consumers within the Union.

Any common price policy shall be based on common criteria and uniform methods of calculation.

3. In order to enable the common organisation referred to in paragraph 1 to attain its objectives, one or more agricultural guidance and guarantee funds may be set up.

***

The European Convention numbered the provision Article III-124 of the draft Treaty establishing a Constitution for Europe. The word ‘Union’ was introduced to take the place of ‘Community’ and the Article referred to was numbered differently, but otherwise not a word was changed (OJ 18.7.2003 C 169/51-52).

The IGC 2004 took over the provision as Article III-228 of the Treaty establishing a Constitution for Europe without changing the wording (OJ 16.12.2004 C 319/100-101).

***

The ‘toolbox’ offered by the provision on common market organisations allows deep cuts in the normal principles of market economy. Here is the description given by the Europa Glossary:

“The common market organisations (CMOs) represent the first pillar of the common agricultural policy (CAP). They are the fundamental market regulation tool governing the production of and trade in agricultural products in all the Member States of the European Union by:
eliminating obstacles to intra-Community trade in agricultural products;
maintaining a common customs barrier with respect to third countries.
Since the reform of the CAP in 2003, most CMOs have been subject to the new system of a single farm payment and decoupling. The Member States which joined the Union on 1 May 2004 participate directly in the new system. Changes have also been made to crisis management arrangements and environmental classification of farms.” See:

http://europa.eu/scadplus/glossary/common_agricultural_markets_en.htm

The Commission’s Scadplus web pages with summaries of legislation offer the basics on ‘Common organisation of the agricultural markets: introduction’, although the page was last updated 27 September 2004. See:

http://europa.eu/scadplus/leg/en/lvb/l11047.htm

A starting point for more up to date information, including latest news, is found on the Commission’s web pages ‘Agriculture and Rural development’:

http://ec.europa.eu/agriculture/index_en.htm

Without outsiders’ views the common agricultural policy (CAP) would be left to government and farming interest insiders. First, a reminder of the sources mentioned in yesterday’s article:

Those who want to understand the present common agricultural policy and its future can turn to the UK House of Lords European Union Committee’s report ‘The Future of the Common Agricultural Policy’, with Volume I: Report (HL Paper 54-I) and Volume II: Evidence (HL Paper 54-II) (7th Report of Session 2007-08, published 6 March 2008):

http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/54/54.pdf

France is known for its addiction to the CAP. The French think tank Notre Europe runs projects which aim at budget reform and CAP reform post 2013. Among a plethora of policy papers there is a fresh one by Eulalia Rubio ‘EUBudget Review: Addressing the Thorny Issues’, published 7 March 2008. The CAP 2013 project is preparing proposals. A presentation including links to preparatory work is offered in English on the following web page (although the French page has been updated later):

http://www.notre-europe.eu/en/axes/competition-cooperation-solidarity/projects/projet/proposals-for-the-cap-post-2013/

Second, I would like to mention three high quality blogs shedding light on the CAP:

CAP Health Check, with Jack Thurston as coordinator and various contributors, describes itself as “Towards better European farming, food and rural policies”:

http://caphealthcheck.eu/

Wyn Grant comments on the Common Agricultural Policy blog:

http://commonagpolicy.blogspot.com/

Jack Thurston manages Farmsubsidy.org dedicated to transparency, with the motto ‘Who gets what from the Common Agricultural Policy’:

http://www.farmsubsidy.org/

Economics, weight in the EU budget, consumer interests, taxpayers, the (developing) world outside the European Union’s customs and quota borders – Clausewitz would have found the CAP too important to be left in the care of vested interests.


Ralf Grahn

EU TFEU CAP: Common agricultural policy objectives

The main objectives of common agricultural policy (CAP) of the European Economic Community (EEC) were fixed in the Treaty of Rome in 1957, and the Treaty of Lisbon fifty years later would actually ultimately restore the original Article number, without changing the slightest detail of the contents.

In spite of this immovable background the CAP is a hotly contested policy area and historically the greatest user of Community funds.

The CAP “Helath Check” in 2008, the Budget Review in 2008/09 and the next financial perspective from 2014 are all played out within the framework of the basic treaty provisions.

***

The intergovernmental conference (IGC 2007) had nothing specific to say after Article 32 of the Treaty establishing the European Community (TEC), point 47, until Article 36 TEC, point 48 (OJ 17.12.2007 C 306/33).

The Treaty of Lisbon (ToL) changes the name of the treaty, which becomes the Treaty on the Functioning of the European Union (TFEU), Part Three becomes ‘Policies and internal actions of the Union’ and fisheries are added to Title II (renumbered Title III) which consequently becomes ‘Agriculture and fisheries’ (OJ 17.12.2007 C 306/207).

No horizontal amendments seem to apply to Article 33 TEC, which becomes Article 33 in the Treaty of Lisbon version of the TFEU, but destined for later renumbering to become Article 39 TFEU.

Thus, we present the new setting and retrieve the wording of the provision from the latest consolidated version of the treaties (OJ 29.12.2006 C 321 E/54):

Part Three Policies and internal actions of the Union

Title II (renumbered Title III) Agriculture and fisheries

Article 33 TFEU (ToL), renumbered Article 39 TFEU

1. 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.

2. In working out the common agricultural policy and the special methods for its application, account shall be taken of:

(a) the particular nature of agricultural activity, which results from the social structure of agriculture and from structural and natural disparities between the various agricultural regions;

(b) the need to effect the appropriate adjustments by degrees;

(c) the fact that in the Member States agriculture constitutes a sector closely linked with the economy as a whole.

***

The European Convention did not change a comma of corresponding provision of the draft Treaty establishing a Constitution for Europe, Article III-123 (OJ 18.7.2003 C 169/51).

The IGC 2004’s Article III-227 of the Treaty establishing a Constitution for Europe observed the same degree of orthodoxy.

More than that, strict observance is highlighted through the fact that, word for word, the renumbered Article 39 TFEU would be the same as Article 39 of the original Treaty establishing the European Economic Community (Treaty of Rome, 1957).

***

Those who want to understand the present common agricultural policy and its future can turn to the UK House of Lords European Union Committee’s report ‘The Future of the Common Agricultural Policy’, with Volume I: Report (HL Paper 54-I) and Volume II: Evidence (HL Paper 54-II) (7th Report of Session 2007-08, published 6 March 2008):

http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/54/54.pdf

The French think tank Notre Europe runs projects which aim at budget reform and CAP reform post 2013. Among a plethora of policy papers there is a fresh one by Eulalia Rubio ‘EUBudget Review: Addressing the Thorny Issues’, published 7 March 2008. The CAP 2013 project is preparing proposals. A presentation including links to preparatory work is offered in English on the following web page (although the French page has been updated later):

http://www.notre-europe.eu/en/axes/competition-cooperation-solidarity/projects/projet/proposals-for-the-cap-post-2013/

An official tour of CAP legislation and the budget can start from the Commission’s SCADPlus web page Agriculture: General framework:

http://europa.eu/scadplus/leg/en/s04018.htm


Ralf Grahn

EU TFEU: Common agriculture and fisheries policy

The common agricultural policy (CAP), including the fisheries policy, of the European Community (European Union) is one of the most conspicuous features of European integration.

Naturally, each farmer and fisherman is a stakeholder, but so is every consumer and taxpayer in the European Union. In short, every citizen of the EU should know the legal and political basics of the CAP.

Here we begin by looking at the fundamental provisions as they stand when the Lisbon Treaty enters into force.


***

Were the European leaders worried enough by the flagging spirits of the so called Eurosceptic anti-EU crowd to devise this supporting action to keep them going and to stimulate recruitment?

Not only was the ‘constitutional concept’ abandoned, but all pretence at plain English (as well as Bulgarian, Czech, Danish, Dutch, Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish).

Anyway, arriving at a new Title we find the intergovernmental conference (IGC 2007) true to its form. Although very little actual change takes place, the master communicators of the IGC 2007 fully used the opportunity to make the reading experience of the amending Treaty of Lisbon (ToL) as unrewarding as possible, requiring the concurrent perusal of the existing treaties to make any sense.

Here is what the Lisbon Treaty has to say at the beginning of the new Title of the Treaty establishing the European Community (TEC), becoming the Treaty on the Functioning of the European Union (TFEU) (OJ 17.12.2007 C 306/53):

AGRICULTURE AND FISHERIES

46) In the heading of Title II, the words ‘AND FISHERIES’ shall be added.

47) Article 32 shall be amended as follows:

(a) in paragraph 1, the following new first subparagraph shall be inserted:

‘1. The Union shall define and implement a common agriculture and fisheries policy.’, the current text of paragraph 1 shall become the second subparagraph.

In the second subparagraph, the word ‘, fisheries’ shall be inserted after ‘agriculture’ in the first sentence and the following sentence shall be added as the last sentence of the subparagraph: ‘References to the common agricultural policy or to agriculture, and the use of the term “agricultural”, shall be understood as also referring to fisheries, having regard to the specific characteristics of this sector.’

(b) in paragraph 2, the words ‘and functioning’ shall be inserted after the word ‘establishment’.

(c) in paragraph 3, the words ‘to this Treaty’ shall be deleted.

***

We have been sent off to fetch the current Article 32 TEC (found in the latest consolidated version of the treaties, OJ 29.12.2006 C 321/53-54):

TITLE II
AGRICULTURE

Article 32 TEC

1. The common market shall extend to agriculture and trade in agricultural products. ‘Agricultural products’ means the products of the soil, of stockfarming and of fisheries and products of first-stage processing directly related to these products.

2. Save as otherwise provided in Articles 33 to 38, the rules laid down for the establishment of the common market shall apply to agricultural products.

3. The products subject to the provisions of Articles 33 to 38 are listed in Annex I to this Treaty.

4. The operation and development of the common market for agricultural products must be accompanied by the establishment of a common agricultural policy.

***

The materials are now at the plant. Assembly can start. This is what appears at the end of the assembly line after joining the numbering of the Tables of equivalences with the express amendments and horizontal amendment 2(g), thrice replacing the ‘common market’ by ‘internal market’:

PART THREE – POLICIES AND INTERNAL ACTIONS OF THE UNION

Title II (renumbered Title III) Agriculture and fisheries

Article 32 TFEU (ToL), renumbered Article 38 TFEU

1. The Union shall define and implement a common agriculture and fisheries policy.

The internal market shall extend to agriculture, fisheries and trade in agricultural products. ‘Agricultural products’ means the products of the soil, of stockfarming and of fisheries and products of first-stage processing directly related to these products. References to the common agricultural policy or to agriculture, and the use of the term “agricultural”, shall be understood as also referring to fisheries, having regard to the specific characteristics of this sector.

2. Save as otherwise provided in Articles 33 to 38 [ToL, new numbering Articles 39 to 44 TFEU], the rules laid down for the establishment and functioning of the internal market shall apply to agricultural products.

3. The products subject to the provisions of Articles 33 to 38 [ToL, new numbering 39 to 44 TFEU] are listed in Annex I.

4. The operation and development of the internal market for agricultural products must be accompanied by the establishment of a common agricultural policy.

***

For easy comparison with the prior phases of the treaty reform process, here are the relevant provisions of the draft Treaty establishing a Constitution for Europe, as proposed by the European Convention. Section 4 Agriculture and fisheries would have been placed away from the Titles on free movement, in Chapter III Policies in other specific areas (after Chapter I Internal market and Chapter II Economic and monetary policy) (OJ 18.7.2003 C 169/51):

SECTION 4
Agriculture and fisheries

Article III-121 Draft Constitution

The Union shall define and implement a common agriculture and fisheries policy.

‘Agricultural products’ means the products of the soil, of stockfarming and of fisheries and products of first-stage processing directly related to these products. References to the common agricultural policy or to agriculture, and the use of the term ‘agricultural’, shall be understood as also referring to fisheries, having regard to the specific characteristics of this sector.

Article III-122 Draft Constitution

1. The internal market shall extend to agriculture and trade in agricultural products.

2. Save as otherwise provided in Articles III-123 to III-128, the rules laid down for the establishment of the internal market shall apply to agricultural products.

3. The products listed in Annex I (*) shall be subject to Articles III-123 to III-128.

4. The operation and development of the internal market for agricultural products must be accompanied by the establishment of a common agricultural policy.

[* The asterisk indicated that Annex I had to be drawn up.]

***

The IGC 2004 took over the draft text in the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/99-100):

SECTION 4
AGRICULTURE AND FISHERIES

Article III-225 Constitution

The Union shall define and implement a common agriculture and fisheries policy.

‘Agricultural products’ means the products of the soil, of stockfarming and of fisheries and products of first-stage processing directly related to these products. References to the common agricultural policy or to agriculture, and the use of the term ‘agricultural’, shall be understood as also referring to fisheries, having regard to the specific characteristics of this sector.

Article III-226 Constitution

1. The internal market shall extend to agriculture and trade in agricultural products.

2. Save as otherwise provided in articles III-227 to III-232, the rules laid down for the establishment and functioning of the internal market shall apply to agricultural products.

3. The products listed in Annex I shall be subject to Articles III-227 to III-232.

4. The operation and development of the internal market for agricultural products must be accompanied by a common agricultural policy.

***

The Constitutional Treaty took over the wording of the draft Constitution with minimal adjustments. The referrals to Articles were adjusted technically, and in the second paragraph ‘and functioning’ was added to the internal market, while ‘the establishment of’ a common agricultural policy was deleted in paragraph 4 of Article III-226.

The Lisbon Treaty merges the Articles of the Constitution and shifts the sentences without altering the contents.

***

Here are the contents of Annex I – the List referred to in Article 32 TEC as presented in the latest consolidated version (OJ 29.12.2006 C 321 E/183-185, where it is presented as an easier to read table). The numbers of chapters and positions refer to the Brussels nomenclature and the following text describes the products:

ANNEX I
LIST
referred to in Article 32 of the Treaty

Chapter 1 Live animals

Chapter 2 Meat and edible meat offal

Chapter 3 Fish, crustaceans and molluscs

Chapter 4 Dairy produce; birds' eggs; natural honey

Chapter 5

05.04 Guts, bladders and stomachs of animals (other than fish), whole and pieces thereof

05.15 Animal products not elsewhere specified or included; dead animals of Chapter 1 or Chapter 3, unfit for human consumption

Chapter 6 Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage

Chapter 7 Edible vegetables and certain roots and tubers

Chapter 8 Edible fruit and nuts; peel of melons or citrus fruit

Chapter 9 Coffee, tea and spices, excluding maté (heading No 0903)

Chapter 10 Cereals

Chapter 11 Products of the milling industry; malt and starches; gluten; inulin

Chapter 12 Oil seeds and oleaginous fruit; miscellaneous grains, seeds and fruit; industrial and medical plants; straw and fodder

Chapter 13

ex 13.03 Pectin

Chapter 15

15.01 Lard and other rendered pig fat; rendered poultry fat

15.02 Unrendered fats of bovine cattle, sheep or goats; tallow (including ‘premier jus’) produced from those fats

15.03 Lard stearin, oleostearin and tallow stearin; lard oil, oleo-oil and tallow oil, not emulsified or mixed or prepared in any way

15.04 Fats and oil, of fish and marine mammals, whether or not refined

15.07 Fixed vegetable oils, fluid or solid, crude, refined or purified

15.12 Animal or vegetable fats and oils, hydrogenated, whether or not refined, but not further prepared

15.13 Margarine, imitation lard and other prepared edible fats

15.17 Residues resulting from the treatment of fatty substances or animal or vegetable waxes

Chapter 16 Preparations of meat, of fish, of crustaceans or molluscs

Chapter 17

17.01 Beet sugar and cane sugar, solid

17.02 Other sugars; sugar syrups; artificial honey (whether or not mixed with natural honey); caramel

17.03 Molasses, whether or not decolourised

17.05 Flavoured or coloured sugars, syrups and molasses, but not including fruit juices containing added sugar in any proportion

Chapter 18

18.01 Cocoa beans, whole or broken, raw or roasted

18.02 Cocoa shells, husks, skins and waste

Chapter 20 Preparations of vegetables, fruit or other parts of plants

Chapter 22

22.04 Grape must, in fermentation or with fermentation arrested otherwise than by the addition of alcohol

22.05 Wine of fresh grapes; grape must with fermentation arrested by the addition of alcohol

22.07 Other fermented beverages (for example, cider, perry and mead)

ex 22.08
ex 22.09
Ethyl alcohol or neutral spirits, whether or not denatured, of any strength, obtained from agricultural products listed in Annex I to the Treaty, excluding liqueurs and other spirituous beverages and compound alcoholic preparations (known as ‘concentrated extracts’) for the manufacture of beverages

ex 22.10 Vinegar and substitutes for vinegar

Chapter 23 Residues and waste from the food industries; prepared animal fodder

Chapter 24

24.01 Unmanufactured tobacco, tobacco refuse

Chapter 45
45.01 Natural cork, unworked, crushed, granulated or ground; waste cork

Chapter 54

54.01 Flax, raw or processed but not spun; flax tow and waste (including pulled or garnetted rags)

Chapter 57

57.01 True hemp (Cannabis sativa), raw or processed but not spun; tow and waste of
true hemp (including pulled or garnetted rags or ropes)

***

Adding fisheries to the Title heading and the text of the Article takes account of existing practice.

Aware of the highly regulated and protectionist nature of the common agriculture and fisheries policy as well as the massive support mechanisms, the reader may be astonished to find out that in principle the rules for the establishment and functioning of the internal market apply to agricultural products.

The concept of first-stage processing is important, as is Annex I listing the products.


Ralf Grahn

EU budget reform with unreformed CAP?

Roman Maruhn has written a clear synthesis of the questions concerning a reform of the budget of the European Union: „Auf dem Weg zu einem neuen Politikmix? Die Überprüfung und Reform des EU-Haushalts“. A budgetary system described as a historical relic and an un-transparent monster is certainly an object worthy of study and reform.

Gobalisation, climate change, energy security, energy market, immigration and integration, growth and jobs as well as enlargement belong to the challenges the EU Commission has named at the launch of the budget review 2008/9.

Maruhn remarks that the future functions for the EU, as visioned by the Commission – protection, solidarity and prosperity – are not fully covered by the tasks attributed by the coming Treaty of Lisbon. The Commission wants to achieve a new policy mix, based on European added value.

Lacking powers to raise taxes, the European Union’s is likely to continue to suffer from continued intergovernmental bargaining, far removed from the European common good. The less than satisfactory funding system is complicated by the budget rebates.

Some of the conclusions:

Spending reform can offer chances to set new political priorities. The budget reform should not be underestimated, since it could new strategic courses being set for the European Union. Budget reform should be seen in conjunction with reviews of the basic treaties, the common agricultural policy (CAP) and cohesion policy.

Future enlargement of the Union brings pressure to bear on the costliest policies of the EU. Has the case for a more political and democratic tax financing of the EU weakened along with the scrapping of state-like symbols and citizens as sources of legitimacy? The Commission has an interest to review and reform the EU budget; the participatory consultation process serves as a means to this end.

***

Maruhn’s paper offers an introduction to the background for long overdue EU budget reform. Let us hope that the Centrum für angewandte Politikforschung and the Bertelsmann Forschungsgruppe Politik continue their efforts to produce analysis for better EU strategies – institutional, substantial and budgetary – and that they are joined by many others.

***

Notre Europe, the think-tank established by former Commission president Jacques Delors, has taken on a very French mission: a study on the conditions under which European agriculture could fit into the world economy over the next twenty five years.

A host of papers has been published (of which I mention a few) for the EU agricultural policy post-2013 and a task force appointed, headed by Franz Fischler, the former EC Agricultural Commissioner, and Henri Nallet, a former French Minister for Agriculture.

Since even the French President, Nicolas Sarkozy, has hinted at a willingness to review some aspects of the Common Agricultural Policy, the Notre Europe task force might end up with reform thoughts of a kind, but radical reform plans would be highly unexpected.

Let us wait and see, but consumers and tax payers may have to look elsewhere.


Ralf Grahn


Sources:

Roman Maruhn: Auf dem Weg zu einem neuen Politikmix? Die Überprüfung und Reform des EU-Haushalts; CAP Aktuell Nr 14, November 2007; http://www.cap-lmu.de

François Bonnieux: Farming and the Environment: prospects and proposals; Introductive Paper to the task force 10 September 2007; http://www.notre-europe.eu

Pierre Boulanger: Les arbitrages budgétaires; Papier introductive à la réunion de la task force du 10 septembre 2007 ; http://www.notre-europe.eu

Damien Fontaine : L’intégration des nouveaux Etats membres dans la nouvelle agriculture européenne ; Papeier introductif à la réunion de la task force du 10 septembre 2007 ; http://www.notre-europe.eu

Anne Claire Thomas : La gestion du risque prix après 2013 ; Papier introductif à la réunion de la task force du 10 septembre 2007 ; http://www.notre-europe.eu

CAP reform camp

The vast majority of EU citizens, the consumers and taxpayers, have few friends among the member states’ governments. The UK House of Commons Environment, Food and Rural Affairs Committee spoke of a well-established core group of reform-minded countries (UK, Denmark, Netherlands and Sweden). The Committee welcomes the accord signed with Italy on the future of the Common Agricultural Policy (CAP). Not much to go on in a European Union of 27 member states.

Still, democracy should be about valid reasons and informed debate leading to accountable policies for acceptable results.

Some of the conclusions of the Committee bear repeating, because they challenge the governments in the anti-reformist camp to think through their stance and improve their justifications and, ultimately, their positions:

“Further reform of the CAP is both necessary and inevitable.”

“The only long-term justification for future expenditure of taxpayers’ money in the agricultural sector is for the provision of public goods. Payments should represent the most efficient means by which society can purchase the public goods – environmental, rural, social – it wishes to enjoy. For these payments to remain publicly acceptable, it is essential that they relate directly to the public goods provided and that, in turn, these public goods are measurable and capable of evaluation.”

“The objectives of the CAP have remained unchanged for the last 50 years and now seem dated. European agricultural policy has moved on since then, encompassing issues such as rural development, protection of the environment and animal welfare. The UK Government should begin negotiating, at the earliest opportunity, for a redrafting of the existing Article which lays out the objectives of the CAP – Article 33(1) – with the new text reflecting the wider context of modern rural policy.”

“Some of the key issues the UK Government must address in devising and pursuing such a rural policy for the EU should include:

· The prioritisation of objectives (for example, between environmental and rural development considerations)
· The degree of subsidiarity embodied in the new policy
· The relative advantages and disadvantages of financing such a policy – at least to some extent (i.e. co-financing) – at the Member State level
· How much of the current expenditure on the CAP would be required to fulfil the policy objectives chosen
· How best to manage the transition from the current CAP to this new ‘Rural Policy for the EU’
· The extent to which this new rural policy can contribute to the mitigation of, and adaptation to, climate change”

***

The Reform Treaty or Lisbon Treaty is going to be as unreformed, and anachronistic, as ever concerning the objectives of the Common Agricultural Policy (although fisheries are added under the same heading). The earliest opportunity seems to be in a distant future.

For an outsider the Committee made a puzzling choice in leaving out consumers’ interests from its discussion altogether and relating to taxpayers mostly indirectly, as the logically necessary payers for and receivers of the public goods mentioned. If the interests of the voters as a whole do not concern the governments of the status quo group inordinately, they could be seen as potential allies and beneficiaries of the pro reform camp’s agenda.

Since the Commission Green Paper for the CAP review 2008 promises to be little more than a health check without serious diagnosis or treatment, the importance of the overall budget review 2008/9 grows.

The December 2005 European Council and, formally, the inter-institutional agreement in May 2006 invited the Commission to undertake “a full, wide-ranging review covering all aspects of EU spending, including the Common Agricultural Policy, and of resources, including the United Kingdom rebate, and to report in 2008/9”.

This promise might have been a joke for Jacques Chirac, but it is extremely important for the citizens of Europe.


Ralf Grahn


Sources:

House of Commons, Environment, Food and Rural Affairs Committee: The UK Government’s “Vision for the Common Agricultural Policy”; Published on 23 May 2007

Interinstitutional agreement between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management; Official Journal 14.6.2006, C 139/1

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.

***

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.

***

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