Memorandum submitted by the Country Land
and Business Association
THE IMPORTANCE FOR EU AGRICULTURE OF A SECURE
FRAMEWORK OF PROPERTY RIGHTS IN THE ACCEDING MEMBER STATES
INTRODUCTION
1. Initially, the Country Land and Business
Association (CLA) had not planned to submit written evidence to
this inquiry. As an organisation representing 40,000 farming and
other land based rural businesses, we had taken an interest in
the accession negotiations, since the accession of the 10 new
member states could be expected to provide farmers in the EU 15
with increasing competition over time depending on these terms,
but now the terms of the accession are agreed and the die is cast.
We have, rather, concentrated our resources in recent months on
the detailed terms of the CAP reform implementation and on various
UK Government policies affecting the rural economy, such as planning
and housing.
2. However, there is another aspect of EU enlargement,
namely the alignment of legislation in the acceding states on
the rights of ownership, where action still to be taken will affect
the climate for rural businesses in these states and, possibly,
in the EU 15 too. Progress here is therefore of concern to landowning
organisations throughout the EU. The key objectives are the establishment
of a secure framework of rights of ownership—property rights—in
the acceding states and the acceptance of the principles supporting
these rights among the Governments and judiciaries of the acceding
states. It will also be important that the judges nominated by
these states to the European Court of Justice bring with them
an acceptance of these principles. That is not a certainty, given
that some of them do not have an engrained history of democracy
and protection for individual rights. The extent to which these
objectives are being achieved in the acceding states, and the
implications for the EU 15 of their achievement, are the subject
of this evidence.
3. The EU treaties formally regard legislation
on property rights as the preserve of member states. That reflects
the desire of democratic member states to protect their own frameworks
of property rights. However, EU policies such as the Common Agricultural
Policy (CAP), which had originally been concerned only with support
regimes for agricultural commodities, have now entered the area
of property rights. Rural development schemes that involve irrevocable
changes in land management (eg afforestation), the introduction
and operation of milk quotas, environmental policies that restrict
or direct land use and now the introduction of a decoupled CAP
support entitlement—the Single Farm Payment—are all
examples of policies that now affect landowning property rights
as well as day to day farming.
4. CLA and the other landowning organisations
that constitute the European Landowning Organisation (ELO) consider
this intervention in property rights as significant because of
the importance of a secure framework of such rights to the future
of the rural economy and environment and, indeed, to the wider
economy and the wider environment.
The Importance of a Secure Framework of Property
Rights
5. In the view of the CLA (and ELO) EU enlargement
to the East will work only if the acceding countries—and
the member states of the West as well—appreciate that property
rights are no longer a controversial statement of ideology but
a necessity to build a market democracy, in which all individuals
and families can participate, secure in the knowledge that the
ownership and stewardship of property will be protected.
6. So far as agricultural, forestry and
other rural policies are concerned a secure framework of ownership
rights is essential, not only to protect individuals, families
and businesses, but also to enable those in agriculture and land
management to meet public demands for ever higher standards of
food quality and safety; of environmental conservation and enhancement;
of recreation and building design; and to enable them to provide
a prosperous rural economy to the benefit of other rural businesses
and communities.
7. Property rights are also critical in
agriculture itself:
— as decoupled methods of CAP support
are introduced, the relationship between the public and the farmer
or land manager changes. Secure property rights are needed in
order to negotiate sensible contracts, for example for environmental
land management;
— second, the individual farmer will
rely less on representative unions to negotiate support levels,
but will rely more on his or her own ability, often working with
others, to negotiate better contracts in the supply chain. Branding
and appellations contrôlées need legal security;
— third, long term investment in new
technologies, for example on renewable energy crops, requires
secure intellectual property rights; and
— fourthly, property rights can, if
not protected, be easily eroded, as they were in the East during
the years of state ownership, and as they can be when Western
governments, through regulation, "nationalise the use of
the land". For example, legislation such as the EU Environmental
Impact Assessment Directive may be implemented in such a way that
central or local Government takes on the role of determining individual
farming or land management decisions. At that point property rights
are eroded, because the core characteristic of ownership, the
vesting of rights and responsibilities in one legal person, is
weakened. It is this combination of rights and responsibilities
that makes ownership work, that makes it attractive to individuals,
and that enables owners to contribute positively to the public
interest. If property rights are increasingly eroded, there will
be negative consequences for society and the economy, as well
as for individuals.
DEVELOPMENTS IN
THE EU ON
PROPERTY RIGHTS
OF RELEVANCE
TO THE
ACCEDING STATES
8. All EU 15 member states and the acceding
states have ratified the European Convention on Human Rights (ECHR),
which contains provisions on rights of ownership. The ECHR and
the European Court of Human Rights remain the basic legal protection
for these rights in these countries, and member states, and the
public authorities within them, are obliged to observe the ECHR.
In the UK the ECHR is applied through the Human Rights Act. However,
the ECHR is not legally binding on the institutions of the EU,
as its provisions on the payment of fair compensation for lawful
expropriation of property (principally compulsory purchase) are
general. CLA and ELO therefore saw the 1999-2000 Convention to
draft an EU Charter of Fundamental Rights as an important vehicle
to fill these two gaps, and to anticipate the accession of former
communist countries to the EU.
9. The EU Charter of Fundamental Rights
was agreed by the EU at Nice in December 2000 and contains provisions,
in Article 17, enshrining rights of ownership. This Article was
included after representations by ELO to the Convention in 2000,
and should be seen as a positive development. The Article is
valuable to all owners of property, be they householders, small
businesses farmers or landowners for two key reasons. First, it
explicitly recognises the right of an individual not only to own
property but also to use and bequeath that property. Such a right
is a necessary underpinning for secure transactions in physical
and intellectual property and for confidence in long term investment.
Second, the Article requires fair compensation to be paid, within
a reasonable period, for lawful expropriation of property. This
latter provision is more explicit than the equivalent provision
in the ECHR.
10. At the moment, however, the Charter
is not part of EU Treaty Law, and would become so only if an EU
Constitution were to be agreed with the Charter appended to or
included within it. There are wider arguments against the UK supporting
an EU Constitution, in particular if it were to be a vehicle for
extending EU competence into areas of decision taking which the
UK regards as being for member states, but if and when a Constitution
is agreed then it is the firmly held view of CLA and ELO that
the Charter—and within that Article 17—must be incorporated.
Such incorporation mean that member states and public authorities
within member states, would be required to observe the terms of
Article 17 in their decisions, ie the more explicit provision
(than the ECHR) on payment of fair compensation within a reasonable
period. That provision has resonance for individuals whose land
was compulsorily acquired for the construction of the M40 but
who had to wait up to 10 years or more for compensation to be
paid. Second, the Article would be legally binding on the institutions
of the EU themselves, ie the Commission, in proposing EU legislation,
the Parliament in scrutinising draft legislation and the Council
in adopting legislation
11. Until a Constitution is agreed, the
Charter is not legally binding on EU institutions or within member
states. It is, nevertheless, a landmark. In the first place, all
member states have now recognised the value of the EU's Treaties
being accompanied by a declaration of rights and principles, to
protect individual citizens. For once the focus is on individual
people and businesses, not on harmonisation of trading or subsidy
regimes.
12. More importantly, the Charter is a message
from the institutions of the Union themselves, to the Commission,
Parliament and Council of Ministers. And the message is that all
these institutions agree voluntarily to be judged on the principles
of the Charter. So the Charter will act as a constraint on the
Commission, Parliament and Council, and it is interesting to note
that the Charter has already been referred to in consideration
of EU decisions on legislation, in the European Court of Justice.
For the first time, the Commission, not just the member states,
is constrained by legal principles equivalent to those enshrined
in the ECHR. We know this is so because the Prime Minister's own
representative in the 1999-2000 Charter Convention, Lord Goldsmith,
now Attorney General, confirmed that result to CLA the day after
the Charter text was finalised in October 2000.
13. There is a strong argument for the Charter
to be enshrined in EU law, as a safeguard for individuals, farming
and other rural businesses, as Non Governmental Organisations
and others put pressure on governments, European, national or
local, to place increasing regulation on the use of property,
splitting control of property from responsibility for its stewardship.
The Charter will make public authorities think twice before they
expropriate or over-regulate.
14. Each acceding country also knows this,
and the task of aligning their national legislation to that within
the EU must now take account of the existence and meaning of the
Charter.
15. Some specific examples within the EU
demonstrate the relevance of the ECHR to national and sub-national
law making on land management, and thus the relevance of the Charter
if and when that is incorporated into EU law. In Flanders, in
Belgium, the regional government was obliged to modify its intention
to ban all shooting of gamebirds in a Natura 2000 Special Area
of Conservation, under threat of challenge in the European Court
of Human Rights.
16. The basis of such challenges is worth
stating. It is not that government action, in the public interest
in favour of the environment, is necessarily wrong. On the contrary,
farmers and landowners are keen to demonstrate that the environment
will best be conserved by their own positive land management,
recognised if necessary in contractual agreements with government
at some level.
17. However, all environmental conservation
can succeed only where there is an economic use for the land or
building concerned, albeit that the buyer of the environmental
service may be the government itself. Regulation without recognition
of this need starves the environment of the resource necessary
to secure its conservation.
18. For example, the cost of conserving
the heather moorland habitats of upland Britain or the woodland
cover of France, or Spain, without shooting, would be prohibitive.
Land management and country sports are part of the solution to
environmental conservation not, as some have argued, the problem.
19. On the negative side, we have seen the
pressure for regulation of farming and land management building
year by year. Proposals for local authorities and local communities
to become involved in land management decisions, whether they
originate in the Council of Europe or within member states, may
be well intentioned, but they separate ownership control from
responsibility. How much better to enter into an agreed contract
with the owner or land manager, to provide a certain habitat for
a fee, and then to leave him or her to take the risk, take the
decisions, and make a living, for his benefit and that of the
local community. This puts rights and responsibilities back together,
where they should be.
DEVELOPMENTS IN
THE ACCEDING
COUNTRIES
20. Also important is what has been happening
in relation to ownership rights in the acceding countries. Overall
the task to bring what were in most cases former communist regimes
into line with western property based democracies has been enormous,
although it did start before accession negotiations began. In
these countries, the two biggest tasks have been to align legislation
with that obtaining in the European Union, and to complete the
privatisation of the ownership of land, and in so doing, put in
place a practical and equitable mechanism for restoring land to
its former owners, wherever possible.
21. The pace and method of achieving these
objectives has varied greatly throughout the applicant countries.
Progress on introducing western style property rights was fastest
in relation to the ownership and free movement of capital. Progress
in respect of the right to own land in the applicant countries
has been rather more complicated.
22. So far as foreign ownership of land
is concerned, transitional periods are in place after accession.
Whatever terms are in application confidence in ownership will
build only when it can be seen that transactions in land are secure.
This is not yet the situation in some of the acceding countries.
23. Privatisation of land in the former
communist countries remains a sensitive issue. CLA has not followed
progress on privatisation in detail since 2001 when it surveyed
the situation across the acceding countries. The figures at that
time indicated a very patchy situation. The figures that follow
are not up to date, but indicate the scale of the task. In Poland
state ownership of land was, in 2001, running at about 25-30%.
By 1999, about 4.7 million hectares had been taken into the State
Treasury for redistribution, and 3.5 million hectares had been
resold or leased, mainly leased. Some land had been transferred,
free, to agricultural chambers and academic institutions. In the
Czech Republic some 900,000 hectares remained in state hands in
November 2000, and land that had been privatised remained subject
to restrictions on ownership by foreigners. In Estonia private
land accounted, by the end of 2000, for about a third of the total.
According to the EU Commission privatisation in 2001 at the local
level remained slow, and claimants had found it difficult to get
hold of land, particularly in the northern regions. So much still
remained to be done.
24. Private land ownership was thus still
not the norm in most of these applicant countries of the East
in the way that it is in the West, and the progress made towards
liberalisation of property belies the task still to be achieved
in respect of land itself.
25. The task is considerable. Private ownership
requires reliable deeds of ownership, land registration, accurate
mapping of boundaries, clear tenancy law to accommodate short
and long term tenancies and a land market with agents to facilitate
transactions.
26. However, unless private land ownership
becomes widespread and certain there are bound to be difficulties
in establishing the "second pillar" initiatives of the
CAP in these countries, initiatives to encourage agri-environment
and rural development. Who should the contracts be made with?
How can they act as collateral for financing the business? How
can they be taken into account when the business is transferred?
The development of farming businesses will itself be inhibited.
The agricultural industry will move away from dependence on production
support towards the development of individual farming businesses,
with business relationships with suppliers, consumers and partners.
So privatisation becomes yet more important.
27. The most sensitive of issues is restitution
of land to former owners. In Poland, for example, many owners
were forced to flee the country after the second world war and
they, or their descendants, have not returned. There is, nevertheless,
a strong case for former owners and descendants being given the
opportunity to recover land confiscated from them. CLA and ELO
would not expect lands in the Eastern European countries to be
returned to former owners in all cases, but it is just that they,
or their descendants, should have the opportunity at least to
re-purchase their lands on reasonable terms. Thereafter, they
should have the same rights of ownership as citizens elsewhere
in the EU. They can then take on the full responsibilities and
rights of ownership.
28. In this way confidence, certainty and
clarity can return to landownership in the acceding countries,
and long term investment in agriculture and land management can
follow, with benefits for these countries' economies and populations.
Country Land and Business Association
March 2004
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