MEMORANDUM SUBMITTED BY THE MINISTRY OF
AGRICULTURE, FISHERIES AND FOOD (S10)
INTRODUCTION
1. Next year will see the start of a new
round of multilateral trade negotiations within the World Trade
Organisation (WTO). It is not yet clear how extensive this round
will be but it is certain to include agriculture. WTO members
have already agreed to start negotiations on agriculture by 1
January 2000 with the aim of achieving "substantial progressive
reductions in support and protection". The round is expected
to be launched at a Ministerial meeting in Seattle in the USA
from 30 November to 3 December 1999.
2. The European Union (EU) and the UK Government
both strongly support the establishment of a comprehensive new
round of WTO negotiations next year. The European Commission will
represent the EU in the negotiations, working within a mandate
agreed by the member states.
3. This memorandum first describes the background
and general structure of the forthcoming negotiations. It then
analyses the ground to be covered in the negotiations on the WTO
Agreement on Agriculture: domestic support to agriculture, import
access and export subsidies. Other issues relating to agriculture
which might feature in the negotiations, including food safety,
biotechnology and farm animal welfare, conclude the memorandum.
BACKGROUND AND
GENERAL STRUCTURE
OF FORTHCOMING
NEGOTIATIONS
4. The General Agreement on Tariffs and
Trade (GATT) came into being as part of the post-war reconstruction
to begin the process of multilateral trade liberalisation. It
has been in operation since 1948. There has been a number of multilateral
negotiations or "rounds" since the creation of the GATT.
While certain GATT rules applied to agriculture, others did not.
The Uruguay Round fundamentally changed matters. This was launched
in 1986 and finally ended in 1994. Agriculture was a key part
of the Uruguay Round and its conclusion included a specific Agreement
on Agriculture.
5. The Agreement on Agriculture sets out
commitments which members must apply over a six year implementation
period (1995-2000), but which will remain in force until a successor
agreement is made. These commitments are to:
— reduce domestic support;
Details are given in the following section.
6. The Agreement on Agriculture also allows
special and differential treatment in the form of reduced commitments
to take account of the disadvantaged position of developing countries,
and put in place special arrangements for net food importing developing
countries.
7. Article 20 of the Agreement on Agriculture
sets the context for negotiations on agriculture in the next round.
They are seen as part of a continuing process of reform, drawing
on the experience of implementing the commitments made in the
Uruguay Round. Account is also to be taken of non-trade concerns,
special treatment for developing countries and the objective of
establishing a fair and market-oriented agricultural trading system.
The full text of Article 20 is in Box 1.
| Box 1: Article 20 of the WTO Agreement on Agriculture
|
| Continuation of the Reform Process |
| Recognising that the long-term objective of substantial progressive reductions in support and protection resulting in fundamental reform is an ongoing process, Members agree that negotiations for continuing the process will be initiated one year before the end of the implementation period, taking into account:
|
| (a) the experience to that date from implementing the reduction commitments;
|
| (b) the effects of the reduction commitments on world trade in agriculture;
|
| (c) non-trade concerns, special and differential treatment to developing country Members, and the objective to establish a fair and market-oriented agricultural trading system, and the other objectives and concerns mentioned in the preamble to this Agreement; and
|
| (d) what further commitments are necessary to achieve the above mentioned long-term objectives.
|
8. The Uruguay Round also introduced new rules governing
trade restrictions used to protect human, animal and plant health
in the Agreement on Sanitary and Phytosanitary Measures (SPS Agreement).
It is not yet clear whether this Agreement will feature in the
new Round. Other issues that might be covered include biotechnology
and farm animal welfare.
9. The structure and scope of the wider negotiations
will not be decided until the Seattle Ministerial. It is an EU
aim that the negotiations should last no longer than three years,
and several other members have also said they would like a short
round. The EU, and the UK, also supports a comprehensive round
of negotiations covering a wide range of trade issues in order
to achieve significant further liberalisation of trade and promotion
of economic growth, set firmly in the context of sustainable development.
A comprehensive round should also make it easier to reach a deal
on the more difficult subjects, including agriculture.
NEGOTIATIONS ON
THE WTO AGREEMENT
ON AGRICULTURE
(a) Outcome of the Uruguay Round
10. The main requirements of the WTO Agreement on Agriculture
are described below. They apply to all WTO members, and to the
EU collectively.
Domestic Support
A 20 per cent global reduction in domestic support for agriculture
compared to a 1986-88 average reference level.
Support is measured by the Aggregate Measure of Support (the
AMS), which includes both market price support (internal support
price minus an external fixed reference price, multiplied by the
volume of production) and direct payments which are linked to
production. The commitment is global, not commodity-specific,
which allows members to weight reductions of levels of support
to suit their own conditions.
Two categories of support are exempt from reduction. Green
box support measures are those not linked to production and
therefore considered not to distort trade, for example research,
technical services and environmental payments. Blue box
support covers area and headage payments applied to limited amounts
of production, such as the EU's arable area payments and livestock
premiums: these are considered to be only partly linked to production.
Support measures below a threshold of 5 per cent of the value
of production of a commodity (10 per cent for developing countries)
are considered de minimis and need not therefore be recorded.
Imports
Comprehensive conversion of non-tariff barriers to imports
of agricultural products (eg import bans, quotas and voluntary
restraint agreements) into tariff equivalents.
Reduction of all tariffs and tariff equivalents by an average
of 36 per cent across all product/tariff lines from a 1986-88
average base level, over the implementation period, subject to
a minimum15 per cent reduction for any one line (the EU is reducing
all tariff equivalents by 36 per cent, except for sugar and skimmed
milk powder (SMP) which will be cut by 20 per cent, and all tariffs
by a minimum of 20 per cent).
Maintenance of existing import opportunities, by means of
current access quotas allowing a level of concessionary imports
equivalent to the 1986-88 average, and on the same concessionary
terms.
A guarantee that, where imports are low in relation to consumption,
import opportunities will be created, by means of minimum access
quotas at reduced tariff rates, initially representing 3 per cent
of domestic consumption and rising to 5 per cent by the end of
the implementation period.
For products where non-tariff barriers have been converted
into tariff equivalents, if the price of imports falls by more
than 10 per cent below a 1986-88 reference price, or import volumes
rise above a trigger level (calculated based on the size of existing
market access opportunities), then basic tariffs can be supplemented
by special safeguard duties.
For cereals and rice, under an entry price agreement made
bilaterally with the US and bound in the WTO, the amount of tariff
applied must not raise the duty-paid import price higher than
155 per cent of the feed grains intervention price for cereals
, and between 180 per cent and 267 per cent of support prices
for various varieties of husked and milled rice. This arrangement
was made because of US concerns that future reductions in EU support
prices for cereals would not necessarily lead to lower tariffs.
Exports
Reduction of the volume of subsidised exports by 21 per cent
(14 per cent for developing countries), compared to the average
level in 1986-90, over the implementation period.
Reduction of expenditure on subsidised exports by 36 per
cent (24 per cent for developing countries), compared to the average
level in 1986-90, over the implementation period.
For processed products, only the expenditure limit applies.
Peace clause
For a nine-year period, from 1995 to the end of 2003, domestic
support measures which conform to the Agriculture Agreement are
exempt from a range of challenges normally possible under WTO
rules restricting the use of subsidies, provided that support
to any specific commodity does not rise above the level decided
in 1992. WTO members also committed themselves to showing "due
restraint" in the application of countervailing duties on
the basis of agricultural export subsidies or domestic support
measures.
(b) Negotiating agenda for the forthcoming Round
11. Negotiations on the Agreement on Agriculture are
expected to focus on the three broad areas of domestic support,
imports and exports, where a framework for commitments already
exists as described above. Particular issues likely to feature
in the negotiations on each area are described in this section.
Domestic support (including support for environmental objectives)
12. The EU already has considerable scope for further
reductions in the AMS, and the recent round of CAP reforms has
increased this. Annex A Table 1 shows a projection of total EU
AMS compared with the Uruguay Round ceiling. As a result, in the
next round the EU could offer cuts in the AMS commitment without
changing the CAP. However, as also illustrated by Table 1, the
abolition of the blue box exemption (which would have the effect
of placing arable area and livestock headage payments in the EU's
AMS, using up most of the headroom under the Uruguay Round ceiling)
would severely reduce the scope for further commitments.
13. Following the recent reforms to US agricultural policy,
the EU is now the only major user of the blue box. There will
therefore be considerable pressure for change in this area, encouraging
a shift in emphasis to environmental and other green box measures.
One possibility would be a reduction commitment for blue box payments,
either as part of the AMS or a separate commitment, which would
require payments to be reduced over time (ie made degressive).
Another possibility would be for the EU to respond to pressure
on the blue box by decoupling payments from production—eg
by basing them on historic rather than current production or by
linking them to environmental objectives—so as to make them
eligible for the green box exemption.
14. Other possible changes in domestic support commitments
could also be envisaged, such as moves to tighten the rules for
the green box exemption to further reduce the possibility of a
link to production. There may also be pressure to make the AMS
product-specific, setting reduction commitments for particular
commodities. This would reduce the EU's flexibility to offset
the maintenance of support for one sector by reductions in another.
15. In the specific case of oilseeds, the Blair House
Agreement reached during negotiation of the Uruguay Round constrained
the area on which the EU could grant oilseeds support. The recent
Agenda 2000 reforms will reduce the rate of oilseeds area payment
to the level applied for cereals by 2002, creating a general rather
than a crop-specific payment rate and thus effectively disapplying
the Blair House limits.
16. The effect of changes in domestic support would be
different between developed and developing countries. Most developing
countries will want to keep open the possibility of pursuing development
policies in the agriculture sector. Exemptions under both the
green box and special and differential treatment provisions allow
for a wide range of development expenditure. In addition the rules
allow domestic support payments by these countries up to the 10
per cent de minimis level. While some developing countries
may argue for even greater flexibility, others see measures which
are not linked to production (such as support for infrastructure)
as being the best way forward.
Imports
17. Tariffication created some very high EU tariff rates
for agricultural products. Even after an average36 per cent cut
most still remain high enough to preclude imports. Annex A Table
2 shows the gaps that are likely to remain between EU institutional
prices and landed prices (ie world market price plus tariff) following
the implementation of Agenda 2000 and allowing for the expected
development of world prices.
18. As Table 2 indicates, the EU will be able to offer
further tariff reductions on a reasonably wide range of commodities
without affecting the internal market. Exceptions would, however,
appear to be pigmeat, poultrymeat and sugar. Greater competition
from imported produce would exert downward pressure on EU price
levels for these products.
19. Developing countries will generally give high priority
to securing greater access to developed country markets. Acknowledging
this the EU has already indicated that it believes that tariff
free access should be accorded by all developed countries to esentially
all products of the least developed countries and that the more
advanced developing countries could also make a contribution.
However, some of the developing countries already benefit greatly
from preferential and non-reciprocal market access to the EU such
as that enjoyed by African, Caribbean and Pacific countries under
the Lome Convention. Multilateral increased market access would
devalue those preferences which in the case of the commodity protocols
under the Lome Convention—bananas, rum, beef and veal, and
sugar— are particularly valuable concessions to the countries
concerned.
20. There are a number of options for greater market
access for all countries. Flat-rate cuts to tariffs, similar to
the Uruguay Round reductions are one option. Others are to focus
on reducing tariff peaks (tariffs which remain significantly above
the average level), or to reduce tariff escalation (ie, the imposition
of higher tariffs on processed products than on raw materials,
which discourages exporters from adding value). Combinations of
these approaches are of course also possible. If tariffs remain
at significant levels, then increasing tariff-rate quotas (TRQs)
is a further option for improving market access. Finally, there
are criticisms of the administration of TRQs and pressure to make
this simpler and more transparent in order to encourage their
use.
Exports
21. The limits on volumes of subsidised exports agreed
as part of the Uruguay Round are expected shortly to place considerable
pressure on EU markets for several commodities, leading to the
accumulation of intervention stocks. Surpluses of cereals, sugar,
beef and skimmed milk powder are projected to rise, and the EU's
relative share of the growing world cheese market is expected
to fall. Annex B Figs 1-4 show key MAFF projections. The expenditure
limits on export refunds for processed products are also now constraining
the EU's ability to export. Since the Agenda 2000 reforms did
not reduce EU support prices to world levels, these problems are
expected to continue, making further concessions on subsidised
exports extremely difficult for the EU to consider in the absence
of further CAP reform.
22. Some WTO members are likely to call for the elimination
of export subsidies to be agreed in the next Round, including
the use of generous export credits (mainly used by the US). Many
developing countries see export subsidies as especially harmful,
leading to produce being dumped on their markets, which inhibits
the growth of their own industry, leading to import dependency.
Net food importing developing countries have, however, benefited
in the past from subsidised and thus cheaper food supplies, and
some are concerned at the prospect of reduced availability of
these exports.
23. Other forms of export support are also likely to
be addressed to examine whether they create distortions in trade,
notably the role of State Trading Enterprises which exercise international
trade monopolies in some countries (for example the Canadian and
Australian Wheat Boards).
The Peace Clause
24. The constraints of the Peace Clause are generally
considered to have reduced the number of disputes in the agriculture
area. There could therefore be a strong incentive on many—though
not all—members to renew the clause at the end of 2003,
and the need to do so might encourge WTO members to reach the
necessary consensus on an agricultural reform package.
(c) Implications for EU agricultural policy
25. The EU adopted in March 1999 reforms to the Common
Agricultural Policy under the Agenda 2000 package (the subject
of the Agriculture Committee's Seventh Report of 29 June 1999).
One of the stated aims of these reforms was to prepare the EU
for further negotiations on agriculture in the forthcoming WTO
round.
26. The final outcome of the Agenda 2000 package will
move the EU in the direction of world prices for cereals, beef
and dairy products (although price cuts for dairy products were
postponed until 2005), but prices are unlikely to reach world
levels in most cases. Consequently the EU will remain constrained
by the existing WTO limits on subsidised exports, with internal
surpluses projected to rise. The accumulation of surpluses will
make it difficult for the EU to agree to further reductions in
subsidised exports, and increases in market access, through reduced-tariff
quotas, without additional reform. However, there are reviews
of several CAP regimes scheduled over the next few years (sugar
in 2000, cereals in 2002 and dairy in 2003) which could help to
address the problem.
27. The EU has a reasonable basis for offering further
tariff cuts (although some commodities will be sensitive as mentioned
above) and reductions in the AMS. However, pressure on the blue
box, which protects the EU's arable area and livestock headage
payments from reduction, will create difficulties for the EU which
has very limited room for manoeuvre in this area.
28. On 27 September 1999 the EU Agriculture Council adopted
unanimous conclusions setting out its recommendations on the EU's
approach to agriculture in the WTO round (copy at Annex C). The
Council recognises the importance of further liberalisation in
and expansion of trade for agricultural products as a contribution
to sustained and continued economic growth, and as foreseen in
Article 20 of the WTO Agreement on Agriculture. The Council also
confirms its resolve to continue developing the existing European
model of agriculture based on its multifunctional characteer (ie
its role in producing food, feed and fibre, in preserving the
rural environment and in contributing to the viability of rural
areas).
29. The decisions adopted within the framework of Agenda
2000 are considered to constitute essential elements of the EU
position for the WTO negotiations, with the EU's policy being
founded on the full Agenda 2000 package (ie including the inbuilt
reviews and the statements adopted at the time, reproduced at
Annex D).
(d) Government position
30. The Government supports further liberalisation of
agricultural trade in order to support sustainable development
and economic growth worldwide, as well as to improve opportunities
for our own exporters. Liberalisation is also firmly linked to
further reform of the CAP, where the Government supports the phasing
out of market price support and direct payments which are linked
to production, in order to reduce substantially the costs of the
CAP to consumers and taxpayers, and to encourage the development
of a viable and sustainable farming industry which is capable
of competing without ongoing production support. This will also
reduce the negative impact of the CAP on agriculture in developing
countries.
31. The Government also endorses the view that agriculture
is multifunctional in character and that it is important for the
WTO negotiations to take account of non-trade issues. Future commitments
should take full account of the social and environmental aspects
of sustainable agriculture as well as the need for a competitive
and viable industry. In pressing for further reductions in production-related
support, the Government has consistently emphasised the importance
of accompanying, targeted measures to conserve and enhance the
rural environment and promote the rural economy. Measures such
as the UK's agri-environment schemes fall into the green box and
are therefore not subject to reduction commitments.
32. The UK's approach to the next WTO round has been
and will continue to be developed in conjuction with our EU partners,
since the competence for international trade negotiations is at
EU level. It will also be important for the EU to work closely
with the countries who are applicants for EU membership. Within
that context, we will be arguing for the EU to adopt a flexible
approach to the negotiations, taking account of our offensive
interests in reducing trade barriers and improving the situation
of EU exporters as well as defensive interests, and also to take
account of the wider economic, environmental and development benefits
of trade liberalisation across the board. The Government is continuing
to develop its approach to the more specific issues likely to
feature in the negotiations, as discussed in section (b) above,
and has recently completed a consultation exercise covering all
these matters.
OTHER ISSUES
RELATING TO
AGRICULTURE
(a) The SPS Agreement
33. The Uruguay Round also introduced new rules governing
trade restrictions used to protect human, animal and plant health
in the Agreement on Sanitary and Phytosanitary Measures (SPS)
Agreement). Measures must be applied only to the extent necessary
to protect human, animal or plant life or health. They must be
based on sound science and must not arbitrarily or unjustifiably
discriminate between trading partners.
34. The SPS Agreement provides a balance between the
ability of countries to decide the appropriate level of protection
against health risks and the requirement for protective measures
to achieve that level of protection to be based on sound science.
It also permits (in Article 5.7) a precautionary approach by providing
for provisional measures to be adopted where information is still
insufficient, on the basis of available pertinent information
including that from the relevant international organisations.
However, countries must seek to obtain the additional information
necessary for a more objective assessment of risk and review the
measure accordingly within a resonable period of time.
35. The extent to which the SPS Agreement might figure
in the new round is not yet clear. Some countries are calling
for discussion for trade provisions affecting Genetically Modified
Organisms, which could include the SPS Agreement (although other
WTO disciplines could also be involved—see section (c) below).
The EU Agriculture Council has stated that the EU should seek
solutions which assure consumers that the WTO will not be used
to force on to the market products about whose safety there are
legitimate concerns, and that it would be useful to obtain clearer
general recognition of the precautionary principle. This does
not imply a reopening of the SPS Agreement in the Round, although
there might be scope for developing guidelines clarifying some
of its provisions.
36. The Government considers that the SPS Agreement provides
a good balance between the ability of governments to decide on
the appropriate level of protection against risks to human, animal
or plant health, and the requirement for measures to achieve that
level of protection to be based on sound science. The precautionary
approach allowed within the Agreement also balances the right
to take provisional measures against the obligation to seek further
information within a reasonable period. These limitations are
necessary: if the Agreement were to allow measures based only
on consumer concerns without justification, there would be implications
not just for our own policy measures but for measures taken by
third countries which could close off our export markets.
37. The Government therefore sees no need to reopen the
Agreement, but could support initiatives to develop guidelines
clarifying some of its provisions, for example to give clear definition
to the provisions of the precautionary approach in Article 5.7.
(b) Hormone growth-promoters
38. The Committe have specifically mentioned in their
request for evidence the dispute between the EU and the US and
Canada over imports of beef raised using hormone growth promoters.
The WTO ruled that the EU import ban was illegal under the terms
of the SPS Agreement, on the grounds that the EU had not conducted
a proper risk assessment. The European Commission is conducting
a new risk assessment which is unlikely to be complete until early-mid
2000. However, results of an interim study were made available
at the beginning of May 1999. The Commission claimed that the
interim study revealed new information which justified a continuation
of the ban.
39. The Government appointed a group of independent UK
experts to determine whether the new studies alter our own views
on the scientific basis of the ban. Following a critical evaluation
of the scientific reasoning and methods of argument adopted in
the key papers cited in the report of the Commission's Scientific
Committee on Veterinary Matters relating to Public Health (SCVPH),
the group were unable to support the conclusion reached by the
SCVPH that risks associated with the consumption of meat from
hormone-treated cattle may be greater than previously thought.
The Government therefore continues to consider that the EU ban
is not justified on scientific grounds.
(c) Restrictions on trade in genetically modified organisms
and products
40. The EU takes full account of potential impacts on
human health and the environment in its approval process for the
release and marketing of GMOs and GM products.
41. If the EU approval process for GM foods were to uncover
objective evidence of a risk to consumers, national or EU authorities
would already have the ability to impose trade restrictions on
that product under the terms of the SPS Agreement. No WTO rule
changes would be necessary to allow this action, provided it was
based on the kind of evidence outlined in section (a) above.
42. With regard to the impact of GMOs on the conservation
and sustainable use of biological diversity, the Government strongly
supports the development of a Biosafety Protocol to the UNEP Convention
on Biological Diversity. There is an urgent need for the Protocol
with the increased trade in living modified organisms and growing
concerns about their potential impact. Negotiations on the draft
protocol were suspended in February 1999 but are due to be resumed
in January 2000. The UK and EU aim is to agree a protocol which
will establish a legally-binding framework for the safe transboundary
movement of living modified organisms, including living modified
organisms for trade. The protocol should ensure that countries
are able to take account of legitimate concerns about environmental
impacts before allowing imports of a particular GMO.
43. Under the terms of the WTO's Technical Barriers to
Trade Agreement, technical regulations affecting trade must not
be more trade-restrictive than necessary to fulfil a legitimate
objective (including protection of human health or safety, animal
or plant life or health, or the environment). The Government has
however imposed a requirement for products containing GM material
to be labelled, in order to allow consumers to decide whether
to purchase them. While not required by Government, therefore,
the segregation of GM from non-GM products is increasingly occurring
as a commercial strategy on the part of suppliers in order to
facilitate labelling and consumer choice.
(d) Farm animal welfare
44. The relationship between farm animal welfare standards
and world trade rules is the subject of increasing discussion
in the UK and in the rest of the EU. European legislation has
been raising standards internally, most recently through Directive
99/74 which requires member states to ban the use of the battery
cage for laying hens from 2012. This gives rise to the concern
that EU producers will suffer a cost disadvantage compared with
their non-EU competitors, and that third countries will thus put
significant quantities of supplies on to the EU market which do
not meet the welfare standards demanded by consumers.
45. WTO rules do not allow members to take action against
low-welfare low-cost imports since these products are essentially
the same as domestic products ("like products" in WTO
terms) apart from in the method by which they have been produced.
Discrimination against them would be a restriction on trade which
is not allowed under the agreed exceptions to WTO rules (which
include, amongst other things, the protection of human, animal
and plant life and health, and the conservation of exhaustible
natural resources).
46. This has led to calls for the issue to be on the
agenda for the next WTO round, with a view to rule changes to
take account of farm animal welfare policies. In June, when agreeing
to the new directive on the welfare of laying hens, the Agriculture
Council and the Commission made a joint declaration calling for
international acknowledgement of animal welfare rules to be a
key point of the EU's negotiating brief for the WTO round. This
was repeated in the Council conclusions agreed on 27 September
(Annex C).
47. The Government strongly supports the further improvement
of farm animal welfare standards in the EU, and has backed calls
to include animal welfare standards in a new round of trade negotiations.
There is, however, very little support for this outside the EU.
It could well be counter-productive to make sweeping proposals
for WTO rule changes which will have virtually no chance of acceptance
by other WTO members. Some agricultural exporting countries, both
developed and developing, will see any changes in this area as
protectionist—particularly against the background of the
EU's traditionally defensive stance in negotiations on agricultural
trade.
48. The Government is therefore aiming to develop realistic
goals for making some progress on farm animal welfare in the Round.
Options might include clarifying within WTO rules whether governments
could require labelling of livestock products according to the
welfare standards of production, and including within the green
box under the Agreement on Agriculture any payments made to offset
the added costs of complying with higher welfare standards. The
Government will also seek to promote wider international discussion
of animal welfare issues outside the WTO, including the creation
of international consensus for a multilateral agreement on animal
welfare standards.
1 November 1999
Annex A
Table 1
AMS—ESTIMATES OF EU15 AGGREGATE MEASURE OF SUPPORT:
WITH AGENDA 2000
MILLION EURO Overview: If "blue box"
direct payments continue to be excluded from the AMS calculation
the EU is expected to remain broadly within 50-60 per cent of
the Uruguay Round domestic support ceiling over the forecast period.
However, including these direct aids is estimated to push the
EU to more than 90 per cent (within roughly 5 euro billion) of the AMS ceiling.
| 19951 | 19961
| 1997 | 1998 |
1999 | 2000 | 2001
| 2002 | 2003 |
2004 | 2005 | 2006
| 2007 | 2008 |
2009 | 2010 |
| Total price —support | 33,716
| 35,221 | 35,027 | 34,149
| 34,060 | 30,682 | 27,514
| 25,729 | 25,659 | 25,559
| 25,015 | 24,522 | 24,032
| 23,953 | 23,888 | 23,820
|
| —wheat | 2,593 | 2,972
| 2,841 | 3,019 | 3,024
| 2,186 | 1,367 | 1,392
| 1,417 | 1,441 | 1,466
| 1,491 | 1,516 | 1,541
| 1,566 | 1,591 |
| —coarse grains | 3,528
| 4,202 | 4,372 | 4,087
| 4,042 | 3,136 | 2,280
| 2,304 | 2,329 | 2,353
| 2,377 | 2,401 | 2,426
| 2,450 | 2,474 | 2,499
|
| —rice(a) | 507 | 527
| 527 | 478 | 430
| 430 | 430 | 430
| 430 | 430 | 430
| 430 | 430 | 430
| 430 | 430 |
| —white sugar(b) | 5,754
| 5,439 | 5,417 | 5,290
| 5,298 | 5,312 | 5,320
| 5,333 | 5,342 | 5,355
| 5,364 | 5,377 | 5,386
| 5,399 | 5,408 | 5,421
|
| —SMP | 1,782 | 1,727
| 1,680 | 1,723 | 1,714
| 1,759 | 1,822 | 1,794
| 1,734 | 1,672 | 1,477
| 1,287 | 1,113 | 1,058
| 1,006 | 954 |
| —butter | 4,210 | 4,371
| 4,334 | 4,362 | 4,357
| 4,402 | 4,464 | 4,436
| 4,380 | 4,323 | 3,968
| 3,628 | 3,292 | 3,251
| 3,208 | 3,164 |
| —beef | 13,962 | 14,080
| 13,953 | 13,288 | 13,291
| 11,554 | 9,928 | 8,138
| 8,125 | 8,081 | 8,029
| 8,005 | 7,966 | 7,923
| 7,893 | 7,859 |
| —olive oil(c) | 1,380 |
1,903 | 1,903 | 1,903
| 1,903 | 1,903 | 1,903
| 1,903 | 1,903 | 1,903
| 1,903 | 1,903 | 1,903
| 1,903 | 1,903 | 1,903
|
| Other AMS—support(d)(e) | 13,811
| 12,924 | 12,037 | 11,150
| 10,264 | 9,377 | 9,377
| 9,377 | 9,377 | 9,377
| 9,377 | 9,377 | 9,377
| 9,377 | 9,377 | 9,377
|
| Total AMS | 47,527
| 48,145 | 47,064
| 45,300 | 44,324
| 40,059 | 36,891
| 35,106 | 35,036
| 34,936 | 34,392
| 33,899 | 33,409
| 33,330 | 33,265
| 33,197 |
| GATT ceiling | 78,672 | 76,370
| 74,067 | 71,764 | 69,462
| 67,159 | 67,159 | 67,159
| 67,159 | 67,159 | 67,159
| 67,159 | 67,159 | 67,159
| 67,159 | 67,159 |
| Headroom | 31,145
| 28,225 | 27,003
| 26,464 | 25,138
| 27,100 | 30,268
| 32,053 | 32,123
| 32,223 | 32,767
| 33,260 | 33,750
| 33,829 | 33,894
| 33,962 |
| "Blue box" payments | 20,846
| 22,545 | 21,372 | 21,475
| 21,750 | 23,217 | 25,576
| 26,913 | 26,911 | 26,908
| 27,876 | 28,863 | 29,839
| 29,837 | 29,835 | 29,833
|
| Illustrative headroom with "blue box" payments
| 10,300 | 5,680
| 5,631 | 4,989 |
3,388 | 3,883 | 4,692
| 5,140 | 5,212 |
5,315 | 4,891 | 4,397
| 3,911 | 3,992 |
4,059 | 4,129 |
NOTES:
1 The Commission has recently submitted revised total AMS
estimates for 1995 and 1996 of 50 and 51 billion euro respectively.
(a) 15 per cent reduction in the rice intervention price
take place independently of Agenda 2000.
(b) No reductions in sugar quotas are assumed to take place.
Export commitments are likely to necessitate quota cuts to prevent
intervention stock accumulation.
(c) The olive oil regime is assumed to be unchanged from
1998-99.
(d) Comprises Equivalent Measures of Support (85 per cent)
and other product specific AMS (15 per cent). Equivalent commitments
cover budgetary outlays on horticulture, viniculture and some
textile regimes. Falls from 1995 to 2000 due to reform of the
fruit and vegetables regime, and assumed constant thereafter.
(e) The baseline included an AMS of around 1.2 becu per
year for Sheepmeat, but this was not included in the Commission's
AMS estimate and is therefore excluded from this total.
Annex A
Table 2
GAP BETWEEN LANDED AND EU INSTITUTIONAL PRICES(a)
—following complete implementation of GATT commitments
and Agenda 2000
TARIFF RATE
AT FINAL
BOUND TARIFF
| World price level: | "Low" forecast (d)
| "High" forecast(d) |
| Common Wheat(b) | 55% |
55% |
| Maize(b) | 55% | 55%
|
| Barley(b) | 55% | 55%
|
| Rice(c) | 44% | 44%
|
| White Sugar | 12% | 16%
|
| SMP | 55% | 75%
|
| Butter | 47% | 54%
|
| Beef | 62% | 79%
|
| Sheepmeat | 10% | 33%
|
| Pigmeat | 6% | 23%
|
| Eggs | 19% | 59%
|
| Poultry | 8% | 26%
|
(a) As percentage of institutional price in forecast
year (or estimated market price for intensive livestock products
and sheepmeat). Landed price equals world price plus maximum allowable
tariff under the GATT accord (including safeguard levies calculated
based on external reference prices, if applicable).
(b) Cereal landed prices are constrained at the maximum
of 155 per cent of the intervention prices.
(c) Both scenarios include 15 per cent cut in intervention
price by year 1999-2000 from 1996-97 levels agreed by the Council
of Ministers. Landed prices of husked indica rice are constrained
at 180 per cent of the intervention price. For this analysis the
intervention price is converted from paddy to husked equivalent.
For milled rice imports, MAFF estimates that the "gaps"
are 23 per cent and 36 per cent for the low and high world price
scenarios respectively.
(d) Where available "high" and "low"
forecast based on range of estimates by various forecasting agencies,
except for eggs which is based on +/--20 per cent of a central
forecast. Outside forecasts used are the 1999-2007 World Agricultural
Outlook (Food and Agricultural Policy Research Institute), and
the 1999-2004 OECD Agricultural Outlook.
WTO MILLENNIUM ROUND—COUNCIL
CONCLUSIONS
The Agriculture Council stresses that safeguarding the future
of the European model of agriculture, as an economic sector and
as a basis for sustainable development, is of fundamental importance
because of the multifunctional nature of Europe's agriculture
and the part agriculture plays in the economy, the environment
and landscape as well as for society. Thus the contribution of
agriculture remains vital to the European economy and society.
With this view and within the preparation of the European
Union's position in view of the upcoming Seattle Ministerial Conference
of the WTO the Agriculture Council has held an intensive discussion
on the agricultural aspects of these negotiations. At the end
of its deliberations, the Council has drawn the following conclusions:
I. GENERAL ASPECTS
1. The Council recognises the importance of the further
liberalisation in and expansion of trade for agriculatural prooducts
as a contribution to sustained and continued economic growth,
and as foreseen in Article 20 of the Agreement on Agriculture.
2. The Council also confirms that it is firmly resolved
to continue developing the existing European model of agriculture
based on its multifunctional character, as endorsed by the European
Council, and to act to assert its identity both inside and outside
the European Union.
Europen agriculture as an economic sector must be versatile,
sustainable, competitive and spread throughout Europe, including
the regions with specific problems. It must be capable of maintaining
the countryside, conserving nature and making a key contribution
to the vitality of rural life. It must also be able to respond
to consumer concerns and demands regarding food quality and safety,
environmental protection and the safeguarding of animal welfare.
3. The Council recalls the scale of the efforts made
to curb the budget and exercise rigour in implementing the Common
Agricultural Policy. It underlines that the efforts made notably
in terms of reducing support prices, represent an essential contribution
by the European Union in stabilising the world's agricultural
markets.
Therefore, as was decided by the European Council in Berlin,
the decisions adopted regarding the reform of the CAP within the
framework of Agenda 2000 constitute essential elements of the
European Union's position for the future multilateral trade negotiations
at the WTO.
Accordingly, the Union's policy in the forthcoming negotiations
shall be founded on the full Agenda 2000 package decided by the
European Council.
4. The Council recalls that negotiations on agriculture
will be based on the principles enshrined in Article 20 of the
Agreement on Agriculture. This implies that the long-term objective
of substantial progressive reductions in support and protection
resulting in fundamental reforms is an ongoing process. Moreover,
this process is conditioned by other concerns which must also
be taken into account, notably: the experience and effects of
implementing reduction commitments agreed in 1994, special and
differential treatment of developing countries, the objective
to establish a fair and market oriented agricultural trading system,
and non-trade concerns.
5. The Council sees a need to take an offensive line
within the forthcoming WTO negotiations. This is necessary in
order to achieve inter alia the following aims: taking
full advantage of the expansion in world trade while maintaining
and developing the European model of agriculture with its multifunctional
characteristics and with high quality and safety standards; placing
market liberalisation in a setting which brings international
recognition of the constraints imposed on European farmers and
agricultural products and does not call into question the principle
of the Community preference.
II. NEGOTIATING MODALITIES
6. The Council fully subscribes to the idea of a new
comprehensive WTO Round. Indeed, only a comprehensive approach
can produce substantive and balanced results which will be for
the benefit of all WTO members.
The Council also welcomes the approach already stated by
the European Union which is based on the principle of a "single
undertaking", ie nothing is decided until agreement has been
reached on all issues; all participants must accept and implement
all agreements.
III. EUROPEAN UNION'S
OBJECTIVES IN
THE NEGOTIATIONS
Bearing in mind the above considerations, the main objectives
of the European Union in the agricultural sectors should be the
following:
7. With regard to the improvement in access, the European
Union, as a major food exporter, must act with a view to sharing
in the expansion of world trade, which will be offered as a result
of the new Round. The European Union therefore, is prepared to
negotiate for lowering trade barriers in agriculture, bearing
in mind that this process is more advanced in some agricultural
sectors than in others. However, it must also obtain, as a counterpart,
improvements in market opportunities for its exporters. In connection
with the improved market access, protection for Community products,
whose reputation for quality is linked to geographical origin
or indication, should also be obtained.
8. The "Peace Clause" and the "Special
Safeguard Clause" have proved to be very useful instruments
in the implementation of the Uruguay Round. Similar instruments
will be needed in the future. This is necessary in order to provide
legal security for the outcome of the negotiation and to enable
abnormally low price offers or import surges to be dealt with
without frequent recourse to more disruptive action under the
general safeguard clause.
9. It is essential, for the affirmation of the CAP, to
maintain the balance of the present elements of the Agreement
on Agriculture, in particular those which concern modalities relating
to domestic support. This remains an essential element in providing
assistance to WTO members to move away from price support towards
more transparent and non-distorting policies. Furthermore, direct
aids can contribute to some of the missions of multifunctional
agriculture particularly in the field of rural development.
10. The Council is prepared to continue to negotiate
the process of reductions in export subsidies provided that all
such support is treated on equal basis. Modalities of export support
commitments should be reviewed. For the Council, it is imperative
to introduce discipline on the use of export credits. Moreover,
appropriate solutions must be found to other less transparent
forms of export support such as state trading and the provisions
of food aid.
11. The Council considers that the European Union should
be prepared to negotiate reductions in support provided that,
in particular, the concept of "blue and green" boxes
will continue.
12. The Council considers that an appropriate balance
has to be struck in the outcome of the negotiations between trade
and non-trade issues, most of which result from the multifunctional
role of agriculture or are intended to answer the legitimate concerns
of the rural world and of cunsumers. This applies in particular
to the multifunctional role of agriculture including environmental
protection, safety and quality of food and animal welfare.
The Council considers it essential to ensure that progress
on trade issues does not damage the ability of those employed
in agriculture to supply public goods, in particular as regards
the environment and the sustained vitality of rural areas. For
the Council, direct aid measures with no or minimal trade impact
must have an important role to play in this context.
13. With regard to food safety and quality, the European
Union should seek solutions which assure consumers that the WTO
will not be used to force onto the market products about whose
safety there are legitimate concerns and which allow the European
Union to establish the appropriate level of protection. Without
prejudice to the provisions of the disputes settlement procedure,
it would be useful to obtain clearer general recognition of the
precautionary principle.
Additional concerns of consumers can also in part be met
by providing more information through inter alia the development
of labelling schemes.
Without prejudging at this stage the nature of possible solutions,
the Council, stressing the need to ensure equal conditions of
competition between European Union and third country producers,
considers that international acknowledgement of animal welfare
rules must be one of the key points of the negotiating brief for
the WTO Millennium Round.
IV. OTHER ASPECTS
OF THE
NEGOTIATIONS
14. Recognising the need for a special and differential
treatment for the developing countries, the Council shares the
view that the new Round should provide benefits to developing
countries and assist the integration of those countries, particularly
the least developed countries, into the international trade system.
To this effect, the European Union should be prepared, within
the context of a joint effort amongst developed countries, to
go beyond the regime already applied to them within the GSP and
the Lome Agreement. Furthermore, the Council recalls that the
European Community has proposed that WTO Ministers meeting at
Seattle enter into the commitment to ensure duty-free market access
no later than the end of the new round of negotiations for essentially
all products exported by the least-developed countries.
15. The Council recalls that the enlargement of the EU
will have a profound impact on European agriculture and should
contribute to the stabilisation and development of world markets
through the application of Community policies. Without prejudice
to Article XXIV (6) of the GATT, this should be given its due
weight in the negotiations.
16. The Agriculture Council intends to play an active
role in the forthcoming negotiations and therefore expects to
be regularly informed on their evolution in order that it can
provide an appropriate input when necessary.
27 September 1999
ANNEX D
STATEMENTS ADOPTED AT THE BERLIN EUROPEAN COUNCIL, MARCH
1999
"The European Council considers that the decisions adopted
regarding the reform of the CAP within the framework of Agenda
2000 will constitute essential elements in defining the Commission's
negotiating mandate for the future multilateral trade negotiations
in the WTO."
"The European Council considers that further price reductions
are necessary in order to facilitate the enlargement with the
new member states and the future multilateral trade negotiation
at the WTO. The European Council requests the new Commission to
put forward the appropriate proposals."
|
