400 likes | 411 Views
This article provides a brief overview of the key issues and negotiations related to agricultural policy during the process of EU accession for Central and Eastern European countries. It discusses the asymmetrical trade liberalization, the impact on the Common Agricultural Policy (CAP), and the unfinished agricultural reforms in the accession countries.
E N D
Short introduction to the issues • Copenhagen Council 1993 - agreed that the associated countries of CEE desire become EU members (the 'Copenhagen criteria'). • Essen Council 1994 - launched a pre-accession strategy designed to provide a route map for the associated countries as they prepared for accession. • Agenda 2000 published by the Commission in 1997 - included Opinions on the readiness of each of the applicants for membership. These Opinions were endorsed at the Luxembourg Summit the following year ('Luxembourg group’)
Short introduction to the issues • Berlin Council 1999 - accepted the Agenda 2000 package and adopted a reinforced pre-accession strategy, including a medium-term financial perspective for the 2000-2006 period. • Brussels Council October 2002 - reached agreement on the financial parameters for the CAP in the context of enlargement up to 2013 • Copenhagen Council December 2002 - reached agreement on the outstanding negotiating chapters (including agriculture and budget). Negotiations successfully concluded. • 1 May 2004 - intended date of accession.
The pre-accession strategy Bilateral trade agreements designed to bring about free trade between each of the candidate countries and the EU: • The process of trade liberalization was asymmetric • EU reduced its barriers faster than the candidate countries, • there is now essentially free trade in industrial products • because of the sensitivity of agricultural trade, concessions here were limited to reduced tariffs on a limited quantities of imports (tariff quotas) from the applicant countries. • Despite these limited concessions, the evolution of the agricultural trade balance has favoured the EU.
Background of negotiations • Common Agricultural Policy (CAP) is a major component of the EU budget • Agriculture is a major sector of the economy in most new member states • As a result, accession negotiations over agricultural policy were among the most difficult
Central European agriculture in the 1980s • In 1980s, centrally planned economies • Prices usually fixed, for inputs, wholesale and retail food products • In general, inputs and meat consumption highly subsidized
CAP and the enlargement of the EU • the enlargement is expected to: • double the agricultural labour force • as well as the arable area of the EU, and • to add over 100 million food consumers to the internal market. • It can be expected that the pressure for CAP-reform resulting from the eastward extension of the EU is much larger than that from the WTO process.
About the CEE Countries: • About 3.4% of global land resources • Only 2.2% of global population • 10-15% of GDP from agriculture • 15% of population is active in agriculture
Agricultural Performance • Overall decline • More decline in agriculture than in the overall economy • Production is still below pre-reform level • More decline in livestock production • Signs of recovery • Yields are below EU levels
Incomplete Transition in the Farming Sector • Unfinished privatization of agricultural land • Dual farming structure, with a significant share of large-sized farms • Barely restructured collective farms • Low profitability of farming, but larger individual farms are performing better • Farms are unable to service their debt • Leasing is the major form of land transaction • Incomplete land administration
Current Agricultural Policy Framework • Level of policy and institutional reforms varies between EU accession candidates, but none are yet fully in line with the EU • Current support programs are a complicated and inconsistent package creating distortions • Most agricultural policy instruments do not conform to the CAP
Status of Agricultural Reform in the EU Accession Countries, 2001
World Bank Agricultural Policy and Institutional Reform Index 2001
Harmonization Issues with the Common Agricultural Policy • Present framework does not fully correspond to the level of support and instruments of the CAP • The level of support should be aligned to the higher EU levels only after the accession • In moving toward EU accession, the emphasis on self-sufficiency needs to be eliminated • Competitiveness requires, higher productivity and efficiency in agriculture, should be the focus of agricultural policy
Extension of direct payments • CAP direct payments would not apply in the CEECs. • The Commission argued that CAP direct payments were compensation for past cuts in EU price supports, which would not be suffered by farmers in the candidate countries. • It also argued that direct payments would negatively affect the required restructuring of the agricultural sector as well as bringing about significant changes in income distribution in the CEECs. • The Commission argued that structural aid would be more beneficial. The difficulty was that the applicants saw this as second class citizenship of the CAP and not politically acceptable.
Terms of enlargement • Full access to CAP price support in 2004 • Direct payments phased in: 25% of EU-15 level in 2004, rising to 100% in 2013 • Additional 30% can be funded from elsewhere (some can come from funds originally intended for rural development) • Production quotas calculated in the basis of late 1990s production levels
Critical Issues for EU Accession • Selecting the appropriate course for agricultural policy • Harmonization with the CAP • Consolidation of the farming sector • Enhancing the competitiveness of farming and agroprocessing sectors • Improving transparency in agricultural product markets • Strengthening private sector representation in agriculture • Accelerating necessary institutional development • Overcoming obstacles to rural development
Proposals for an Agriculture Policy Agenda • Quick completion of main transition tasks: farm consolidation, land privatization, creation of functioning land markets • More effective use of budget support to agriculture: focus support programs on efficiency enhancement, not price and export subsidies • Government intervention in the sector needs to be integrated into a more consistent and predictable framework • Changes in agricultural policy need to take into account the evolving nature of the CAP as a “moving target” • Postpone full adjustment of support to EU levels until actual accession • Measures to reduce social tensions and provide social protection should be separate from policy instruments to improve efficiency and competitiveness
Post 2004? • Further enlargement – Romania, Bulgaria, Turkey, beyond? • SAA - Croatia, Macedonia, Serbia and Montenegro, Bosnia, Albania? • More modulation and degressivity?
SAPARD Special Pre-accession Assistance for Agriculture and Rural Development
Single framework for accession • The SAPARD programme enables the Community to provide financial and technical assistance for agriculture and rural development in candidate countries as they prepare for EU accession. • SAPARD is one element of the Pre-Accession Assistance available to candidate countries. Other Pre-Assistance is provided under Phare and ISPA • The SAPARD regulation, adopted in June 1999, provides the basis for Community support for implementing the agricultural acquis and adapting the agricultural sector and rural areas in candidate countries.
Single framework for accession • Intensive technical and financial assistance for candidate countries • Logical and transparent policy framework • Accession Partnership • National Programme for the Adoption of the Acquis
SAPARD : Special pre-accession assistance for agriculture and rural development Accession Partnership • Outlines key priorities and EU financial assistance required • Alignment to the agricultural acquis • Veterinary, phytosanitary and marketing requirements • Upgrading food processing standards • Increasing competitiveness in agri-food sector • Coherent structural and rural development policies National Programme for the Adoption of the Acquis • Practical steps required • Timetable and costs
SAPARD : Special pre-accession assistancefor agriculture and rural development
The SAPARD programme Objectives • Assist in implementing the acquis communautaire in agriculture and rural development • Solve priority and specific problems related to developing a sustainable agricultural sector and rural areas
The SAPARD programme Principles • Decentralised management of external aid • Commission exercising ex-post clearance of accounts controls • Priorities • Improve market efficiency, quality and health standards • Maintain and create jobs • Protect environment
The SAPARD programme Co-financing rules • Total Public Expenditure • Max 75% EU • Min 25% applicant country • Revenue Generating Investments • Min 50% private resources • Max 50% public expenditure of which: • Max 75% EU • Min 25% applicant country • Technical Assistance • Up to 100% EU contribution • Commission initiated – up to 2% of total budget
The SAPARD programme Implementation • Adopt 7-year SAPARD programme • Establish and accredit SAPARD agency in applicant country • Conclude Bilateral Financing Agreement comprising: • Multiannual Financing Agreement – financial rules for the whole programming period • Annual Financing Agreement – financial commitment for each year
Agricultural situation in CEECs • Farm structures • Farm privatisation virtually concluded, but • Ongoing issues relating to land markets • and property rights • Structural overcapacity in agricultural processing • Output • Generally stable after the dramatic decline of the 1990’s, but • Most CEECs still below pre-transition levels
Commodity situation • Total CEEC crop production near pre-transition levels • Increased area planted to cereals
Animal sectors Livestock numbers still well below transition levels • cattle and sheep c. 50% of pre-transition level • cow, pigs and poultry c. 70% of pre-transition level
Agricultural situation in CEECs Medium term commodity outlook for 2005 Crops • Forecast CEC-10 crop surplus : 7-8 million tonnes • Forecast EU-15 crop surplus : 30 million tonnes • Exports at world market prices a key factor Livestock • Continued slow recovery in livestock sector • Forecast beef and pig production: close to self-sufficiency • Modest dairy surplus around 2 million tonnes