The Hindu : E.U. accord to check food overproduction

Online edition of India's National Newspaper
Sunday, Jun 29, 2003

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International

E.U. accord to check food overproduction

By Batuk Gathani

Brussels June 28. The European Union has taken an epoch-making initiative to overhaul its Common Agricultural Policy (CAP). It is hoped that the proposed reform of Euro 43,000-million CAP may end the single biggest roadblock to global trade talks. The current perception is that the proposed CAP reform strategy may offer fresh hope to the stalled Doha world trade talks.

Supachai Panitchpakti, current Director General of the World Trade Organisation said the proposed CAP was a "substantial achievement that would be a positive effect on the global agricultural talks and beyond.'' The next round of world trade talks — Doha to Cancun in Mexico — commences in September.

For some time, the European food industry, under the banner of `CIAA', has been calling for major structural reforms to make the industry more competitive. After 16 hours of intense negotiations, in the early hours, the European Agricultural Ministers and officials said they had agreed on a new CAP system that would reduce the overproduction of food in the E.U. countries, which has triggered much uncertainty in the world food markets. E.U. farmers are recipients of Euro 103,937 millions in direct subsidies, compared to Euro 54,715 millions received by U.S. farmers and Euro 52,750 million by Japanese farmers.

Now, by cutting the link between subsidy and output, the E.U.'s CAP reforms could reduce the incentive for European farmers to overproduce or "build mountains'' of dairy products, meat and grains surpluses.

Although, the key reform plan of CAP does not cut farm spending, it will break the link between subsidies and production.

The E.U. Farm Commissioner, Frank Fisher said: "This decision marks the beginning of a new era and this reform sends out a strong message to the world. We are saying goodbye to the old subsidy system, which significantly distorts international trade and harms developing countries.''

The issue is both emotive and divisive on both sides of the developed and developing countries fence as farm trade has been the main stumbling block in the deadlocked Doha trade round held under the auspices of the WTO, where the E.U. has faced bitter criticism for its agricultural policies.

The generous farm subsidy for the E.U. is also a highly sensitive political issue on the domestic front, particularly in France, Germany, Italy, Spain, Portugal and Holland where politicians depend on farmers' vote banks.

Critics said the proposed reforms were a "mixed opportunity'' and would do little to help farmers in the developing countries, for whom the E.U. markets remain a closed shop. As Sam Barrat of OXFAM, the international charity, said: "The E.U. farm subsidies under CAP have simply been repackaged. This is a huge disappointment.''

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