Select Committee on Agriculture Seventh Special Report


The Agriculture Committee has agreed to the following Special Report:—

The Committee has received the following memorandum from the Ministry of Agriculture, Fisheries and Food, constituting the Government's Reply to the Sixth Report from the Committee of the 1999-2000 Session, The Implications for UK Agriculture and EU Agricultural Policy of Trade Liberalisation and the WTO Round, made to the House on 28 June 2000.

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1. The Government welcomes the Agriculture Committee's report. This is a response from the Ministry of Agriculture, Fisheries and Food, which has been agreed with the Department of Trade and Industry, the Department for International Development, the Department for Environment, Transport and the Regions, the Food Standards Agency, the Foreign Office, Her Majesty's Treasury, the Scottish Executive Rural Affairs Department, the Department of Agriculture and Rural Development (Northern Ireland), and the National Assembly for Wales Agriculture Department.

The Committee's general conclusions

2. The Committee's general conclusions were as follows.

The liberalisation of trade in agricultural products as regulated through the WTO is beginning and will continue to have a profound effect on the UK agricultural industry and on EU agricultural policy. It is important to remember that WTO rules are not forced upon countries, nor is the organisation an undemocratic, self-appointed oligarchy. Instead, it is a governmental club whose members have devised and agreed the rules and are responsible for implementing and amending them where necessary. The number of countries applying to join the WTO testifies to its success. Even China has now recognised the benefits of signing up to a rules-based international trading system which means that all those affected by world trade, which in practice means farmers and consumers as well as importers and exporters, can look ahead to a stable, non-discriminatory trading environment. We do not dismiss those with concerns which have traditionally been considered to be outside the scope of trade negotiations, such as food standards or production and process methods but we believe that the WTO should not be transformed into a sort of universal reform league if this puts at risk its ability to sustain its primary purpose as a rules-based regulator of world trade agreements. We understand the fears expressed by those who see globalisation leading to irreversible and detrimental consequences for traditional rural communities. But we believe that the best way to assist those small farms which find themselves under threat is through reform of the CAP and a gradual shift away from distorting production subsidies to a policy based on clear objectives for environmental protection and rural development. Significant cuts in export subsidies would be a welcome step in the direction of further steady, managed CAP reform.

In order to achieve the best possible outcome for UK consumers, farmers and those employed in the food and drink industry, the UK Government needs to work tirelessly to persuade others to understand and share its aspirations for the future. We see three key audiences for this work. First, there are the UK's fellow member states of the EU. The UK Government must take the lead in persuading these other nations of the need for radical reform of the CAP and for adopting a constructive and defensible position in the WTO round. Second, there are the EU's trading partners. With many of these, the UK has special ties because of historical and commercial circumstances. Ms Quin told us that the Government "certainly use those contacts to express our views, to urge for momentum in the WTO process". She believed it to be important "for European countries to be talking very purposefully to developing countries and to our partners in a variety of organisations", both to get the new round launched and to explain the EU's position more clearly. As she explained, it is for the UK to take the lead role in explaining terms such as multifunctionality because our reputation as free traders will make it easier to shake off suspicions of protectionism. Finally, there is a domestic audience which needs to be convinced of the value and benefit of the WTO process. Nick Brown MP alluded to this constituency in his speech in March this year when he observed that "Progress in trade liberalisation requires an understanding amongst farmers, consumers and the wider public of the collective economic gains from freer trade, and the economic costs of protectionism". We believe that it is the duty of the Government to further this understanding. To succeed, it will need to convince this audience that their concerns can be met in a global trading environment and that the WTO is working in their interests, rather than those of the multinationals. The Government must work with the EU and with the WTO itself to increase transparency of the process and to demonstrate the advantages of the WTO rules over border riots and barricades.

It is too early in the negotiating process for participants or commentators to be prescriptive as to the details of any final WTO package. However, it is not too early for work to be done to build the foundations for a successful settlement. Joyce Quin recognised that the WTO process should reach a conclusion "that does reach out to all members" and that "it would not be good at all if the outcome is simply seen to be a fix between big powerful groups and does not have the wholehearted support of the developing countries as well as the developed members of the WTO". The efforts of the UK Government to work with the three audiences we have identified could make a significant and worthwhile contribution to ensuring that the WTO Millennium Round emerges from the disaster in Seattle to establish new arrangements for world trade which are and are seen to be advantageous to all concerned.

3. The Government welcomes the strong support given by the Committee to its objectives for the WTO agriculture negotiations. The Committee recognises that further agricultural trade liberalisation will have a significant impact on the Common Agricultural Policy, and should lead to the kind of steady, managed reform of the CAP sought by the Government and supported by the Committee. Reform should include reductions in total support as well as its re-targeting into environmental and rural development measures delivered by less distorting mechanisms. We acknowledge that there will be impacts on the UK agricultural industry and rural communities. Further liberalisation will bring wide economic benefits and lead to a more competitive and viable industry, but it must also take account of the social and environmental aspects of sustainable agriculture. We will therefore continue to emphasise the importance of measures to conserve and enhance the environment and promote the rural economy which do not distort trade.

4. We also welcome the Committee's support for a rules-based trading system as the best way of achieving a stable, non-discriminatory trading environment. The WTO is essential to meet the challenge of globalisation, since a rules-based system allows governments to work collectively to respond to those challenges. Without a multilateral rules-based trading system, there would be scope for the arbitrary imposition of trade barriers for protectionist purposes. Large powerful countries would also be free to exercise their commercial strength at the expense of the weak.

5. The Government recognises the key importance of persuading other EU member states of the benefits of our objectives for the WTO negotiations and the future of the CAP. We are working hard to develop strategic alliances with member states which do share our views and also to ensure that the arguments for further reform are fully understood and are given due weight by all member states and by the Commission. We intend to keep in close contact with other key WTO negotiating partners, and also to continue our consultation of and communication with interested groups in the UK, in particular as we develop more detailed views on particular issues during the course of the negotiations.


The Committee also made other principal recommendations and conclusions as follows.

Trade liberalisation in agriculture

(a)  We believe that the case for further trade liberalisation in agriculture is compelling. It will open up new markets for UK exporters, provide new products for UK consumers and encourage UK farmers to be more efficient and competitive, whilst rationalisation of production will lower costs to the taxpayer. It will also benefit developing countries just as directly and positively as opening markets to their manufactured goods. The impetus it gives to further reform of the Common Agricultural Policy is particularly to be welcomed (paragraph 4).

6. The Government is also strongly supportive of further liberalisation for the reasons given by the Committee. We intend to engage fully in the negotiations to ensure that these benefits are achieved to the greatest extent possible.

7. In relation to developing countries, it is true that some will see direct benefits from improved market access following liberalisation. However others (particularly countries in the African, Caribbean and Pacific group) could experience a loss in the relative value of their trade preferences with the EU. Developing countries which are net importers of food could also see an increase in their import bills from rising world prices following liberalisation. It will be important to provide ways of allowing these countries to adjust to the changes as well as appropriate support during this process.

The blue box

  (b)  We believe that the price of defending the blue box will depend on the evolution of US policy and that the EU should concentrate on converting measures currently within the blue box to green box payments. This would over time simplify the system as well as signify an important shift away from the acceptability of subsidies related to production (paragraph 31).

8. We agree that the overall aim must be for the EU to move away from production-linked subsidies, including the type of direct payments currently within the blue box, in line with the commitment to substantial, progressive reductions in support and protection included in Article 20 of the WTO Agreement on Agriculture and recently re-affirmed by the OECD Ministerial Council. Converting these measures to decoupled payments which would be compatible with green box criteria would be one means of doing this. An alternative, as mentioned in the Committee's report, would be to retain the payments but phase them out over time. It is sensible to keep both options open for now, since others' views will contribute to the feasibility of particular outcomes. However, independent of any particular outcome on the blue box, the Government considers that green box payments specifically targeted at environmental and rural development objectives will continue to be necessary in their own right, and that such payments may also need to meet social objectives notably in peripheral hill farming areas.

The green box

(c)  We believe that the criteria for inclusion in the green box should be defined more clearly by WTO members and that measures should be judged to be within the green box only when their primary purpose is to meet these criteria and not when the qualifying characteristics are merely a secondary by-product of measures (paragraph 32).

9. The main condition for green box eligibility, as set out in Annex 2 to the WTO Agreement on Agriculture, is that measures should have no, or at most minimal, trade-distorting effects or effects on production. Policy-specific criteria are also provided for the various categories of measures eligible for inclusion. In the Government's view these criteria already provide an adequate assurance that measures with only a secondary aim of meeting one of the specified policy objectives should not be included. As an example, for payments under environmental programmes, eligibility must be determined as part of a clearly-defined government environmental or conservation programme and be dependent on the fulfilment of specific conditions under the programme. In addition, the amount of payment must be limited to the extra costs or loss of income involved in complying with the programme. These conditions should make it impossible to include a measure on environmental grounds which has a primary purpose other than an environmental objective.

The Peace Clause

(d)  We believe that the true value of the Peace Clause is probably more symbolic than real but that the EU should continue to support its renewal (paragraph 34).

10. The Government considers that the Peace Clause acts in the interests of all WTO members, not just the EU, in giving reassurance that if they comply with agreed commitments for both domestic support and export subsidies, they will have a degree of protection from challenges possible under other WTO rules. The prospect of expiry of the Peace Clause is likely to create significant pressure to conclude the negotiations, which is welcome, but we agree with the Committee that renewal of the Peace Clause is likely to be an important feature of a new Agriculture Agreement. At the same time, in order to justify the continuation of this protection from challenge, the EU and other WTO members will need to fulfil their commitment under Article 20 of the WTO Agriculture Agreement to substantial progressive reductions in support.


(e)  We conclude that the EU has scope to offer substantial tariff cuts from the current high levels in most commodities. In doing so, it should concentrate on the most distorting tariffs both for importers and exporters and should offer the greatest assistance to the least developed countries for whom this is an important issue (paragraph 37).

11. The Government agrees that there is scope for substantial further tariff cuts in the EU, and would also want to see other WTO members with high tariffs make significant reductions. There is some way to go before resolving the details of the best approach to take in reducing tariffs, as well as other aspects of market access such as reduced-tariff quotas, and the Government will be consulting further on this issue. We will also need to consider how tariff reductions fit into the wider reform process in order to achieve a balanced outcome to the negotiations. However, we would certainly wish to take into account the distortions caused by particularly high tariffs and tariff escalation, and the interests of the least developed countries who may have potential to export agricultural products.

12. It is Government policy to address the particular needs of least developed countries as a priority in trade negotiations and it will continue to pursue duty- and quota-free market access as a key objective. In this regard, the EU is already committed to granting duty- and quota-free access to essentially all products of the least developed countries by 2005, and we will be pressing for exclusions to be kept to a minimum, at the same time recognising the EU's obligations to its partners in the African, Caribbean and Pacific group.

Export subsidies

(f)  The reduction of export subsidies should be a high priority in any negotiations. We strongly agree with the Minister that the answer to the problem faced by the food industry is further substantial reform of the CAP and we note that the pressures caused by export subsidies make such reform more likely. Within the context of the current negotiations, we agree with the British Poultry Meat Federation that "less obvious forms of export subsidy such as export credits, export guarantees, and food aid should be dealt with in the same way as export refunds". This should help to highlight the use by other countries of such assistance to their exporters and give the EU more room for manoeuvre. We also support the approach taken by the Minister in persuading "our allies ¼ that we are not here just talking about self-contained agricultural subsidies, we are talking about subsidies which have a very important knock-on effect in terms of the food industry more generally and the economy more generally". Moreover, we agree wholeheartedly with her twin objectives of ensuring that the UK industry is not unfairly targeted in agreeing cuts in export subsidies and of making such cuts "part and parcel of a wider agricultural reform process" (paragraph 40).

13. The Government welcomes the Committee's support for its views on the necessity of further reductions in export subsidies as part of a wider reform process. It is clear that export subsidy cuts must form part of the outcome of the negotiations. The process of agreeing these cuts must be matched by decisions to make corresponding reductions in support prices, so that the competitiveness of UK food processors and exporters is not damaged. We also agree with the need to ensure that less obvious forms of export subsidy are brought within equivalent disciplines, and will pursue this actively in the negotiations.

Animal welfare

(g)  We believe that the EU, and the UK Government in particular, must make continued and forceful efforts to clarify objectives on animal welfare and then explain their intentions to individual WTO members prior to the launch of a wider round of talks. We also believe that the EU's position would be strengthened by the adoption of uniformly high welfare standards across all Member States. Of the various solutions suggested, we favour a combination of labelling, green box support and multilateral agreements on issues which cannot be brought into the purview of the WTO (paragraph 47).

14. The Government shares the Committee's wish to raise welfare standards to the same level across all member states. During our Presidency of the EU in 1998 the Council agreed a Directive setting minimum welfare standards for all farm animals; we were constructive in negotiating an agreement on last year's laying hens directive; and we look forward to taking an active part in negotiations on the Commission's proposals for updating the EU pig welfare rules, which they have promised for later this year. The Government also recognises that effective enforcement is essential if these EU agreements are to fulfil their aim. We welcome the recent strengthening of the Commission's team charged with checking compliance with welfare rules. And we shall not hesitate to alert the Commission to evidence of ineffective enforcement where that is brought to our attention.

15. The three options identified by the Committee for taking animal welfare forward in the WTO negotiations are the ones being considered by the Government, and were also raised for discussion in a paper submitted by the EU to the negotiations in June 2000. In the same paper the EU made clear that our objective for raising animal welfare issues was not to provide a basis for the introduction of new types of non-tariff barriers. However, we agree with the Committee that there is a great deal of suspicion from trading partners of the EU's motives in this area, and achieving consensus on international standards is likely to be an extremely slow process.


(h)  We agree with the Government that it must work to persuade other countries of the real meaning of multifunctionality and project it as representing a dynamic and forward-looking view of agriculture, not shorthand for a reluctance to reform. The EU needs to continue to define objectives and develop policies which express the ability of agriculture to fulfil a multifunctional role. The CAP is not nearly multifunctional enough, and the EU needs to pursue its evolution. We see no reason why reasonable support for goals encompassing the multifunctional nature of agriculture could not be embraced in further green box measures (paragraph 51).

16. The Government welcomes the Committee's support for our aims in relation to the multifunctional role of agriculture. Reform of the CAP must result in an agriculture which is commercially viable and also socially and environmentally sustainable. We must therefore reduce production-related support, and refocus a proportion of those funds on policies which are specifically targeted towards social and environmental objectives and which do not distort trade. These policies are compatible with the criteria of the green box.

17. This way of addressing the multifunctional role of agriculture should be acceptable to WTO partners, most of whom also wish to continue pursuing these types of policies. The term "multifunctionality" has no agreed definition, and its use has unfortunately come to be suspected as an attempt to justify the continuation of production-related support. We agree with the Committee that it is only by being specific about our intentions that we will counter this suspicion.

Hormones in beef

(i)  We recognise that the beef hormones case does highlight the importance of basing trade restrictions on sound science and the difficulties of applying the precautionary principle in the many areas where science is not so clear (paragraph 55).

18. The Government believes that it is vital to continue to take a science-based approach in the development of food safety standards and of trade restrictions imposed on food safety grounds. We do not accept that the scientific case for a ban on the use of hormone growth-promoters has been made. This position is supported by recent advice from a group of independent UK experts, as well as evidence from the European Commission's own Committee on Veterinary Medical Products and the Joint Food and Agriculture Organisation/World Health Organisation Expert Committee on Food Additives. We will however continue to fulfil our European obligations by enforcing the ban in the United Kingdom.

19. We support the concept of the precautionary principle in order to ensure a high level of consumer protection. However, there is a need for clear, agreed guidelines on how it should be applied in the field of food safety. There should be an objective assessment of the risks, costs and benefits involved in precautionary action so as to prevent its misuse as a disguised barrier to trade. We welcome the recent Commission Communication on the precautionary principle, which provides a useful contribution to the debate.

20. We note that the WTO Sanitary and Phytosanitary Agreement balances the right to take provisional measures against an obligation to seek further information within a reasonable period.

The SPS agreement

(j)  There will always be some degree of disagreement among scientists on any policy issue but we believe that the SPS provides a framework in which actions can be taken on an equitable and scientifically justified basis (paragraph 55).

21. We agree with the Committee's view. In particular the requirement in the SPS Agreement to base trade measures either on agreed international standards or on a scientific risk assessment is important to ensure that action taken which restricts trade is properly justified.

Import inspections of foodstuffs

(k)  We recommend that the Government, through the EU if necessary, work towards the establishment of international agreements for equivalence of food safety inspection systems to remove a potential barrier to trade (paragraph 56).

22. The Government accepts the value of international agreements for equivalence of food safety inspection systems. The UK has supported the work of the Commission in negotiations with a number of countries outside the European Union. So far these negotiations have resulted in equivalence agreements being signed between the EU and four countries. We believe that the HACCP approach to food safety regulation of food produced in country should replace the current outdated and prescriptive regulations in this area. Such an approach, which focuses on outcomes, would serve both to reduce the regulatory burden on EU businesses and facilitate the conclusion of further equivalency agreements with our trading partners.

23. In addition the UK takes an active part in the work of the Codex Committee on Food Import and Export Certification and Inspection Systems which is drafting codes in a number of areas specifically intended to develop harmonisation and equivalence between member countries in the field of food inspection procedures.

Genetically modified organisms

(l)  Given that the Montreal Protocol is now complete, we recommend that the EU restrict discussions on GMOs in the context of the WTO talks to any measures necessary to harmonise WTO rules with those agreed under the Biosafety Protocol (paragraph 58).

24. The Committee is right to suggest that further work is needed to clarify the interface between the Biosafety Protocol[1] and the WTO. The EU is pursuing this under the broader aim of clarifying the relationship between Multilateral Environmental Agreements (of which the Protocol is one) and the WTO rules more generally. This clarification is part of the EU's agenda for the next WTO round. Our aim is to achieve improved mutual supportiveness between the multilateral trade and environment systems so that both are strengthened. The Government believes it is important to ensure that trade rules are not used to inhibit the development or application of multilaterally agreed environmental measures, and equally that environmental measures are not abused as a form of disguised protectionism.

25. Clearly the Biosafety Protocol will be central to discussions of the environmental effects of GMOs in the WTO. The Government agrees that WTO rules and those in other international agreements should not duplicate but complement each other. In the context of a comprehensive Round, we stand ready to respond to any concerns raised by other WTO members.


(m)  We do not accept that labelling would kill off the technology of genetic modification and we see proper labelling about both safety and production methods as a crucial part of the consumer's right to know and to choose (paragraph 60).

26. Irrespective of the regulatory procedures in place to assess the safety of GM foods, it is clear that some people will choose not to eat GM foods. The Government is fully committed to enabling consumers to make informed choices about the foods that they eat. It is important however for any mandatory labelling rules to be practicable and enforceable.

(n)  We recognise that the range of issues on which consumers require information is ever-growing and that this will make it difficult to reach agreement between WTO members who each have different concerns and different approaches to labelling regimes. Nevertheless, we believe that this development makes it even more important that clarification is sought and obtained on the scope of the existing TBT and that the EU should seek to extend it if it should prove inadequate to meet the concerns of consumers. One way to do this would be to introduce mandatory labelling in one instance as a test case. We recommend that the Government ensure that clarification by whatever means is sought (paragraph 61).

27. As the Committee notes, labelling is already covered by the Technical Barriers to Trade agreement, which requires any regulations in this area to be transparent, non-discriminatory and not more trade restrictive than necessary to achieve a "legitimate objective" (including health and safety and the environment). The Committee is right that there is some uncertainty as to whether labelling designed to meet wider consumer objectives would be considered compatible with trade rules, for example relating to the promotion of animal welfare. The Government wants negotiations to resolve such areas of uncertainty in order to fulfil our general wish to provide consumers with the information they need to make informed choices.

28. Mandatory labelling schemes have been introduced by some countries, and at the EU level where there are high levels of consumer concern or specific health, safety or environmental issues. Nevertheless within negotiations it will be essential to address the concerns of other WTO members, particularly developing countries, about the potential for labelling schemes to be abused for protectionist purposes, and the weak capacity of many producers in developing countries to meet the higher requirements of mandatory labelling schemes. Agreeing guidelines among all WTO members may be the best way to prevent misuse. In considering labelling schemes generally, whether mandatory or voluntary, the focus should be on their effectiveness in tackling legitimate objectives.

Developing countries within the WTO

(o)  Developing countries must be assisted to make their own representations and negotiate for their own priorities such as food security within the current talks on agriculture and the wider WTO Round (paragraph 68).

29. We agree with the Committee that it is vital that developing countries receive assistance if they are to take full advantage of the opportunities offered by a new round of WTO negotiations. Developing countries need more and better support for the negotiation and implementation of WTO agreements, and for institution-building. UK technical assistance commitments for trade currently exceed £15 million. Relating specifically to the agriculture negotiations, this includes support for a World Bank programme to strengthen developing country participation in the negotiations in agriculture and funding of a full time consultant to work with the South Centre in Geneva in providing technical support to developing country negotiators.

30. In addition, we continue to press for greater coherence between the WTO, World Bank/IMF and other relevant agencies in their provision of trade-related technical assistance, and practical follow-up to the joint WTO/World Bank/International Trade Centre statement made at Seattle. We are working to take this forward with like-minded donors in the EU, and with the World Bank.

Reform of the WTO

(p)  We recommend that the Government press for the greatest possible transparency and accountability within the WTO with regard to both documents and procedures (paragraph 69).

31. We agree with the report's conclusion that there should be increased internal and external transparency in the WTO. The Government actively supports this and has been working with our EU partners to look at ways that transparency can be improved. Possible measures to improve external transparency include further de-restriction of WTO documents, an increased use of the internet, and wider consultation by the WTO Secretariat.

32. We also believe that national governments have a crucial role to play. That is why we are committed to consulting widely on issues relating to the multilateral trading system, and why we included representatives of business, unions and non-governmental organisations (NGOs) in the UK delegation at the Seattle conference. In the run-up to Seattle, we produced a consultative booklet which was distributed to over four thousand people, including NGOs, business organisations and other interested parties.

33. UK Government Ministers and officials have met and will continue to meet representatives from NGOs, business, labour, local government and consumer groups to discuss WTO issues in the run-up to a new Round. We are also exploring further means to widen the discussion between Government and civil society, in order to stimulate informed debate. For example, the DTI website invites queries and feedback.

(q)  We support moves to increase the effectiveness and openness of the disputes settlement procedures but recognise that efficiency should not be sacrificed to a requirement to hold a public inquiry on every issue (paragraph 71).

34. The UK supports attempts to make WTO procedures more transparent. We would have no difficulty in making public more of the material put into the dispute settlement process. But we also have to respect the sensitivities of other Governments, including those of developing countries, many of whom have concerns about the consequences of conducting disputes more publicly - for example that richer countries, multinational companies and NGOs will be more adept at handling publicity than they will be. There may also sometimes be valid commercial reasons for confidentiality. Subject to the need to retain the integrity of the system of dealing with disputes between Governments, we believe that reform should proceed in parallel with discussions under the built-in agenda and a new Round.

Parliamentary scrutiny of the WTO

(r)  We recommend that the Leader of the House, through the House of Commons Modernisation Committee, examine current procedures to see if more effective forms of parliamentary scrutiny could be devised to monitor the work of the WTO (paragraph 74).

35. We believe that issues raised in the WTO need to be fully debated in national parliaments. Growing public interest in the work on international organisations such as the WTO makes this scrutiny all the more important. Parliaments have a key role in ensuring that concerns about the activities of international organisations are understood and addressed by governments.

36. To this end, the Government has been pleased to contribute to a number of Select Committee inquiries, both before and after Seattle. These include the Environmental Audit Committee's Second Report, "World Trade and Sustainable Development: An Agenda for the Seattle Summit" (November 1999); the House of Lords European Union Sub-Committee A's report on the EU Mandate (June 2000), and the ongoing inquiry into the WTO by the International Development Select Committee. Ministers have also participated in the House of Commons Debate on the WTO (9 December 1999) and the House of Lords Short Debate on globalisation (19 April 2000).

Impact of the Uruguay Round Agreement on Agriculture

(s)  We recommend that the Government, through the EU, ensure that an assessment is made of the impact of the Uruguay Round Agreement on Agriculture and published at an early stage of the agriculture negotiations (paragraph 76).

37. Most WTO members, including the EU, have placed a high priority at the start of the agriculture negotiations on the fulfilment of Article 20 of the WTO Agreement on Agriculture, including examination of the effects of the Agreement. Papers discussed at the second negotiating session, held in June 2000, included background papers by the Secretariat on the use of green box measures, the agricultural trade performance of developing countries, and the effects of the reduction commitments on world trade. Further papers were requested from the Secretariat including one specifically on non-trade concerns. Most of these papers have already been or will be published on the WTO website. It will clearly be important to examine and take appropriate account of all this material in the new negotiations. We do not believe though that the outcome should be to delay the process of further trade liberalisation, thus prolonging measures which distort trade and slow down improvements in market access, but rather to consider measures to address social and environmental concerns directly.

38. The Government also intends to keep in close contact with the sustainability impact assessment of the new negotiations being commissioned by the EU. The assessment will cover individual negotiations on agriculture and services, and also a wider round of negotiations when this is launched.

Impact of further trade liberalisation on UK agriculture

(t)  As the talks progress, we expect the Government to take into account the potential impact of proposals made during the negotiations upon UK agriculture when contributing to the EU's response to those proposals. We also expect the Government to take particular account of the likely cost and effect upon the competitiveness of UK industry of existing, pending and likely future WTO commitments in implementing new EU or domestic legislation (paragraph 79).

39. The Government will take the impact on UK agriculture fully into account when assessing negotiating proposals. Our views on such proposals will be developed in parallel with views on the future of CAP regimes, since the two are closely linked. The Government consistently takes WTO obligations into account when implementing legislation, and agrees with the Committee that we also need to take possible future commitments into account as appropriate. This is one of the reasons for our view that CAP support should focus in the future increasingly on measures which achieve social and environmental objectives associated with sustainable farming but which do not distort trade. In this respect we welcome the Committee's support for the Rural Development Regulation and the redirection of support which that represents, while agreeing that this is only the first step in a longer process.

Impact of trade liberalisation on the UK food industry

(u)  We recognise that the potential impact of measures agreed under the WTO will not be the same in all cases for the food and drink industry as for farmers and that the Government should be mindful of the need to promote the interests of the food sector as well (paragraph 80).

40. The Government recognises the difficulties that constraining access to export refunds without matching reductions in EU support prices is creating for exporters of processed foods. For the short term, we are seeking more flexible access to Inward Processing Relief as a partial solution to this problem. However, we agree with the industry that further reform is the only long-term answer, removing the need to rely on export subsidies to maintain competitiveness. As stated above, we will seek to ensure that any further cuts in export subsidies are matched by decisions to make corresponding reductions in support prices, so that the competitivity of UK food processors and exporters is not damaged.

Impact of trade liberalisation on UK consumers

(v)  We conclude that there are clear benefits for the consumer in trade liberalisation but that the existing safeguards in the form of the SPS and other agreements need to be monitored to maintain food safety and standards to an optimal degree, especially in the context of the new UK Food Standards Agency and the proposed EU Food Safety Authority, and to provide consumers with clear information to enable them to make choices (paragraph 82).

41. We agree with the Committee that there are clear benefits for consumers from liberalisation, in respect of the price and choice of food. The SPS Agreement also gives us the right to impose trade measures where necessary to protect the safety of food. Food safety remains a key Government concern and we believe that the measures in the SPS Agreement provide adequate means to take justified measures to protect public health. The WTO rules governing the provision of labelling and consumer information are less clear, but the provision of appropriate information is a priority for the Government and we support the EU in pressing for clarification of the rules through the Agreement on Technical Barriers to Trade.

CAP reform

(w)  We offer our continuing support to the UK Government in its endeavours to persuade other member states of the urgency of radical reform of the CAP and urge the UK Government to pursue that reform more strenuously and to place this issue higher on its own agenda of EU reform (paragraph 85).

42. The Government welcomes the Committee's continuing support for its policy of pressing for radical reform of the Common Agricultural Policy. We can reassure the Committee that we attach a great deal of importance to this objective and are working strenuously already to lay the groundwork for further reform, building upon the outcome of the Agenda 2000 reforms. This is neither an easy nor a quick process given the fact that most Member States do not share our view. We are working to develop strategic alliances with Member States which do share our analysis and also to ensure that the arguments for further reform are fully understood and are given due weight by all Member States and by the Commission. The timing of these negotiations will be crucial. We need to take into account the pressures for reform arising from the next round of WTO trade negotiations and enlargement as well as the political timetable in key Member States if sufficiently radical change is to be secured.

Ministry of Agriculture, Fisheries and Food

5 October 2000

1   The official name of the Biosafety Protocol is the Cartagena Protocol, not the Montreal Protocol. The original intention had been to agree the Protocol in Cartagena in 1999, and, in recognition of all the work put into the process by Colombia, this name was retained in spite of the fact that the Protocol was finally agreed in Montreal. Back

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