Examination of witnesses (Questions 220
- 239)
TUESDAY 21 MARCH 2000
MR PETER
STEVENSON, MR
DAVID BOWLES
and MR CHRIS
FISHER
220. As quickly as you can because time is pressing.
(Mr Bowles) Very quickly. The RSPCA was arguing extremely
strongly during the Agenda 2000 negotiations, both with the Commission
and with the UK, that there should be an overall reform of the
CAP, particularly in areas such as export subsidy but also in
going from encouraging intensive production into going and diverting
that money into extensive production. I think we were all very
disappointed with what happened at the Berlin Summit and what
came out of the Agenda 2000 negotiations. Yes, we do want to see
the CAP reduced but what we want to see also is the funds diverted
from encouraging intensification and production, into actually
encouraging extensification.
221. Can I just come back on to you then because
you have talked about a win/win situation of phasing out export
subsidies and raising welfare. This is merely a transfer of subsidies
between one and the other. Now, (a), do you think it will actually
be feasible and (b) does that not fly in the face of what you
have just said about trying to reduce the overall spend for CAP?
(Mr Bowles) No. The bottom line is is it trade distorting;
is it production encouraging? We have been discussing this with
the US and with the Cairns Group. The real worry they have is
that they see, as Chris said, animal welfare as a substitute protectionism.
If you are saying to them that you need measures in place to make
sure that it is not trade distorting, it is not production encouraging,
then they are quite happy with discussing that sort of issue so,
no, I do not believe that there is any disparity in that.
Mr Paterson
222. Can we turn to domestic support. You both
cite the possibility of payments through the "green"
or "blue" boxes. Should the money for farm animal welfare
be additional to support currently going to livestock producers?
Against which animal welfare criteria should it be allocated?
Who would define those criteria?
(Mr Stevenson) I have not given thought as to whether
it should be additional to. Certainly for a long time—we
were writing to the Ministry of Agriculture about this 18 months
to two years ago—we have advocated that alongside the agri-environment
measures should be what we call a Farm Animal Welfare Scheme which
could be used to help farmers firstly, and less controversially
perhaps, with the capital costs involved in changing from intensive
to more extensive systems, be it battery cage to free range or
perhaps providing straw for pigs in previously slatted systems.
Maybe even, I think this is more controversial, some help could
be given for the increased running costs for a transitional period
of, shall we say, about four years. For any business I think it
is the transitional period, as you make the change, that is the
most vulnerable. Certainly we would like to see such a scheme
set up. That scheme could be used to compensate farmers, I think,
for three categories, really, firstly for any income that is forgone
as they make the change, secondly, and perhaps most obviously
in terms of the costs of making the change, the capital costs
involved but, thirdly, possibly as an incentive to make the change.
Those are the three categories that apply to the agri-environment
measures. I think we could have identical categories for a Farm
Animal Welfare Scheme.
(Mr Bowles) Do not forget that at the moment under
I think it is the Rural Development Regulation you are allowed
to have animal welfare subsidies for new buildings. That is in
existence already.
223. Do either of your organisations put any
sums to this?
(Mr Fisher) Not yet. I think it is an issue that we
realise we have to look at. To answer your question directly,
it has to be new money, unless money is found from the existing
budget. At the present point in time the reality is that there
is little or no money being spent on animal welfare. It has not
benefited from the Common Agriculture Policy but it has benefited
from a protective market in one sense and now that market is being
open and therefore we are discussing these questions. I think,
also, it has to be primarily related to the implementation of
higher minimum standards because this is where the problem lies.
Right at the beginning of this discussion we were talking about
labelling. It is easier for producers to get some money back in
a price premium on organic or free range or whatever, it is not
so easy to get the money back on minimum standards. Yet, of course,
it is the question in terms of significant differences in minimum
standards where the real trade conflicts will come. Let us be
clear, we are only raising "green" box payments because
that seems to be, one, the most politically acceptable within
WTO and, two, because the other issues where you could perhaps
balance these differences at the border seem to be more difficult.
So, therefore, if you take that as the reason why we are raising
it, then it is going to be important to bridge that gap one way
or the other otherwise there will be no benefit in raising the
standard if you know the outcome is going to be that you end up
buying American products from lower welfare sources.
224. Which border? In the example that I cited
of the egg manufacturer being hit by the Directive, and he thinks
not being imposed so effectively in Europe, he would probably
like to see the border you have just mentioned being the British
border but, also, all the EU producers will be hit by the lower
standards in America. Are you talking about EU money or UK money?
(Mr Fisher) This is exactly where we are in the WTO
sense. In the EU sense, for better or for worse, we have a single
market and we have a mechanism if it is properly implemented which
can ensure a relatively level playing field between producers
in the EU. We are now moving to a global market where we do not
have the same set of mechanisms in place. We do not have the same
mindsets. Other States have legislation but are interested in
other things. The WTO operates purely in a trade sense and this
is where the dysfunction is clearly coming all the time. When
the WTO sits down to have a panel, it is solely concerned with
the trade dimension, it is not concerned with the social and the
welfare policy. What I am saying is it has to be in this sense
EU money. If it can be supported with money from the Member States
fine but I think there has to be agreement at EU level to support
this which is, of course, something of a climate shift in policy
from where we have been up until now. Animal welfare has always
come for free up until now.
(Mr Bowles) I have to say I think he is being unduly
pessimistic about the rest of Europe going the same way as the
UK with battery hens. There have always been rumours and, for
instance, at the moment Spain is operating lower standards than
450 square centimetres for battery hens. We have looked at that,
it has never been proved. If the ban came into effect in 2012
then it would be an EU ban but I do not think he has anything
to worry about or the Spanish producer or the French producer
still carrying on with battery cages.
225. I think we have probably gone down that
road enough. Can we pick up the point you made, getting on to
trade distortion. Nick Brown, the Secretary of State, last week
said you would look at possible "green" box payments
to "... compensate for the true extra costs of higher animal
welfare standards in a non trade distorting way." Can any
support for the livestock sector be non-trade distorting? How
can we explain that to our trading partners?
(Mr Fisher) I think the official WTO way of looking
at this would be to say no. No payment is absolutely non-trade
distorting but it can be less trade distorting. Any form of payment
to a producer, you can say compared with other producers in other
countries who are not receiving comparable payments in some way
may distort the market. This comes back to the question of why
we need to look at the question of cost of animal welfare and
I think the Government and the Commissioner need to look at the
cost of animal welfare. When the great day comes that we may come
forward to finally justify "green" box payments, we
will have to be very clear about what the animal welfare component
really does cost. I do not have all the answers to those questions
but I sat here two weeks ago and listened to the NFU give evidence
to you and I regretted the fact that they really played up the
potential costs of animal welfare, stating as fact that this was
a potentially catastrophic thing without supporting it with any
detailed evidence and the fact that already they knew it was only
one of their range of costs and the situation was much more complex
than that. I think what we would be afraid of is that animal welfare
becomes a patsy for why we cannot go forward. Animal welfare has
never received any funding up until now. It is a relatively poor
relation in the scheme of things and yet it is now proving to
be perhaps the biggest victim of the WTO. To be clear on what
people said earlier, at this stage it is not a victim of WTO rules,
it is a victim of the EU's perception of WTO rules.
Mr Opik
226. We have talked already about enforcement
and you said that the differential animal welfare standards or
inferior standards outside the EU can be favoured because of the
way the system works. How would you specifically run a preferential
system of import with regard to animal welfare?
(Mr Fisher) What we would call preferred market access—Switzerland
has faced this problem recently with eggs. Our view would be this,
in terms of WTO, WTO should be concerned with trade and, therefore,
so long as the volume of trade increases compared with what it
was previously, the WTO should be relatively happy. If we increase
our volume of egg imports, for example, by 100 per cent, it should
be of no concern to the WTO whether those eggs are free range
eggs or battery eggs. We should be allowed as European consumers
to decide if we want to favour the importation of free range eggs.
That is not to say that you would then say to all other countries
that you must have free range egg production or minimum standard
egg production as your norm. The complexity of it is—and
this is where bureaucrats are not very happy with this—obviously
controlling that at the border, as you can see in areas like GMOs,
this can be rather difficult and can be rather costly in bureaucratic
terms. If you can then open your market on the basis of those
products which either conform to or exceed your own standards,
then you begin to produce these win/win situations. It may well
be that, for example, there will be certain countries, the US
probably being one, where a large proportion of their products
would not meet our standards and would be well below them. We
have seen a case quite clearly on the hormones in beef. There
are some American beef producers who are not using hormones. Their
beef could quite happily be sold on the European market and we
would be quite happy to buy it. The problem is that the rules
as they are at the moment are not allowing that to be distinguished.
Interestingly, the Americans at one stage proposed this idea of
a labelling scheme which said "produced in the US".
The idea was that the consumers would say "Ah, ha that is
produced in the US therefore it has got hormones, therefore I
probably will not buy it", when in fact it may well have
been US beef produced without hormones. I think it brings out
that you have got to have the policy mechanism which tells consumers
what they want to know or to allow those products into the market
which are consistent with your own.
227. Would you have a classification system
or perhaps a sliding scale or something? Would you have a binary
situation where imports either achieve a certain level or they
do not?
(Mr Fisher) I think from a bureaucratic point of view,
the simpler the system the better. This is where you potentially
run into some WTO problems because the simplest way is to say
"These are our standards, if you comply with our standards
then in you come". In WTO terms that is taken as "You
are setting the standards unilaterally and not really discussing
it with others". Then you come into this notion of equivalence,
whether you are prepared to allow some margins. I think, without
giving a definitive answer, that is something which can be looked
at, particularly if your own producers are receiving some form
of support, or there are labelling schemes to support public information.
There may be certain areas where you can identify a clear cut
off point in terms of one system costs an awful lot more than
another and therefore that may be a good break point to make the
distinction.
228. You have not established the definitive
position yet on that?
(Mr Fisher) No, I do not think we have but I think
also it would vary greatly from subject to subject here.
229. Secondly, you have said you heard the NFU
arguing the problem of welfare standards and also the fact that
USA imports may not achieve our standards within the context of
what we are discussing. How would you make sure then that animal
welfare standards do not end up being a specious way of having
a trade war so that we could end up suffering for trying to impose
our standards and we suffer in other products that we are wanting
to take to the USA?
(Mr Bowles) A lot of people think that we are imposing
our standards on other countries. I tend to look at it the other
way round. If we do not have a mechanism to sort this problem
out, other countries are imposing their standards on us and we
will just be driven down. I think that is an important distinction.
230. That may happen but, okay, let us say we
impose these restrictions on American imports, how do we make
sure—perhaps by changing the WTO rules, for example—the
Americans do not introduce specious conditions for us and therefore
pretty much negate it on the basis that it is bring our agricultural
economy to its knees?
(Mr Stevenson) I think when the EU or the US was making
some PPM distinction, as I said earlier they would have to be
able to justify that in a variety of ways including on the basis
of science. Does the preponderance of veterinary science show
this system imposes welfare problems on the animals. The second
thing is that when there are disputes they go to a dispute panel
which should be able to distinguish, should be able to tease out
what is a real, genuine welfare and ethical concern or what is
just a disguised restriction on trade. I have to say whenever
we have discussed the kind of concerns we have had with officials
at the WTO—I remember a meeting a year ago when I started
telling them: "You know, we have genuine welfare concerns
and they are not just protectionist"—they just interrupted
me and said "Of course we recognise all the problems that
have come up have been genuine, they are not just attempts at
protectionism". I think it is distinguished by the dispute
rules.
(Mr Fisher) The problem is that the dispute mechanism
is potentially quite effective but it is somewhat blinkered in
the issues that currently it feels able by the rules to consider.
Therefore it does not consider the motives or whether the welfare
policy is successful or not, it only considers whether or not
it is trade restrictive and if there might be another less trade
restrictive method.
Mr Mitchell
231. You have to police it and you have to ensure
that it is fairly applied if you are going to discriminate. You
have said that some American producers produce beef without hormones,
some produce it with hormones. How can you police identical products
at port of entry and exclude one or discriminate against one on
the grounds that it is produced in methods which are damaging
to animal welfare? I mean egg powder and beef, whatever.
(Mr Bowles) Under the recent agreement, under the
Bio Safety Protocol, they have decided already that they are going
to have measures to distinguish between GMO grains and processed
foods and non GMO grains and processed foods. That has happened
already, they are putting in the mechanism already to do that
on another issue. I think it is very important to see what happened
at the agreement on the Bio Safety Protocol. Not only did they
agree that you did not need a complete science to stop imports
of beef products but also they agreed that they needed some good
labelling system as well.
232. If it is faith and policing, we have had
enormous troubles with the importation on the EUR 1 certificates
of, say, Icelandic prawns which were found when the prawns came
here and were interrogated by the Customs and Excise that they
spoke Russian. There have been huge retrospective fines. It is
impossible to involve the policing system, which assumes good
faith, and is not going to be subject to fraud.
(Mr Stevenson) We have such worldwide policing systems
in the EU already. EU inspectors go periodically to look at poultry
slaughter houses in Thailand or Brazil to make sure they are complying
with the food safety standards we require. These things can be
done if the political will to do them is there. I recognise this
requires also a certain amount of good faith. One has to hope
that one's trading partners are being honest with one, yes, and
also periodically we have inspections. If the will to do it is
there all of these problems can be overcome. What I do not believe
is acceptable from our point of view is a feeling that we are
going to continue indefinitely into the future with an international
treaty of the WTO rules which time and again are severely damaging
EU attempts to secure better standards of animal welfare. Animal
welfare is a legitimate concern and we have to try to address
that.
Mr Todd
233. Labelling. A voluntary labelling scheme
clearly would not meet your objectives because it would be ignored
by a reasonable proportion of producers and presumably would not
have a sufficient rigour in definition to be meaningful in any
way?
(Mr Fisher) Generally yes. I think in an animal welfare
sense voluntary labelling schemes are useful but they have not
proven to be effective in terms of producing huge changes in market
shift. Therefore we come to mandatory schemes and whether or not
they are compatible with WTO rules.
234. Right. Do you believe that there is a way
in which mandatory labelling schemes could be made compatible
with WTO? Indeed is there any evidence that they are not compatible
now?
(Mr Fisher) No, there is not. Any objective reading
of the TBT agreement of the WTO does not rule out mandatory labelling
schemes at all, even on the basis of process and production methods.
235. I think it would be fair to say that when
we were in Geneva that was rather borne out. No cases had been
fought on this matter and it is far from clear, therefore, whether
a mandatory labelling scheme would fall outside or inside the
current regulations. I think it could be summarised, indeed I
think I put it to one of the WTO officials, that maybe there was
an opportunity here for a straightforward challenge to resolve
the matter. Would that be your view?
(Mr Fisher) Yes. I think from an animal welfare point
of view, the specific questions to be answered are can animal
welfare be justified as a so-called legitimate objective under
the terms of the TBT. Because there is no specific language but
there is a kind of general language which appears elsewhere in
the Treaty it is an arguable point. There is certainly no reason
to suggest that it is not and I would say that there is a strong
case to say that it is. Then you get down to the nitty gritty
of the labelling scheme. Is the labelling scheme proportionate
to the objective? Has it taken into account the interests of your
trading partners? Is it just imposing your standards on others?
There you have a series of technical hurdles which need to be
overcome. We have argued very strongly that the proposed egg labelling
scheme provides a very, very good test case in so far as we already
have a voluntary labelling scheme in the EU on eggs which has
not really worked. The Commission recognises this and now proposes
to go to a mandatory scheme. What is helpful, from a WTO point
of view, is that the scheme is likely to be descriptive, i.e.
it is not describing one method but it shows the different methods
which are available, so it is helping consumer information. We
can argue over the nuances over whatever scheme might be there
but there are quite well established systems internationally,
the cage, the barn, the free range. Therefore I think that makes
quite a potentially strong case for WTO. Up until now one of our
major annoyances really has been that the Commission has been
unwilling, if you like, to go in to bat on some of these issues,
even where it is on quite a strong case. There are lots of areas
in WTO rules which are totally untested and for purely political
reasons they have not done that.
236. Okay. I have got you on that. I understand
the point you are making. What I want to explore is, let us take
the hypothesis that we have been able to establish a mandatory
labelling scheme in a particular regime. Would that mean to you
that there would be free market access to products that did not
meet those standards on the basis that the consumer should be
left to make the judgment? In other words, would you see labelling
schemes, therefore, as the total solution to a need to distinguish
between animal welfare regimes which are satisfactory and those
which are not satisfactory?
(Mr Fisher) My answer, and I think it would reflect
my colleagues, is that in most cases we would not see labelling
as a total solution.
237. Why not?
(Mr Fisher) Simply because it is imperfect. Just as
in the case of beef hormones, if you believe—No, let us
not take the case of beef hormones because that is meant to be
about health.
238. I was going to say that is a slightly different
issue.
(Mr Fisher) If you take a question which may have
been of significant public concern such as the leg hole traps
saga, a cruel method of trapping, it may well be that a significant
proportion of the people who want to buy those products are happy
to do so but it is not something which is highly acceptable to
the public. That would be a case where labelling perhaps may not
be a complete solution. The reality is that any labelling scheme
is not going to move you to, shall we say, a 100 per cent market
in free range eggs or a 100 per cent market in non animal tested
cosmetics, it is going to allow the market to play a stronger
role which from a purely liberalised point of view may be satisfactory
but for the reasons we have discussed earlier in terms of the
impact that it may have on your domestic producers may ultimately
be undesirable.
239. Would it be logical to allow the consumer
to make the final judgment? We all have our views on what is acceptable
or not acceptable in animal welfare terms. Should not the individual
consumer in the supermarket or wherever else they are buying the
product be able to exercise a final choice as to their values,
as to whether that is what they want to put in their bag having
read a label which gives a clear definition of what it is as against
another product which may not meet those standards and which perhaps
they care rather less about?
(Mr Stevenson) We are talking about a situation where
we, the EU, have gone beyond labelling. We have said we believe
the system is so cruel that it is banned. Let us take the battery
cage, or hopefully the sow stalls.
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