1. European agriculture, the future of the CAP and the WTO negotiations
ENARPRI Trade Agreements and EU Agriculture Brussels, 8 June 2006
European agriculture, the future of the CAP and the WTO negotiations
Giovanni Anania
Department of Economics and Statistics
University of Calabria, Italy

2. …meanwhile, what’s happening in international markets?
the plan (all in 20’ …)
the agricultural negotiations in the WTO Doha Development Agenda round: where are we? what may happen? how relevant for EU agriculture and the CAP?
…meanwhile, what’s happening in international markets?
the future of the CAP where is it likely to be heading? where should it be heading?

3. a quick review of the status of the negotiations on agriculture
the WTO negotiations on agriculture, where are we?
a quick review of the status of the negotiations on agriculture
the main elements of the agreement yet to be decided in italics and underlined
colors used as indicators of the sensitivity for the EU (…as I see it ) of the decisions left to be made, from green (not a problem for the EU) to red (sensitive)

4. product-specific “caps” on amber box support
where are we on domestic support?
linear reduction of the overall (amber box + blue box + de minimis) trade distorting support; three tiers, the EU alone in the first one
linear reduction of the amber box support, three tiers, the EU alone in the first one
product-specific “caps” on amber box support
reduction of the de minimis support
blue box modified, support capped at 5% (2.5%?) of value of production
formula(s) + coefficients in the formula(s)
20% cut in the first year of implementation
green box: “reviewed and clarified”

5. operational commitments for export credits, STEs and food aid
where are we on export competition?
parallel elimination of export subsidies, subsidized export credit, trade distorting practices of exporting STEs, and improper forms of food aid which displace commercial purchases
“end date”: 31 December 2013
operational commitments for export credits, STEs and food aid
flexibility: “phasing will take into account internal reform steps of members”

6. the tariff reduction formula (Swiss? UR-type? tariff caps? …)
where are we on market access?
four tiers
the thresholds
the tariff reduction formula (Swiss? UR-type? tariff caps? …)
the coefficients in the formula
“sensitive products” (how many? which deviation from tariff reductions for “normal” products? how large the TRQ expansion?)
TRQs (volume, in-quota tariff, administration)
preference erosion, tariff escalation

7. S&DT for developing countries
where are we on the other issues relevant for agriculture?
in the agricultural negotiations:
geographical indications (?)
the “cotton initiative”
other “sectoral initiatives”
export taxes
tropical products
S&DT for developing countries
at the other tables of the negotiation:
TRIPS (GIs)

8. what’s the cost of not reaching an agreement?
the WTO negotiations on agriculture, what may happen?
what’s the cost of not reaching an agreement?
many believe an agreement is needed, but that no agreement is better than a bad agreement
… and what is seen as bad by some is seen as good by others: the ambitiousness of the agreement

9. what I would see as an ambitious DDA Agreement on agriculture:
the WTO negotiations on agriculture, what may happen?
what I would see as an ambitious DDA Agreement on agriculture:
- current domestic support reduced
- current market access increased
- effective S&DT component for poor
developing and least developed
countries, and a less far reaching S&DT
for more developed developing countries
- ambitious cotton initiative
- geographical indications on board

10. what’s the cost of not reaching an agreement?
the WTO negotiations on agriculture, what may happen?
what’s the cost of not reaching an agreement?
many believe an agreement is needed, but that no agreement is better than a bad agreement
… and what is seen as bad by some is seen as good by others: the ambitiousness of the agreement
if an agreement is reached before the summer recess it will not be ambitious

11. modalities by the end of June? I doubt it…
the WTO negotiations on agriculture, what may happen?
modalities by the end of June?
I doubt it…
modalities by the end of July?
it is possible but, in my opinion, unlikely
positions on some of the relevant elements
of the agreements remain distant
a huge amount of details has to be agreed
on some elements of the agreement
final-stages-type negotiations did not even
start yet
the “who is to be blamed for the failure” game…

12. how sensitive a DDA agreement would be for EU agricultures and CAP?
the WTO negotiations on agriculture, how relevant?
how sensitive a DDA agreement would be for EU agricultures and CAP?
for the defensive interests: not a problem
(it will be within the Commission negotiating mandate…)
for the offensive interests (in and outside agriculture): little or no gains
if an agreement is not reached, relevant components of the reformed CAP will likely be subjected to WTO disputes

13. …meanwhile, what’s happening in international markets?

14. …meanwhile, what’s happening in international markets?

15. …meanwhile, what’s happening in international markets?

16. …meanwhile, what’s happening in international markets?

17. …meanwhile, what’s happening in international markets?

18. …meanwhile, what’s happening in international markets?

19. …meanwhile, what’s happening in international markets?

20. …meanwhile, what’s happening in international markets?

21. …meanwhile, what’s happening in international markets?

22. …meanwhile, what’s happening in international markets?

23. …meanwhile, what’s happening in international markets?

24. agricultural markets expand
…meanwhile, what’s happening in international markets?
agricultural markets expand
imports & exports both grow, and do so in developed as well as in developing countries
net trade position of developing countries does not show any significant change
China net deficit expands, India surplus declines, while Brazil surplus expands rapidly
EU net trade position improves (…while the contrary is true for the US)

25. what’s important for the future of European agricultures?
the conclusion of the DDA round is important, but the agreement, when it will occur, likely will not be so ambitious to significantly affect current CAP and EU competitiveness
implications of (recent and future) rulings in the WTO dispute settlement system seem potentially more relevant
the most important “game field” for the future of the CAP is the domestic one: the definition of the post-2013 (post-2009?) EU agricultural and rural development policies

26. …looking at the past to understand what may be ahead
from fully coupled support, linked to “how much” the farm produced (pre-1992), to
partially decoupled support, linked to “what” the farm produced ( )

27. …looking at the past to understand what may be ahead

28. decoupled support (post-2003), linked to “farming/land management”
…looking at the past to understand what may be ahead
from fully coupled support, linked to “how much” the farm produced (pre-1992), to
partially decoupled support, linked to “what” the farm produced ( ), to
decoupled support (post-2003), linked to “farming/land management”
declining support
declining financial resources for the CAP

29. what’s ahead?
with respect to income support, we should expect “more of the same”: more decoupling less financial resources less support - support to become more selective - more space for implementation choices at the national level more cross-compliance constraints (?) more farm payments in exchange for the production of specific non-market goods and services

30. how much “more of the same” and at which speed? …it remains to be seen
what’s ahead?
how much “more of the same” and at which speed? …it remains to be seen
plus, possibly, something a little different from what we have already seen: new safety net policy instruments - partial (re)nationalization
is something missing? more (and more effective) policies to strengthen the competitiveness of EU agri-food system, domestically and abroad

31. strengthening the competitive wedge
the farm structure adjustment issue (for certain agricultures is a prerequisite) the technological innovation wedge - product innovation - innovation in the production process - innovation in the services sold with the product - from farm competitiveness to chain/territory competitiveness the quality wedge quality  qualities (…consumer driven) including: origin, food safety standards, organic, animal welfare standards, no GMOs, …

33. strengthening the competitive wedge
the farm structure adjustment issue (for certain agricultures is a prerequisite) the technological innovation wedge - product innovation - innovation in the production process - innovation in the services sold with the product - from farm competitiveness to chain/territory competitiveness the quality wedge quality  qualities (…consumer driven) including: origin, food safety standards, organic, animal welfare standards, no GMOs, … “made in Europe” is different!