Examination of Witnesses (Questions 200-210)
COMMISSIONER FRANZ
FISCHLER AND
MS MAEVE
DORAN
THURSDAY 20 MARCH 2003
200. How do we, in areas where we do export
and do have subsidy—
(Commissioner Fischler) One always has to be careful.
There is one exemption. In mainland Europe there is no support
of tomato production, but there is a support in the farthermost
regions—for example, in the Canary Islands.
201. May I ask one further and different question?
In terms of European development assistance policy, there is now
a developing policy of a poverty focus for European development
assistance. If Doha is to be a development round, should we not
have a poverty focus for the CAP, both in terms of its impact
on other countries, developing countries, and in terms of where
the subsidies within the European Union go?
(Commissioner Fischler) As I see it, what we need
first is that we must do, and continue to do, a lot, so that most
of these poor countries are able to participate in the negotiations.
Part of the problem is that they do not understand what is at
stake in these negotiations, and they do not have the capacity
to follow the negotiations. Therefore they do not have the possibility
to engage themselves actively in the negotiations. We organised
several seminars, meetings and so on, but when I was in the last
Mini Ministerial in Tokyo most of the Africans kept quiet—they
did not say a word. I think that this is what we have to change
first. Only when they are able to make their point, to defend
themselves, to go on the offensive and to think about the economic
impact of new WTO rules, will it be possible to have a more balanced
negotiation.
Tony Worthington
202. Recently, President Chirac produced an
initiative for Africa. What stance are you taking on that?
(Commissioner Fischler) In my view, this initiative
is basically a constructive contribution to the process, but it
is still not clear which countries are covered under this initiative.
It is not perfectly clear what is meant by this so-called "moratorium".
We are in close contact meanwhile with the French authorities,
because it also came as a surprise to us. It was not announced
in advance that such an initiative would be taken. Therefore,
we now have to analyse what they should have meant, or have meant,
or what they thought to mean—however you put it! We are
in close contact with the French authorities, therefore, to see
in what way such a thing could be implemented because there are
some elements which are still unclear. Obviously the French authorities
were not aware of all the consequences of their idea. We will
complete this work as soon as possible and hope, within a few
weeks, to have a clear position, because there is another Summit
foreseen for 16 June.
203. So we will know the response by then?
(Commissioner Fischler) Even before. We must know
it before.
204. Could I take you back briefly to something
you said earlier about the abuse of food aid? I think I know what
you mean by that, but I want to be clear that what you mean is
the same as my understanding.
(Commissioner Fischler) I will give you a simple example.
The last statistics we have show that in the US they have about
200,000 tonnes of skimmed milk powder stocks. So—surprise,
surprise!—they are now offering a food aid programme, where
they give 120,000 tonnes of skimmed milk powder. Nobody asked
for it, but it is an offer. I could show you a graph—we
do not have it here—which would show you that in the US,
when the prices for a certain commodity are going down, the food
aid always increases, and also the other way round. It is always
totally independent, however, from the real demand in the poor
countries. We think that this is nothing other than hidden export
subsidisation. We have a different system here. Our humanitarian
food aid programmes are constructed in a totally different way.
We offer a certain amount of money and the receiving countries
are free to buy the product where they want to buy it. Usually
they buy it in their own region, because then they have lower
transport costs and so on. I think that this is real food aid—but
not that we send our surpluses to Central Africa or somewhere.
Mr Battle: They will not find the water
to mix with the powder—in Iraq.
Mr Khabra
205. You mentioned the Cotonou Agreement. You
are aware of the coffee prices. What do you think should be done
and what is your opinion about the coffee rescue plan, which is
sponsored by Oxfam? May I also ask you a crude question? You mentioned
earlier that there should be a level playing field opportunity
between the EU and the US as far as agriculture is concerned.
Do you not think that if you reduced the subsidy to zero, there
would be an opportunity for developing countries to have a level
playing field situation? Could you tell us which of the countries
would be most opposed to the reduction of subsidy to zero?
(Commissioner Fischler) Let me deal first with your
question on coffee. If you look at the coffee market, you will
see that we have very low tariffs for the import of raw coffee
and we have higher tariffs for the import of roasted coffee. This
has nothing to do with agriculture, therefore; this is the protection
of Nestlé—and some other "small" companies.
This is the reality, and I think that we have to speak about it.
It is something which we really should discuss. Regarding your
second question, as I said at the beginning, the decisive question
is not whether or not we give support, but it is the way in which
we give support. What we have to reduce—or, in the best
case, phase out—is that we give trade-distorting support.
Therefore, the question is not whether we and the Americans should
go to zero with our support and that then we have solved the problem.
You should not forget that, first of all, in our agricultural
policy we do not have as the single objective the production of
agricultural goods. There are many other objectives. For example,
the protection of the environment and many other things—and
more and more objectives of that type. It is clear, and easy to
demonstrate, that our standards regarding the environment and
many other things are the highest in the world. To keep these
standards, maintain our landscapes and so on, is not without cost.
If we are speaking here about competition, equal footing, or a
level playing field, then it is clear that, as long as we pay
the costs of these additional public goods, there is no great
distortion and no competition problem. The real political question
for the future, therefore, is how we support agriculture. This
is the point, and it is my point exactly when I say that I criticise
our US friends that they have done a U-turn and are now reintroducing
heavily trade-distorting measures—with the effect that the
American farmers no longer get any signals from the markets. You
can see this. You can see the negative effects of that policy.
Meanwhile, FAPRI—a group of researchers from Iowa University—have
calculated to what degree in the future we will have lower world
market prices, because of this new policy. I think that these
are the main problems on which we should focus.
Mr Walter
206. I want to challenge the assumptions in
that last answer, Commissioner. You work on the basis that decoupling
payments from export subsidies, trade support, direct subsidies
to production, and re-bundling them as a single payment to farmers,
putting them in the development box or whatever, is not trade
distorting. I put it to you that if we in the European Union are
handing out cheques to the sum of
50 billion to our agricultural sector, that kind
of support—not available in the developing world, but we
are paying it to our farmers, who will just continue to produce
traditionally, whether it be sheep meat or beef or whatever—is
a subsidy, and that is trade-distorting because it is not available
to the others.
(Commissioner Fischler) But the others do not have
the same obligations—I am sorry. The question is what do
we want. Do we want in Europe an agriculture structure which is
the same as in Brazil? Okay, then we should start immediately,
because a maximum of 10% to 20% of our present farmers can survive.
But do not believe that you will then have the same quality of
European landscape. You will have differences. You will have the
same situation as you have when you go to Brazil and look at what
is going on there. I do not speak of the burning of the rainforest:
there are further problems. For example, look at what is in their
groundwater and which residues they have in their soils, and so
on. The question is, either we say we want a European model of
agriculture—which means an agriculture which is more than
the production of agricultural goods—or we must accept that
our remaining farmers then have to compete with the most competitive
farmers in the world. Then you must give these farmers the same
opportunities. What you cannot do—and what you, for example,
do in the UK now—is introduce higher and higher standards,
more and more restrictions, more and more landscape protection,
more and more natural reserves, and I do not know what else, but
that this should all be done at the price level of a Brazilian
farmer. No, this will not work.
Mr Colman
207. I was going to ask what your view was about
Everything But Arms, in terms of seeing how this would work in
terms of applying to all of sub-Saharan Africa, rather than just
on EBA—and if you wanted to add anything further in terms
of how you see the sugar regime change going forward.
(Commissioner Fischler) To be clear, Everything But
Arms is the best guarantee that the present sugar regime in Europe
cannot survive. This is the reality. The phasing-in of the opening
of the sugar market is already decided and, if we do not reform
the sugar sector in due time, then the system will just collapse.
208. And all sub-Saharan African countries being
involved, not simply the EBA countries?
(Commissioner Fischler) This is not the French proposal.
The French proposal is, so to speak, a kind of best practice model:
that the best conditions given by the different developed countries
to a certain sub-Saharan African country should apply to all the
developed countries. This is what the basic concept of the Chirac
proposal means.
(Ms Doran) As I understand your question, if EBA is
extended to the other African countries or other countries, it
means that you are extending it from the least developed to the
more developed developing countries, which might be self-defeating—because
the more developed developing countries will then wipe out the
original beneficiaries of EBA, which were the least developed
developing countries.
209. For example, Uganda and Tanzania are within
EBA; Kenya is not. So would you extend EBA to a country like Kenya?
Otherwise, it will be massively trade-distorting in East Africa—just
as an example.
(Commissioner Fischler) We must be careful in saying,
okay, we extend it to Kenya, but why then only to Kenya and not
to 50 others? We need a concept here. We cannot deal with this
individually and say, "Okay, for whatever reasons, we enlarge
it or extend it to Kenya but not to other countries".
Chairman
210. These negotiations take on a political
language and shorthand all of their own. What is your position
on the "development box" and how does the EU's "food
security box" differ from the developing countries' proposal
for a "development box"?
(Commissioner Fischler) First of all, let me be clear.
The point is not how we name this thing; the point is what is
in the box. I know that there are some African countries fighting
very hard for the development box but, if you ask them "What
do you mean by that? What should be in the box?", you do
not get much of an answer. It is better, therefore, that we continue
with precise measures, which we should provide to the poor developing
countries. If they call these measures "development box",
it is fine with us. We have no problem with that. The decisive
thing is that—for example, in the proposal we made in the
Doha Round—we say at least 50% of their exports—
(Ms Doran) Developed country imports from developing
countries.
(Commissioner Fischler) Their exports to us should
be without any restrictions.
Chairman: Commissioner, thank you. You
have been extremely generous with your time, which is very much
appreciated. If your officials could let us have that graph of
US food aid, that would be helpful as part of the evidence, because
it is a matter of considerable interest[1].
John Battle was looking very cynical when he said they could not
have much dried milk in Baghdad until they sorted out the water
supply, so we will see if skimmed milk is offered in the humanitarian
programme! Thank you very much for your time. It has helped us
understand a whole number of concepts much more clearly.
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