Select Committee on Agriculture Appendices to the Minutes of Evidence


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;

    —  animal welfare;

    —  biotechnology;

    —  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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