APPENDIX 14
Memorandum submitted by the Country Landowners'
Association (S 22)
The CLA is pleased to respond to the House of
Commons Agriculture Committee Inquiry on the WTO Round, and its
implications for UK agriculture and EU agricultural policy. The
CLA represents some 50,000 landowners who between them own 5 million
hectares of rural land in England and Wales. Our members are involved
in a wide range of rural businesses: agriculture, forestry, fisheries,
tourism, recreation and other rural industries. In addition, they
have an interest in the wider countryside for its amenity and
biodiversity value. Farming, however, remains a main component
of our members' activities, and in some cases is their sole source
of income. Our members have an interest in ensuring that UK agriculture
remains competitive both on the European market and on world markets.
We were disappointed by the failure of the Seattle
meeting to launch a new round of WTO talks. We remain confident
however that discussions will resume, and that agriculture will
remain on the agenda.
The Committee's inquiry focuses on a number
of issues which have emerged over the past few years and which,
although not traditionally associated with international trade
negotiations, nonetheless have an impact on trade. Although we
are not in a position to make detailed comments on the specific
points raised in the terms of reference (ie battery hens, hormones
in beef, import inspections of foodstuffs, restrictions on trade
in GM foodstuffs), we would like to make a number of more general
comments.
THE WTO AND
ENVIRONMENTAL SUPPORT
MEASURES
The CLA recognises the general economic benefits
which freer trade generates, and we have consequently long supported
a managed dismantling of the trade-distorting mechanisms built
into the Common Agricultural Policy. At the same time however,
we are acutely aware of the importance of the environmental role
played by farming in the EU, and of the fact that support payments
under the CAP increasingly have an environmental dimension. Although
we would not condone the maintenance of payments which are clearly
production and trade distorting, we recognise that there is a
grey area where payments can serve other, environmental, purposes.
Some of these payments are included in the "green box"
of non trade-distorting payments under the GATT/WTO agreement.
We would strongly recommend that such payments continue to be
exempt from reduction commitments, and that their environmental
content be strengthened.
The CLA considers that, in the long term, progress
towards a freer market respectful of the environment can best
be achieved in agriculture through the adoption of systems which
are no longer based on agricultural support payments, even at
historical levels, as is the case with Arable Area Payments or
the proposed area payments under the Hill Farmers' Allowance scheme
(under the Agenda 2000 reform of the CAP). The best way to ensure
this is to pay farmers for the positive environmental services
which they provide, and to support new business development in
rural areas.
Agenda 2000, notably through the RDR, marks
a significant step towards such a system of decoupled support.
The introduction of a non crop-specific payment is a small step
in this direction. Although still imperfectly decoupled, this
approach will in theory reduce the distortions caused by the previous,
crop-related, mechanism, and will give an increased role and resources
to agri-environmental measures. In the longer term, however, the
CLA would prefer to see a greater share of public funding going
to direct payments to land managers for environmental services,
funded by further reductions in price support and other direct
payments to farmers. We believe that this approach would be WTO
compatible, insofar as land managers would be remunerated for
the environmental services they generated, even though in some
cases these may still be related to agricultural production.
Decoupling of support could be further enhanced
by developing agricultural insurance schemes, or financial instruments.
As market support both through market intervention measures and
through direct payments are reduced, two further considerations
will assume greater importance. First, it is already apparent
that we do not have in place in Europe an appropriate safety net
mechanism. Much greater attention must be paid to this issue.
Possible routes are through revenue insurance schemes or other
publicly and privately financed instruments. Second, there must
be more attention given in future in the UK to the role of assistance
for restructuring. In short, the coming WTO negotiations must
embrace the issues of environmental payments, provision of a safety
net and assistance for restructuring if agricultural trade liberalisation
is to proceed smoothly.
CONSUMER-RELATED
ISSUES
Over the past few years a number of issues have
emerged which, though not traditionally associated with trade
negotiations, nonetheless have an impact on trade. The main such
issues are:
— standards for health and safety;
— labelling and consumer information;
— and the relationship between trade
and the environment.
Consumer groups, environmentalists and animal
welfare activists are unhappy with the thrust of previous GATT
rounds, which have by and large ignored these issues. They are
also concerned that the forthcoming round of WTO talks would result
in an alignment on the lowest common denominator.
These new issues arise as a result of increasing
demand by consumers for proof of safe products. However, consumers'
concerns go beyond basic food safety. They are also seeking reassurances
on matters such as the quality of the food, its geographic origins,
how it was produced—in terms of human, environmental and
animal welfare. New production and processing methods which have
been recently introduced, such as biotechnology, have added to
consumer unease. In short, consumers are also raising questions
about the acceptability of the processes used to produce food,
raising issues which are distinct from narrow definitions of food
safety.
As traditional barriers to trade come down these
concerns and the accompanying national legislation will become
a more important issue for exporters who perceive them as new
barriers to trade. There is little doubt that, "with the
strengthening of international rules, globalisation of the food
industry, increased trade in consumer food products and the growing
use of biotechnology, trade conflicts over food regulatory issues
and their reform are likely to become more common" (Bureau,
1998:1).
There are many examples of such conflicts:
— Following the BSE scare, third countries
have protested against the EU's ban on the use of specified beef,
sheep and goat offal, and US measures restricting imports of risk
products, arguing that they restricted imports, including from
regions untouched by BSE.
— Some countries, especially in Europe,
impose technical restrictions on production methods in the name
of authenticity or in order to safeguard traditional products.
This can create obstacles for exporters from other countries,
if the restrictions are imposed on them. At the same time, imposing
these restrictions on domestic producers alone can undermine the
competitiveness of the domestic industry.
— The USDA recently identified some
300 cases where national regulations harmed US food exports and
estimated the annual impact as up to US $5 billion in lost sales.
These conflicts cannot be dismissed as simple
protectionism. In the EU, the decisions that have been taken—for
instance on imports of beef treated with growth-promoting hormones,
on the use of factory-farming practices, or on GMOs—apply
to imports as well as to domestic production methods, and have
been dictated by consumer concern about food safety and animal
welfare, as well as by wider environmental concerns.
As part of the Uruguay Round, the Sanitary and
Phytosanitary (SPS) and Technical Barriers to Trade (TBT) Agreements
were set up to guard against such regulatory protectionism. A
number of cases have been brought before the WTO. This area is
likely to feature highly on the future WTO agenda, especially
with relation to GMOs. The case of GMOs illustrates well some
of the failings of the current trading system in relation to wider
environmental concerns.
Under the SPS Agreement, if a country bases
its measures on applicable international standards, these measures
are presumed to be in compliance with the SPS Agreement. However,
there are currently no international standards that specifically
govern GMOs. The International Plant Protection Convention (IPPC)
covers plant health and the environment but doesn't make any distinction
between traditionally developed products and GMOs. Attitudes towards
GMOs vary widely across the world, and across the various "stakeholders'
groups" (farmers, consumers, environmentalists, governments).
While the debate over GMOs is still at a fairly low level in the
USA (though developing fast) and scarcely exists in some countries,
including developing countries such as China, there has been fierce
debate in the EU, India and Ethiopia. The planting of GMOs is
currently heavily restricted in the EU and banned in Austria and
Luxembourg. The rapid uptake of GMOs in the USA is in large part
due to the fact that the US regulatory system was prepared to
treat these products like conventional products for the purpose
of risk assessment and safety. The USA has adopted a regulatory
process which treats GMOs on the basis that biotechnology-derived
products are not fundamentally different from other products in
terms of safety evaluation, and that therefore existing regulations
are appropriate and adequate. Only final products and their intended
uses are subject to regulation, not the method of production (except
for worker and environmental safety issues). In contrast, the
EU has a separate regulatory system for GMOs, regulates both process
and product, and its regulatory approval takes two to three times
as long as the system in the USA. These fundamental differences
in approach explain in large measure the subsequent transatlantic
divergence of views.
Under the current WTO arrangements, a country
may introduce regulations that are more stringent than international
standards on cultural, moral or religious grounds only under very
limited conditions. The SPS agreement does not recognise the validity
of consumer concerns in this area (although under the TBT agreement
they may be taken into consideration by labelling). We recognise
that international trade can be distorted by inequalities in terms
of hygiene and food safety, environmental regulation and animal
welfare. However, when certain restrictions on production methods
are imposed within a Member State for environmental, animal welfare
or ethical reasons (eg the banning of tethered sows), allowing
the free flow of imports of products produced using domestically
banned methods may undermine the credibility of the world trading
system, as well as reduce the competitiveness of local producers.
Labelling certainly offers a solution to this
dilemma, insofar as it moves the responsibility for managing trade
flows away from Governments—which must respect international
commitments—to the consumers, in whose name such trade management
has been requested.
In terms of the institutions involved, we believe
that such measures must be negotiated within the WTO. However,
as stated earlier, there is an urgent need to alter WTO rules
to improve the flexibility of the system, for instance by acknowledging
the right of consumers (and countries) to discriminate on the
basis of production processes. Such an approach does create the
risk of a multiplication of trade barriers rather than their removal,
on issues such as dolphin-friendly tuna, GMOs and hormone-treated
meat. At the same time, there is a grave risk that, by not recognising
the right for consumers to discriminate between products on ethical
or environmental grounds, either through labelling or import restrictions,
the process of trade liberalisation as a whole runs the risk of
losing credibility.
14 February 2000
REFERENCES
Sir Leon Brittan (1999): "The next WTO
negotiations on agriculture—a European view". Address
to the 53rd Oxford Farming Conference—5 January 1999.
Bureau JC, Marette S, Jones W (1998): "Food
safety and quality: trade considerations"; Paper presented
at a one-day Agricultural Economics Society conference on Food
quality and safety standards and trade in agricultural and food
products, 15 December 1998.
ESRC (1999): The politics of GM food: risk,
science and public trust. Special Briefing no 5, Global Environmental
Change Programme.
European Commission: Directorate-General for
Agriculture (DG VI) (1998): Prospects for agricultural markets:
1998-2005.
Kelch, DR et al (1998): "Biotechnology
in agriculture confronts agreements in the WTO"; Agricultural
Outlook, December 1997; Economic Research Service, USDA.
Normile, MA (1998): "Uruguay Round Agreement
on agriculture: the record to date": Agricultural Outlook,
December 1998; Economic Research Service, USDA.
World Trade Organisation: various documents.
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