Select Committee on European Communities Seventeenth Report


Memorandum from the Ministry of Agriculture, Fisheries and Food

  1.  The Government welcomes the 8th report of the House of Lords Select Committee on the European Communities, Session 1998-99, on "A Reformed CAP? The Outcome of Agenda 2000", and notes that the purpose of this report, and the brief initial evaluation therein, is to draw to the attention of the House of Lords the terms of the Common Agricultural Policy (CAP) agreement as part of the Agenda 2000 package of measures.

  2.  The Government largely agrees with the Committee's summary and analysis, and notes a number of particular points. The reform of the CAP did not, indeed, go as far as the UK would have liked. Whilst the package agreed at the Agriculture Council ending on 11 March was an important step forward, its total cost exceeded the CAP spending limit agreed by Heads of State and Government at Petersberg. The UK strongly advocated the introduction of degressivity (ie reducing direct payments gradually over time) as a means of achieving these budgetary constraints, helping to prepare the ground for the forthcoming WTO round, and to facilitate enlargement. However, savings were finally achieved by reducing the reduction in cereals prices, and by delaying the cuts to dairy support prices, rather than through degressivity.

  3.  Whilst the settlement has some disappointing features, decisions on agriculture need to be seen in context. The Agenda 2000 package as a whole was a good deal for the UK and one to which all Member States were able to agree. Moreover, the outcome on agriculture agreed at the Berlin European Council represented a significant step in the direction of reform for which the UK had been pressing, despite the fact that many Member States would have been content with no reform at all. The changes are instrumental in bringing closer the Government`s objective of securing a competitive and sustainable industry with a stronger market orientation, and deliver significant overall economic benefit to the UK.

  4.  The Government agrees that further reform of the CAP will be needed within the financial framework of 2000-2006 in order to deal with probable market imbalances and to enable Central European Countries to be fully integrated into the EU. The forthcoming World Trade Organisation negotiations are likely also to constitute a further pressure for reform.

  5.  The Government shares the Committee's preference that any measures to enhance the environment and to promote rural development should be free-standing. As part of production-support regimes they risk perpetuating arrangements which should rather be brought to an end. The Government pressed for rural/environmental policy instruments on a targeted basis as resources were released from production support. The Government therefore welcomed the creation of an integrated rural development policy. Optional cross compliance provisions form part of the final agreement.

  6.  The Agenda 2000 agreement provides for a significant degree of discretion for Member States in several areas. The way in which this discretion is exercised in this country will have an important influence on the direction and speed of the industry's development. The Government notes that the Committee intends to examine the outcome of the consultation on Agenda 2000, the next stage of which is expected to be issued this Summer when the Minister of Agriculture will set out his ideas on the future direction of the industry and on the areas where national discretion applies.

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