Select Committee on Environment, Food and Rural Affairs Written Evidence


Memorandum submitted by the German Federal Ministry of Consumer Protection

AGRICULTURE AND EU ENLARGEMENT

  1.  The accession of 10 states, eight of which had been within the Soviet sphere of influence until 1989, to the EU and thus to the common agricultural policy poses great challenges for the current EU Member States as well as for the new Member States (NMS). This integration process comes at a time when the common agricultural policy has to be reformed under the pressure of increasing budgetary problems and global pressures of competition. The simultaneity of integration, reform and transformation requires solutions for which only a few months or years at best are available in each case.

  2.  Most analyses on the impact of the accession of 10 NMS start from the assumption that these states stand to benefit more from accession than the current EU-15. The following benefits of accession are mentioned: stability (of economic activities and prices), predictability, clear rules of the game, modernisation and financial resources. In the past decade already, the GDP in the NMS has increased by 4.5% on an annual average, thus exceeding the average of the EU-15 by 2.5 percentage points.

  3.  Yet, this growth has only provided weak impulses for the EU-15 which is primarily due to the minor scope of national economies in the NMS: the GDPs of the NMS, taking the exchange rates as the basis, only amount to 5% of the GDP of the EU-15. Even if purchasing power parity were taken as the basis, they would only total 10%. Forecasts of a 0.5% GDP growth for the EU-15 as a result of the accessions in the coming decade predominantly ensue from the effects of migration and competition and, to a lesser extent, to trade. In the process, this positive trend will be more pronounced in the neighbouring countries of the NMS, ie Germany, Austria and the Scandinavian countries (+ 2 to 3% growth of GDP).

  4.  The Vienna Institute for International Economic Studies assumed in its latest analysis (November 2003) that the forthcoming enlargement would proceed "harmonically and without any shocks". The larger annual economic growth of the NMS (2 percentage points annually) would persist in the years to come. A quick offsetting of the different price level, falling short of the EU average by 50% in the NMS (except for Slovenia), could not be anticipated.

5.  A STUDY ISSUED BY THE EUROPEAN COMMISSION FORECASTS THE FOLLOWING TRENDS:

    —  The long-term strengths of the accession countries lie in a specialisation in the field of crop production, the strengths of the EU agricultural sector in the field of animal production. While the required funds are lacking for investments into animal production, adjustments in crop production are implemented more rapidly.

    —  The study reckons with a decline in competitive capacity of pigmeat production in the accession countries as a result of the adoption of the common agricultural policy. The fact that the prevailing small-scale farming structures are mostly unable to finance investments that would increase profitability also contributes to this.

    —  Milk and beef production in the accession countries will gain from integration into the common agricultural policy. The expected rise in producer prices for milk and beef as well as the cattle premiums will have a positive impact on profitability. A large number of micro-dairy cattle farms is expected to abandon production in the years to come. Increasing specialisation can also be expected in dairy cattle husbandry.

    —  EU enlargement will have a more positive impact on poultrymeat production in the accession countries than on pigmeat production since prices for poultrymeat in the accession countries are more competitive than in the EU-15. Demand for poultrymeat is also showing an upward trend, though imports have gone up as well.

  6.  Today already, the EU exports more agricultural and food produce to the accession countries than it receives from them. Among the EU Member States, Germany is the key trading partner of the Central and Eastern European accession countries.

  7.  Experts assume that the accession-related growth impulses will boost consumer income in the accession countries, thus resulting in more money being spent on foodstuffs. This will benefit suppliers of higher-value products, above all, who are frequently still burdened with import taxes when importing into the accession countries.

8.  FIELDS WHERE SUPPORT IS POSSIBLE AND REQUIRED:

    —  Germany will continue to make every effort in the years to come to assist the NMS under the EU pre-accession instruments and bilaterally in the integration into the EU. Some of the experience gained after reunification from the harmonisation of the farming sector in the new Federal Länder with EU requirements will be helpful in this respect.

    —  From accession to the end of 2006, the EU will provide a special "transitional facility" that is to assist in moving forward with institution-building in the new MS. Corresponding projects will focus, inter alia, on:

      —  administering elements of the common internal market,

      —  veterinary services,

      —  administrative structures to ensure food safety,

      —  management and control agencies for agriculture and rural development (including IACS).

      —  "Twinning projects between public administrations" of the old and new MS are expressly envisaged for corresponding measures.

  9.  The action plans announced by the EU for a "Wider Europe" and the associated "New neighbourhood initiative" play a major role. These NMS, after all, are vitally interested in excellent relations with their eastern neighbours and especially in types of constructive cooperation in the border regions. Yet, the EU as a whole is at the same time interested in seeing the security standard, provided for by the Schengen Agreement, also being guaranteed at the new eastern border of the EU. The European Commission will, therefore, suggest neighbourhood programmes for 2004 to 2006 as an initial step, followed by the "Single neighbourhood instrument" from 2007.

German Federal Ministry of Consumer Protection

January 2004


 
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