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THE BridgeNews FORUM: On farming, farm policy and related agricultural issues.
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* Leaders' Surprise Budget Increase For Agriculture is Likely To Appease
The Newly Emboldened European Parliament
By David Walker, agricultural economist
NORWICH, England -- The March 26 decision by leaders' of the European Union's
member states to raise farm support above that agreed to by agriculture ministers
two weeks earlier is extraordinary.
THE DECISION, which is part of the EU's Agenda 2000 financial package, may have
resulted indirectly from the supposedly unrelated resignation of the European
Commission folowing allegations of fraud, nepotism and mis management.
The leaders -- who sit as the Council of the EU, commonly called the Council of
Ministers -- may have sweetened the pot to avoid a confrontation with the EU
Parliament whose profile has been raised by the Commission's resignation.
WHEN THE agriculture ministers of the European Union agreed to the Agenda
2000 agricultural reform package, they heralded it as "the biggest shake-up in EU
farming since the creation of the CAP." On the other side of the Atlantic, Dan
Glickman, the US Secretary of Agriculture, described it as "not much more than
maintaining the status quo."
IN THE PAST accord on reform of the Common Agricultural Policy (CAP) by the
EU agriculture minsters' Council has signaled final acceptance of change.
The agreement by this Council on March 11 was, therefore, expected to be close
to the final word. It took, however, less than two weeks for the deal to unravel.
THE TREMENDOUS cost of the CAP has been a constant priority for reform
almost from the day it was created. But because of the way it was set up under
the 1957 Treaty of Rome, reform does not come easily.
The signatories to the Treaty, the original members of the EU, were aware that
agriculture had been a problem for previous European economic unions and
probably recognized the need for some indulgence. No doubt, the expectation
was that this would be limited to a transitional period.
NEVERTHELESS, it was not to be, as part of the indulgence was a political set up
that has favoured farmers. And they have cultivated it.
THE POLITICAL structure is such that an external stimulus is necessary for any
meaningful reform. The only significant changes seen, the 1992 MacSharry
Reforms (named for the then-EU Agriculture commissioner Ray MacSharry of
Ireland), were implemented to meet the EU's commitment to the Uruguay Round
General Agreement on Tariffs and Trade.
THE AGENDA 2000 CAP reforms were designed to take the MacSharry Reforms
a stage further. The motivation was recognition that the enlargement of the EU
to include most of eastern Europe would be prohibitively expensive without CAP
reform.
WORKING within a target budget for a seven-year period from the year 2000,
the plans, first published in July 1997, generally reduced market support and
increased direct and compensatory payments to farmers.
The purpose was to reduce the cost of EU enlargement and potential budget
growth rather than reduce existing expenditures. An added advantage of the
lower market support was the increased likelihood of the CAP continuing to
operate within its major GATT commitments.
AS INTERNATIONAL farm commodity prices, and particularly those for grain,
have declined since July 1997, farmers' expectations on fair compensation for
reduced market support have increased. Agreement on CAP reform by the
Council of agriculture ministers almost within the budget target was, therefore,
a commendable achievement.
THE AGRICULTURE Ministers' agreement, however, was not robust.
It was based on a qualified majority rather than the ususal consensus, some
issues relating to meeting the target budget were not resolved and seven
member-state annexes were attached.
Partly because of the fragility of the agreement, final approval of the package
by the Council of first ministers in Bonn two weeks later was not expected to
result in much change.
MANY CHANGES were, however.
These revisions are expected to increase the budget over run from 1.5 billion
euros to 14 billion. That the first ministers were more generous than their
agriculture ministers is quite extraordinary.
A CHANGE in the balance of power between the institutions within the EU,
however, may have begun to emerge following the resignation of the European
Commission, just before the Bonn summit. The Commission is the body
governing EU administration.
On the surface the resignations had no direct implication for agricultural
reforms. Although the Commission had designed the reforms, the agriculture
commissioner Franz Fischler is well respected, not implicated by the scandal
and expected to be reappointed.
THE EUROPEAN Union is governed by three main institutions, the Council,
the Commission and the European Parliament . The parliament is currently
the least powerful of the three, despite its democratic credentials.
It was, however, the European Parliament that blew the whistle on the
Commission. This is undoubted evidence of its increasing clout.
GOVERNMENTS of the member states were perhaps weary of an
independently elected institution having too much influence and limited its
power under the original Treaty of Rome.
But, since then it has been increased particularly by the 1996 Treaty of
Amsterdam.
FOR AGRICULTURE, the powers of the parliament are limited to providing
an opinion on agricultural proposals made by the Commission before Council
adopts them. But there is no obligation to accept. The parliament can delay
its opinion, but in the past its political stature, relative to the commission and
council, has limited its ability to do this to any great effect.
THE CIRCUMSTANCE of the commission's resignation has clearly changed
this. And, the parliament is not scheduled to provide its opinion on the Agenda
2000 CAP proposal until early May.
COUNCIL members were aware of this and may have been mindful of the
possibility that the parliament might welcome the timely opportunity to flex its
muscles.
Council members may, therefore, have sweetened the Agenda 2000 package to
a level that the EP cannot fail to accept. They may hope to delay any
confrontation until a new Commission is in place and the allegations of past
improprieties have faded from memory.
DAVID WALKER, an agricultural economist, lives on his family's farm outside
Norwich, England. He recently served as senior economist in London for the
Home-Grown Cereals Authority and previously was executive director of the
Alberta Grai
n Commission in Canada. His views are not necessarily those of
whose ventures include the Internet site www.bridge.com.
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