Examination of witnesses (Questions 120
- 139)
TUESDAY 29 FEBRUARY 2000
MR BEN
GILL, MR
MARTIN HAWORTH
and DR DERRICK
WILKINSON
120. Is that true of Germany as well?
(Mr Gill) In Germany there have also been increases
in efficiency. Germany includes two countries: one part has very
large units and one part has small part-time farmers, where they
have used their own innovations to try to address the issues relating
to inputs and adding value. I can give you one simple example.
About two years ago I chaired a conference where a small farmer
from France spoke. He farmed in one of the valleys near the French
border with Switzerland, near Geneva, and he had 27 dairy cows.
He was making a happy living because in that valley they were
adding massive value through the products, through cheese and
deriving substantial benefit from it. That is not immediately
replicable in the UK, but there are lessons that need to be learned
about adding value.
121. In negotiations, French and German interests,
which are more protectionist than ours, will be stronger and more
influential in formulating the Commission's position than our
interests.
(Mr Gill) They have the potential to be stronger and
more influential if we do nothing about it. I believe that the
way in which strategic alliances have been sought to try to put
forward a more enlightened view has gained ground in recent years.
I think that is something that we see as a key objective of what
I have been doing with colleagues and will continue to do in the
months and years ahead.
122. It is still a defensive position. Is it
your feeling that the EU can negotiate successfully the WTO round
without conceding further reform of the CAP?
(Mr Gill) That depends totally on the line taken by
those in the negotiations. It will depend on the position that
Commissioner Lamy, the lead commissioner, will take and how aggressive,
positive and skilful he is in the negotiations. Notwithstanding
the fact that the problems of the French and German positions
are significant, Commissioner Lamy to my mind has shown quite
a clear position that is more orientated towards the sort of line
that I would describe rather than being of the camp of the French
Government.
123. You think that further reform of the CAP
will have to follow?
(Mr Gill) I think it is inevitable that further reform
of the CAP will have to take place, without any impact from the
WTO simply because the budget pressures will force major change
sooner rather than later, and I would expect very much sooner
than is envisaged under the reform that was agreed last year.
124. How will the process of EU enlargement
affect the EU's position?
(Mr Gill) My interpretation of where we are with enlargement
is that it is not the urgent problem that we thought it was. Looking
at the five plus one plus one Member States who are on the fast
track approach, the Baltic states could be absorbed tomorrow with
minimal effect on European agriculture; Slovenia likewise; and
Malta and Cyprus likewise. One then comes to Poland, Hungary and
the Czech Republic.
125. That is a big residual.
(Mr Gill) Yes. I come back to the three points. Of
those last three, the Czech Republic in terms of agriculture is
not a big residual. On the Polish situation, I would be very surprised
if there were any rapid integration simply because they are going
the wrong way in their relationships with Europe in racking up
significantly their tariff charges with the European Union in
excess of 100 per cent. If they are going upwards at the moment,
because of disputes, it will be very hard for them to come down
in the short term. That leaves me with the one residual, Hungary,
which is a major problem in terms of potential technical efficiency.
Over the years, since the freeing up of relationships, Hungary
has seen a shrinking of her agricultural economy, particularly
the livestock sectors, which will take time to renew. So I do
not see it as the short-term issue that I saw a year or 18 months
ago.
126. Back to Seattle, a draft text for the agricultural
associations was agreed. Would you regard that draft text as a
suitable basis for talks if it were adopted?
(Mr Haworth) It was not actually agreed. I was there
and it was my impression that it could have been agreed. For us
it would have been a reasonable basis for discussion, yes.
127. We have the feeling that it was a bit more
than that when we talked to the Commission in Brussels. The people
there seemed quite happy with it and thought it was a basis for
progress.
(Mr Haworth) Yes, I think it would have been.
128. It did not include the term "multifunctionality".
One witness has described multifunctionality, rightly in my view,
as a kind of smoke screen to try to continue with existing support
systems. Would you agree with that?
(Mr Gill) I think the one-word answer is no.
129. Why?
(Mr Gill) Multifunctionality has been sneered at by
a variety of commentators as just a smoke screen. In reality,
in recent years it has become increasingly obvious that European
society, European consumers have different priorities from American
consumers. We see within Europe that different countries' consumers
have different priorities. Would it be acceptable, for example,
in the UK to have the number of deaths from listeriosis that occur
in France due to eating soft cheeses? No, it would not. We have
a different priority. In the UK, we have become sensitised particularly
in the aftermath of BSE and all the implications that that has
had on awareness and sensitivity to food safety issues. Equally,
the North American economy has taken a different approach to the
issues of GM technology and hormones. Even today we hear that
whereas Europe appears to be going down one road on GM technology,
China has made it quite clear that it intends to expand on GM
technology. That is a country that is already more advanced in
the use of GM crops than any other country, including America,
in the world. The number of generations of those crops far exceeds
anywhere else. So we have different consumer needs. Also to some
extent that varies as to how hungry the consumer is around the
world, and that needs to be taken into account. Multifunctionality
allows us to look at that issue and to look at the needs of people
with regard to the environment.
130. Are you in favour of putting it back?
(Mr Gill) I do not believe that it is not putting
it back. Multifunctionality, as I see it, is recognising that
whereas 50 years ago farming was about producing more food and
more food more cheaply, today farming is more than producing food.
It concerns producing the landscape in which we live and it is
about a food production system that is sensitive to welfare issues
as well.
(Mr Haworth) The word "multifunctionality"
did not appear, but the concept did. We would accept as multifunctionality
that countries have the right to deal with non-trade concerns,
providing they do so in a way that does not create trade distortions.
That would be our position.
131. That is obfuscation. That brings in a lot
of elements that cannot be analysed to obscure the real issue,
the degree of protection.
(Mr Gill) I do not see it as a degree of protection
at all. I see it as recognition that society has moved on in its
demands, as I said a few moments ago.
132. It is also a recognition of the way we
live.
(Mr Gill) No, I do not think that it is a recognition
of that. I have said that we must survive with the needs of society.
If society needs access to land which is one of the suggestions
that I believe that we are shortly to have from Government in
the Access to the Countryside Bill, there is a cost connected
to providing such access. There will be a cost to providing the
countryside that people want to see. Equally, if society has,
through this House, in the early part of the last decade, introduced
legislation that became effective over the past couple of years
in banning sow stalls and tethers, there is a significant on-cost
for that. Society must decide that it cannot have it both ways.
We cannot want to ban the procedure in the United Kingdom, but
at the retail level buy the cheaper imported product that has
been produced through lower standards. Many years ago when we
introduced legislation on veal crates for very good welfare reasons
we killed off the UK veal industry. At the moment we are running
the risk that we shall do the same to the pig industry. At the
moment in that industry we are experiencing a number of bankruptcies.
With the pressure on milk prices at the moment from other factors,
there is a risk to that industry as well.
Chairman
133. When looking ahead to the Seattle round
of talks, Commissioner Fischler identified a number of crucial
issues such as market access, domestic support, the blue box,
the green box and the Peace Clause. How do you rate those particular
triggers and what should be the bottom line on those issues?
(Mr Gill) The Peace Clause causes a major issue for
us. Originally that was the back-stop against which the Seattle
round should have started. To give the end point, I think it is
increasingly likely that the Peace Clause will have to be extended.
There is no point in having any form of agreement if it is open
to perpetual challenge. There are suggestions that we ought to
be challenging the way that the Americans administer their oil
seed regime with their loan rate clearly leading to increases
in the acreages. With regard to domestic support, we have the
feeling, as I have articulated, that support needs to be redirected
to a much simpler system. The great pity of last year's CAP reform
was that it did the exact opposite. When Commissioner Fischler
first published his reform proposals, I asked him how he could
say that that would simplify matters. His response in a formal
meeting was that of course it could because it meant that the
proposals would remove the need to fix set-aside annually and
would also remove the need for annual price proposals and therefore
that was simpler. He seemed to ignore the key remit that we see
which is to simplify the matter for the people who have to live
with it day by day. Within that remit we obviously afford high
priority to making a system that is simpler, but still permits
recognition of the additional costs that we need to have compensated
in some way if we cannot achieve it in the market place. On the
aspect of export subsidies, we are already coming up against that
now with the cuts that have come into GATT that will significantly
bear down in the coming months and years ahead, particularly in
certain commodities, depending upon the price differential between
Europe and the rest of the world.
134. The blue box is one of the key issues,
because everyone knows that people will agree on the concept of
aids that are not related to production, which is broadly speaking
the green box concept. At the moment we have the blue box protected
by the Peace Clause, which is for aids which are production related.
We have heard evidence from people who would defend the last ditch
to keep the blue box. In Brussels there is quite an affection
for it. Equally, we have heard people say that that is the heart
of the negotiations, that the whole blue box concept will have
to go. Where do you think we are?
(Mr Haworth) If you had asked us that question one
or two years ago, we would have said that the prospects of retaining
the blue box were dubious because the European Union was isolated,
and that if we wanted to keep the blue box we would probably pay
a high price and possibly an excessive price to do so. With the
latest developments in the American agricultural policy, and the
fact that they have given substantial aid in the last two years
which certainly does not seem to be green box measures, but probably
blue box measures, and the fact that they have produced a budget
for this year with substantial amounts which do not seem to be
in the green box, may mean that we have to revise that opinion.
Maybe the Americans will want to retain it together with the European
Union. If that is the case there may be a possibility for so doing.
135. The focus may come back, as people like
the British Poultry Meat Federation would like, on the external
tariffs on the basis that as they are a non-supported industry
they always regard the tariff protection as much more important
than any specific aid protection.
(Mr Gill) That is right. Major questions arise from
the aid payments in North America. The Deputy Director General
of DG6 Agriculture put it clearly at a conference that I attended
last year. He said, "If you have an arid area that is drought
prone, how do justify giving aid one year, as that then encourages
people to grow on the same land the following year so they get
drought aid a second year, and if they get it for three years
in a row that then becomes, not drought aid, but a compensation
payment that is directly linked to that land?" Those are
the sort of aid payments that we have seen. When we went to America
at the time that they were agreeing the first package, there was
almost a Pavlovian response from almost everyone we spoke to in
the American USDA and the US Trade Representative's Department.
As soon as we raised the issue a hand came up to say that it was
decoupled. We could not help but ask, "Decoupled from what?"
Mr Jack
136. In your evidence so far you have given
a feeling that European agriculture is not the same as the agriculture
of those who would seek to take away some of the support systems
that we presently enjoy in Europe. Do you think that the basis
upon which the negotiations within the WTO are being conducted
recognises properly that type of difference because people look
at the end product as the baseline for the negotiation, and not
necessarily the way in which things are produced or the environment
in which they are produced? Does the WTO take into account in
the way in which it operates the kind of differences in farming
regimes that you describe?
(Dr. Wilkinson) Yes, I believe it does. The WTO is
simply a creature of the members and to the extent that the Commission
is doing its job well, it makes those distinctions clear to the
other parties. Obviously, the outcome will not be 100 per cent
the European view, but you would not expect it to be. The European
view is put very forcefully, as is the Australian view, the US
view, the Argentinean view and so on. They are all forcefully
put and they are all considered. I am not sure whether that answers
your question. Certainly the WTO is not resistant in any way to
considering the differences in farming practices around the world.
Chairman: Japan has an extremely low profile
in all this.
Mr Paterson
137. On animal welfare, you have just said that
food production should be sensitive to animal welfare issues and
yet, following Seattle, animal welfare is currently off the agenda,
although it is a big deal for many people in Europe. The RSPCA
has said that, "Animal welfare has been adversely affected
by the way that WTO rules have been applied and interpreted".
Do you agree with that?
(Mr Haworth) There is a problem here because in relation
to the WTO, and GATT before it, the legal situation regarding
imports was that it did not look at production methods, but just
at products. If the products were the same one could not discriminate
against them. That gives rise to difficulties because there is
no legal basis, as the WTO is presently established, for treating
differently eggs that have been produced by different methods.
Along with the RSPCA, we have some concerns about the effects
that that will have on our industry. We can see that such differences
impose a big difference in costs and, therefore, competitiveness.
As our President has said, the problem is that consumers do not
necessarily have those concerns in mind when they make their purchases.
We can analyse that. Frankly, it is very difficult to see in trade
terms what can be done about it. Along with the RSPCA, we pressed
the Commission to raise the matter in Seattle. We know that they
did not get anywhere. We have had correspondence with the Commission
subsequently in which the Commission has accepted that it is unlikely
that it will achieve anything through the WTO, although they had
promised that they would. We have to think carefully about what
we now want them to achieve.
(Mr Gill) A case in point is the Laying Hens Directive,
which was agreed in Brussels last year, on condition—if
"condition" is the right word—that welfare was
included in the WTO round. That has proved to be a totally false
hope. Although we may not like it, we have to recognise that around
the world people's approach to animals is fundamentally different.
Recently on television I saw a brief clip of a documentary on
the way in which turtles were handled in a market. They were left
on their backs so that they could not wander off and the turtles
were struggling around. I was horrified at the cruelty, but it
goes on. The way that dogs and cats—animals particularly
close to British hearts—are treated in other countries is
quite repugnant to me. You can tell me that I am a soft, old sentimentalist
if you want, but that is the way that we are brought up and that
kind of thinking is inbred in us. We would love to change the
approach to animals into a more humane and appropriate one, but
we cannot. Within the discussion we need some recognition of the
fact that you cannot continue to import eggs from other countries
that undermine the price—earlier we mentioned oil seed rape—and
hence destroy your internal poultry market.
138. I shall come back to eggs in a minute.
What you have said is interesting. You do not seem to have any
recommendations to make that have any teeth. Compassion in World
Farming said that the WTO could help in trying to enforce welfare
standards throughout Europe. There was a report six months ago
in the Farmers' Guardian that said that 80 per cent of
Dutch pig farmers did not obey Dutch welfare standards, which
are much lower than ours, and that 20 per cent of them did not
know that there were any welfare standards. There must be a policeman
at some stage who tries to establish standards at a common level.
Could that be the WTO?
(Mr Gill) It should be the European Union. It is an
internal domestic matter. There are European Union regulations.
Going back to laying hens, we have major problems in that Spain
has not implemented not just what was proposed at last year's
council, but also the 1996 directive, and they are still putting
down new houses in violation of that. The Commission has to make
sure that proper resources are used to ensure that Member States
implement European legislation. That is not a matter for the WTO.
How you use the WTO as a policeman in a world context I do not
know as it does not have the resources. It struggles to cope with
what it has to do at the moment. It has no mandate in any context
to be a policeman at all.
139. Turning to the question of pigs and pork
products, if we carry on as we are with standards that are probably
higher than any other country in the world, and with pig farmers
losing £4 million a week, we shall not have a serious pig
industry in 18 months' time. Who should be taking action to establish
fair trade on pig products where animal welfare standards are
completely different? We recognise the problem but someone has
to do something.
(Mr Gill) In the case of pigs, the problem was compounded
by three major factors. One is the strength of sterling, about
which the Government have repeatedly said they can do nothing.
There are those who may argue otherwise. Secondly, we resisted
the unilateral legislation introduced in this country in the early
1990s on sow stalls and tethers, but we were told that it had
to come through. Thirdly, there are the knock-on consequences
of BSE, the so-called BSE tax, which increases the cost of the
order of £5 or so per finished pig. A further set of costs
are general but none the less still very important, for example,
this Government's and previous governments' successive policies
on fuel taxation. The taxation of lorries generally adds around
3p a kilogram, or another £2 to the cost of every pig compared
with products coming in from Denmark, Holland or France. That
is where we make the point repeatedly.
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