Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Examination of Witnesses (Questions 1-19)




  1. David Roberts, Deputy-Director General of DGVI in Brussels, thank you very much for making the journey to be with us. We do appreciate that you have to leave at 12 because I think you are going to Japan.
  (Mr Roberts) To be quite honest, Chairman, I was going to Japan but Mr Fischler was taken ill last week with salmonella. That has caused a series of events, the conclusion of which is the postponement of Japan. However, my train is still going at the same time as it always does.

  2. We are presenting our foot-and-mouth report at a quarter-past, so the deadline remains the same. We are doing a report into what farming might look like in a regime less dependent on subsidy and support than now. We aim to try and come up with various scenarios to test how people would react to that, so we are not postulating a regime in which there is no support for agriculture—that would be a fairly brave thing to do, I think, in the present circumstances—but what we are anxious to do is to begin by looking at, in a sense, the architecture, the politics, the constraints upon decision-taking, so that we do not fall into the trap of just talking as if you have a completely free reign over policy, because obviously the establishment of the World Trade Organisation, the European Union, the legacy of Uruguay—all those are quite significant factors determining the scope for decision-making. I wonder if I could ask you to begin by giving us an appreciation of what you think the mood is amongst European Union Member States about the desirability of change, the need for change in agriculture and the pressures upon them? I know there is a series of elections coming, but try and, in a sense, abstract a little bit from that. How would you assess the appetite for change in the sense about the policy at the moment?
  (Mr Roberts) Mr Chairman, that is a very difficult question. I think in 2002, the beginning of 2003, some really quite difficult choices are going to have to be made, and I think the difficulty is that those who want very radical reform of the CAP will see in various circumstances the reason why we absolutely must have very major reform, and those who do not want major reform of the CAP will find equally compelling reasons why we absolutely must not. So it is a very difficult situation to call. On the external side and external considerations, you have mentioned, Mr Chairman, the WTO negotiations and, of course, we will be under pressure there to make more deep cuts in our trade distorting support, in our export subsidies or even elimination of our export subsidies, and we will be pressed to give much more market access. All of that would imply a fairly radical shake-up. There are also other pressures. There are the negotiations with Mercosur, if and when Mercosur is able to resume serious negotiations if the Argentinians are able to overcome their crisis. There is an undertaking in the Cotonou Agreement to start to negotiate free trade agreements with the ACP countries in 2002, and we already have given duty and, soon, tariff-free quota access to all products to the least developed countries, which will of course have its own impact on the ACP negotiations. If you look externally and if you look, also, at the Johannesburg Summit, which is coming up at the end of this year, which is about sustainable development (which will certainly be used by developing countries to argue that for many of them development means agricultural development, and agricultural development implies better access terms to the developed countries) you see cast-iron reasons for a very great change in the CAP. If you look at enlargement, however, the question is a little bit more difficult, because as regards enlargement there is the decision of Heads of States and Governments (which is the normal decision in all enlargements), that the negotiations will take place on the basis of the existing acquis; and that the negotiations will be finished this year. It is clear that if that had not been the position there could be no serious negotiations this year because we would have to complete our internal reforms first; and if we have to complete our internal reforms first we could not conclude the accession negotiations until late in 2003 and then we would be very close to beginning of the work on the next financial perspectives. So the prospect, therefore, is that we do reach agreement with the candidate countries, essentially on the terms on which they adopt the acquis, but it will be possible, I think, to make that decision such that it does not prevent the acquis being changed. Nevertheless, one can well imagine that once the candidates have got an undertaking on when and how much they are going to get in direct payments, for example, even if that is expressed as a percentage of the total community support, they will convert that percentage into a figure based on the existing level of direct payments, they will convert that from the euro into local currencies and that is what they will be telling their electorates is in prospect when they join. That arm of our equation makes major change, at the moment, rather difficult. So you have the two external influences, one rather conservative, the other very radical, and I think both points of view are represented in Member States. There are Member States who are always in favour of reforming the CAP: there is the United Kingdom, the Swedes and the Danes, who have traditionally looked for a more liberal Common Agricultural Policy.

  3. Can I just interrupt a minute, because you said something very important. It is conventional wisdom—here, certainly—that enlargement is a great force for change for the CAP because "we could not possibly afford to bring in all these new members with an unreformed CAP". What you have just said, I think, is that actually enlargement is a force against change because we have to agree enlargement before CAP reform is completed and once people have come into the European Union on the basis of a certain acquis then there is far less likely to be subsequent reform in the light of promises made to the electorate. Is that a fair summary?
  (Mr Roberts) I am glad you interrupted me to ask the question, because I want to put that rather carefully. Enlargement, I think, is an event which allows those who want to argue for reform to argue for reform and those who want to argue for conservatism to have the means of enforcing conservatism.

  4. What do you think?
  (Mr Roberts) I thought you might ask me that. I want, before even replying, to say that I have been a civil servant even longer than Sir Humphrey, because Sir Humphrey would have retired by the time he got to my age. I think there have been various points in my career when it seemed to me that we were facing the irresistible force approaching the immovable object. The two clash. It is very difficult to see the synthesis that will come out of that. I think that what we will see is something which is considerably less radical than those who want it to be radical, but it will not be possible to maintain things as they are. I think it will not be possible to maintain things as they are, mostly, particularly, because of export subsidies. In Doha we were arguing a great deal about export subsidies but the argument was not about whether we cut them but whether we accepted that the end-point of the cutting would be elimination. Even another very substantial cut will certainly give an arm to those who argue for more liberal internal policies, and therefore I think no change at all is not a realistic prospect.

  5. We have already seen the interlocking nature of the various phases. Could you set out the timetable for us of the mid-term review, the WTO, the accession negotiations, because it would be rather helpful to have that bit of calendar?
  (Mr Roberts) Yes, Mr Chairman. The position is that we will complete the accession negotiations in the course of 2002, which means that we, the Commission, will have to come out with draft common positions on the tough issues in the very near future, and we will be doing that in the very near future. The steps to be done on enlargement now are for the Commission to make a proposal to the Council as to what our common position should be, for the Council to agree it and present it to the candidates and the candidates, we hope, to accept it or to negotiate a conclusion based on that position. That is 2002 on the enlargement side. On the mid-term review, we are anticipating making our proposals in about the middle of the year. We anticipate that that will involve negotiations running on into the middle of 2003. As regards the WTO, Doha specified that there would be agreement on modalities by the 31 March 2003. Modalities are a very key part of the WTO negotiations and therefore very difficult to achieve because they lay down the ground rules on which all members have to submit their offers, which they should do by the time of the fifth ministerial meeting, which will be sometime later in 2003.

Mr Mitchell

  6. You put that answer in terms of the attitudes of existing states. What do we know about the expectations of the applicant states? Have they been given any indication that they have a right to expect the application of the CAP and that benefits will flow their way? Are they being conditioned to expect nothing? They need to know that in terms of whether an application for entry if worthwhile. What information have they been given?
  (Mr Roberts) They have been told that as regards direct payments we will take a decision at a later stage of the negotiations, which unfortunately is now. They have told us that they want direct payments in full from the time of entry. They know that although there was nothing said in Agenda 2000 the financial assumptions underlying Agenda 2000 were that they would not be receiving direct payments in the years running up to 2006. However, they also know that Agenda 2000 assumed entry much earlier than is now taking place, so they know, I suspect, that there is some room within the budget limits for them to get some payments.

Mr Todd

  7. Can we go back to the Uruguay Round. Can I ask whether we have actually complied with our obligations under the Uruguay Round in terms of agriculture?
  (Mr Roberts) Yes, we have. Every year we submit to the Agriculture Committee in Geneva the reports on how much we have opened in terms of tariff quotas, how much export subsidy we have paid and the level of our domestic support—the commitments that we undertook. We have been able to report honestly that we are within our commitments.

  8. You have had no objections to that, or queries as to whether that is accurate?
  (Mr Roberts) The process in the Agriculture Committee in Geneva is that when these reports are made the other members can query them, and of course we have had a lot of queries. We have been able to answer them to the satisfaction of members. What I cannot say, of course, is that at some point or other some member might argue that we are in breach of our commitments, as they did indeed in relation to bananas, for example, and we can lose cases. The bananas case was not a matter of our Uruguay Round commitments or rather not specifically our agriculture ones; they were breaches of the rules of GATT, and GATS rules on trade and services. In terms of what I think you mean by our commitments, our export support and on access, we have not faced any challenge.

  9. What conclusions have you reached on the impact on both our regime and on the European economy of complying with the Uruguay Round obligations?
  (Mr Roberts) That is quite a difficult question because what we did in the Uruguay Round was to change our policy in 1992 with a view to resolving problems that were arising internally, and those changes made it possible to recommend to the Council the adoption of the Uruguay Round commitments as being compatible with that policy. So it is quite difficult to separate out the effects of the Round and the effects of the policy changes we made in the knowledge of the Round. What I can say is that in terms of our exports, the value of our agricultural exports has actually risen. That is largely because of increases in our exports of processed products, which has been possible because the price of cereals, which are part of the component of our export subsidies on processed products, have for a lot of the time been lower than world prices. So no refund was needed, but we had an amount of refund which would be given based on what we have been given in the past. So we have seen an increase in exports of high-value products. We have seen no significant problem in complying with our commitments as regards cereals. As regards beef and some dairy products, particularly in the first year, we had to take action in terms of cutting export subsidies in order to remain within the limits. I think, however, to a large extent we learned to live within the limits and we have not seen a crisis on the dairy market arising from that. As far as beef is concerned, I think it is quite impossible to sort out the effects of the Round and the effects of BSE. At present we are well within our commitment because BSE has had the effect of closing many markets to us. I think, in general, one can say we have lived relatively comfortably with our Uruguay Round commitments, but that is because we took policy changes with those commitments in mind.

  10. Any difficulties about meeting those commitments into the future? From what you have said it does not sound as if there should be.
  (Mr Roberts) The existing commitments I think we can continue to live with, apart from other factors and, also, depending on imponderables, like the rate of exchange of the euro. I should perhaps have said in my reply to the first question that one of the reasons why we have found things more comfortable than we might otherwise have done is that the euro has been relatively weak since it came into effect, and that has had the effect of reducing our prices relative to world prices. If that were reversed and the euro became very strong, then, of course, we would have much greater difficulties, even with our existing commitments. At present we are living well with our existing commitments.

  11. Can we turn to Doha. It may have been inflated in the media, but it was a little difficult to distinguish what the European Union position was in agricultural negotiations with a backdrop of loud noises from French quarters as to their position. I had understood that the European Union took a common position in negotiations at Doha. How was it that it appeared that one Member State appeared to be taking a separate stance?
  (Mr Roberts) The issue where the appearance of different positions arose was—

  12. Was it only an appearance as opposed to a reality?
  (Mr Roberts) It was only an appearance in the sense that the Commission, which speaks for the Community in the WTO, spoke throughout on the basis of the mandate which we had been given by all 15 Member States. There was, however, a moment when the chairman of the conference was able to say (although I am not sure if it was totally true but no one wanted to deny it at that point) that everyone except the Community could accept the text which had been proposed before Doha, the text which had emerged from Mr Harbinson's consultations before Doha. The Community was still arguing about the phrase "with a view to phasing out all forms of export subsidies". At that moment, I think, some Member States may have let it be known that they were more flexible than others in relation to that position. That is the point which I think you are referring to, when there was the impression that France would be taking a tougher stance than others. Our position was that we were prepared to reduce export subsidies on condition that the forms of export subsidisation practised by other members of the WTO were also disciplined, and that was set out in our mandate. The other point of principle that we were taking was that the Doha Declaration taken as a whole was setting the agenda for talks, not actually setting the end-point, and "with a view to phasing out" was presented as being a commitment to an end-point which was out of tune with the whole of the rest of the declaration. So there was just that one day when we were apparently isolated and when some of the Member States were suggesting that they would not find it too difficult to join the majority.

  13. What do we learn from that? Negotiating collectively is difficult, and making sure that the mandate is entirely clear to all Member States and that Member States adhere is pretty critical to successful negotiations. Certainly the United Kingdom representatives have consistently argued to this Committee that there is an EU position that is taken and there is no separate United Kingdom stance to be adopted on matters of this kind, once the position has been adopted. Does this indicate that there is, perhaps, some weakness in the process of defining the mandate and authorising negotiations to proceed?
  (Mr Roberts) No, I do not think it was that. I think the point was that the argument about whether there should be a commitment to phase out export subsidies had been rumbling on since even before Seattle, and the text was cleverly designed to be capable of two interpretations; it was "reduction of all forms of export subsidies with a view to phasing out". It was possible to argue that all that meant was that one was going to reduce export subsidies and the mathematical formulae used for doing so would be one which would eventually lead to zero, in which case it would have been compatible with our mandate. On the other hand, you could say—and it was certainly true from the way the Cairns Group was speaking—that it really meant, no, no, you were committing yourself to reductions with a view to getting to the end of them in this round. Between those two interpretations of what the phrase meant you could obviously have two interpretations of how we should react when the rest of the world appeared able to accept it. So it was not a question of ambiguity on our mandate, it was constructive ambiguity in the text with which we were presented.

  14. As you said, this particular ambiguity was not new, was it, and one would have expected the European Union to have resolved the stance on this ambiguity prior to turning up at the negotiation. It would certainly have given the impression that it was possible to fragment the EU position relatively easily within the negotiating process. Would you not agree?
  (Mr Roberts) A good negotiator prepares for every negotiation and every eventuality, but preparing for every eventuality in a council of 15 Member States which has to take a position on all aspects is, I think, a little idealistic. I think we knew before we got there that all were prepared to take the line that this was not an acceptable form of words. To ask "If the rest of the deal meets the rest of the mandate, is this form of words (which is, anyway, ambiguous) so bad that we must risk the rest of the negotiation in order to oppose it?" is a question which, quite honestly, you cannot discuss openly in council before you get to that situation. I think that is just impossible.

  15. Turning to what was at Doha, do you believe that we now have the scope to pursue the objectives that the European Union have set for this Round?
  (Mr Roberts) Do you mean in agriculture, or do you mean across the board?

  16. Yes, in agriculture.
  (Mr Roberts) Yes. I am sorry if I am speaking at great length but sometimes it is important to get the context. The big argument about the agriculture text, both in Seattle and Doha, was between those who believed that if you are going to put agriculture into a new round it should have a new and more ambitious mandate than what is set out in the Uruguay Round conclusions, and those who said that what we are intending is that the negotiations based on Article 20 of the Uruguay Round agreement should be given an impetus and a deadline by being included in the major round. The text which Harbinson put together was cleverly designed to be capable of both interpretations. The outcome, particularly with the additional words which are negotiated in Doha, is certainly capable of the interpretation which we have always wanted to place on it, which is that it is the negotiation itself and not the decision to open the negotiation which will determine the outcome. Therefore I can answer your question "yes".

  17. It certainly sounds as if you will be at those negotiations for sometime, if the purpose is to maintain ambiguity for as long as possible. Is that a reasonable view?
  (Mr Roberts) Yes and no!

  18. It is, if part of the strategy is to defer decisions for as long as possible on issues which really do need to be resolved. Does the Commission need a fresh and, perhaps, sharper mandate to enter the negotiations in earnest?
  (Mr Roberts) Let me just explain what I meant by "yes and no". Assuming that the deal is something like the Uruguay Round deal, it will involve reducing tariffs by X per cent, our AMS by Y per cent and increasing our tariff quotas, perhaps, or whatever. There will be percentages in the numbers and there cannot be ambiguity about that. Where there can be ambiguity—and probably inevitably in life there will be—will be on the impact, because the impact will depend on other matters. There cannot be an ambiguous settlement in the sense that the figures are not clear. Second point: I do not think there is anything very special about the Doha negotiation in that sense, except that it is extremely complicated to negotiate with 148 countries (the number goes up every few days). It is a very complicated negotiation. To take something which seems totally different, if you have a train strike and the parties are trying to come together to resolve it, a lot of the negotiation is about the terms on which they agree to meet. I think you find exactly the same situation when we were in Doha; that some say they will only come if it is clear that more money is on the table, and the employers usually say "We need to come to see if we can find an equitable solution". Then somebody, depending on the era, has to produce a form of words which allows them both to say "We met our pre-conditions for negotiation" so that they can get together and actually find a solution. So it is the same situation. It is not all that unusual.

  19. Do you anticipate that the round of reforms that have just been implemented are a reasonable basis for a negotiating position in this round? The Agenda 2000 plan has been seen as the basis of the EU position in the WTO round. Have you heard anything or seen anything in this exercise so far that makes you think that will need to be re-addressed with some rigour?
  (Mr Roberts) The decision of Heads of Government at Berlin was that the decisions in Berlin were supposed to be an essential element of our negotiating strategy for the round, but the Heads of Government in Berlin also foresaw the mid-term review, for example. So when we look at the mid-term review we will have to look at the situation in the negotiations as well as problems, insofar as we identify them, in the internal application. I think it is clear that we could not, on the basis of Agenda 2000, meet all the aspirations of liberals, but, on the other hand, we can go at least as far and maybe further than the countries to the right of us—if I might put it that way—Japan, Korea, and that group of countries. So it is too early to say that we would need to do more, but we have in any case to consider whether to do more in the context of the mid-term review.

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