LONDON — Reform of the European Common Agricultural Policy, or CAP, is essential if the European Union’s expenditures are to be contained and remain acceptable to European voters as a whole. This summer the European Commission floated some proposals for changes designed not to reduce the overall burden but to rearrange the way in which subsidies are paid.
The Commission wanted more aid to go to rural conservation and less to production. A change of this kind would reduce overproduction and the extent to which European farm products are dumped in overseas markets. Such dumping pushes down world prices, harming the exports and agricultural industries of developing countries.
Unfortunately, even these limited proposals have been opposed by the major beneficiaries of CAP: France, Spain, Portugal, Austria and Ireland. Their agricultural ministers wrote to various European newspapers defending CAP. They denied that the approximately $39 billion cost of the policy, to say nothing of the higher prices consumers must pay for agricultural products, is too much. Ministers’ attempts to rebut the charge that CAP damages the exports of developing countries were specious and totally unconvincing to rational people. They seemed to think that European aid to developing countries justified the distortions caused by CAP.
It seems that French President Jacques Chirac has convinced German Chancellor Gerhard Schroeder, who seeks to rebuild his relationship with France following a bitter German election campaign, that farm reform should wait until 2006. But reform is needed now. The Commission has recommended the admission of 10 countries, mainly from central and eastern Europe, into the EU in 2004.
The candidate countries have been warned that they will not be immediately granted full CAP benefits available to existing EU members, but they cannot be denied for long. The extension of benefits will push up the cost of CAP greatly unless it is drastically reformed. The warning of unequal treatment has naturally caused resentment and will complicate and possibly delay ratification of the accession treaties.
Of course, every government wants to keep its farmers happy and does not want to lose a “perk,” but if the agricultural ministers do not give way, they could undermine EU enlargement. Politically and economically, that would be very damaging to Europe as a whole.
Vocal farm lobbies, particularly in France, are willing to challenge the government by disrupting communications. Successive French governments have caved in to the farm lobby and failed to rally majority opinion in France to face down such behavior. The image of the poor French peasant is far from reality. Even though France receives a net benefit from CAP, the costs to French consumers outweigh the benefits.
Failure to reform CAP is also likely to be a major obstacle to success in the Doha round of world trade negotiations. The EU’s CAP is not, of course, the only obstacle to progress in agricultural trade liberalization. The American farm-support program has recently been boosted by further pandering to lobbies. Japanese and Korean protectionist policies add to the problems of finding a solution.
Japanese trade negotiators facing pressure over agriculture think that they can safely allow the Europeans and, to a lesser extent, the Americans to take the brunt of the pressures. But American trade officials have already said they would like to reduce farm subsidies, if only other countries would follow suit. If the Europeans don’t move, they will face huge problems in Europe. So Japan will need to be ready to make major concessions in the Doha round. Is the government of Prime Minister Junichiro Koizumi ready to do so? It does not look like it.
The Japanese government probably regards the farm lobby as even more untouchable than road or construction lobbies. This is very unfortunate, as Japan as a whole would benefit from liberalization of food imports, particularly if Japanese industry is to be made more competitive, the cost of living to be kept down and the economy to deal with the inevitable rise in unemployment as bad-loan problems are tackled in the radical way needed.
Liberalization of agricultural trade does not mean that agriculture should be neglected; it means a radically different approach to helping rural communities. Instead of subsidizing surplus food production and the wasteful and damaging use of chemical fertilizers, the main effort should focus on the rural environment with help for more organic farming and humane ways of rearing livestock.
Sadly, the emphasis in the Japanese countryside seems to have been placed on extending concrete surfaces rather than, for instance, on improving soil quality. Those of us who have observed the changes in Japan over the past half century are appalled at how the countryside, one of Japan’s few natural resources, has been destroyed.
Nature in Japan used to be beautiful. Today much of Japan is ugly. Foreigners visiting Japan for the first time and traveling on the shinkansen often ask, where is the traditional beauty of nature in Japan? All they see from the train are ugly factories and housing estates. An exaggeration, of course, but not totally untrue.
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