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Commissioner Fischler's speech on CAP reform

Ladies and Gentlemen,

It is a pleasure to be back in Washington, even for such a brief visit. Brief as it may be, at least it provides me with the opportunity to share some thoughts on the relevance of the recent reform of the Common Agricultural Policy (CAP) for the forthcoming WTO Ministerial Meeting in Cancun with such a distinguished group.

As we all know to well, farm policies on both sides of the Atlantic always provoke heated arguments, usually at the expense of facts - especially recent ones. Repeating the old arguments comes more easily to some than keeping up with the complex and dynamic reality of agriculture today. But it also comes with a cost - short-termism at its worst.

But as we prepare for Cancun, those of us with political responsibility for agricultural policy have a responsibility to deal with the facts as they stand. From a European perspective, I would like to debunk three myths whose net effect is simply to waste time and energy and to prevent progress.

Instead of rehashing our gripes, we need to engage in some new, imaginative long-range thinking if we want our efforts to address the real needs of farmers and consumers world-wide.

Myth #1: US and EU farm policies are not harmonised…

This is mainly a "domestic" US myth, since for the rest of the world, when it comes to farm policy, the US and the EU have more in common than the average US observer is led to believe. Statistics, for instance, show increasing similarities, especially in the crop and dairy sector.

More generally, however, the fundamental questions our farm policies must respond to are essentially the same: Do we keep supporting our farm sectors? And if so, how?

But the present similarities between EU and US belie the fact that they result from significantly different policy directions. The US - clearly in the lead of farm policy reform in the mid-1990s - made the well-known U-turn with its farm policy in 2002, resorting to more trade-distorting, old-type policy instruments.

The EU, on the other hand, driven by the increasing demands of its citizens for a farm policy that delivers what taxpayers and consumers want, embarked on a completely different path.

A path which, by gradually shifting support from product to producer already since 1992, allows us with the more recent CAP reform to decouple at least two thirds of direct producer payments from production.

Unfortunately, the difficulty of following this path is rarely appreciated by our critics. They seem curiously blind to the fact that our reforms affect the lives of real people - Europe's farming families.

Or to the fact that we operate under a fixed farm spending ceiling even while we prepare to take in 10 new member countries and 4 million new farmers in May 2004 added to our present 7 million.

Myth # 2: EU farm policy reforms are too little, too late...

The best example to test this myth is the EU's recently agreed CAP reform - the third in just over a decade - and what it does with respect to the WTO Doha Development Agenda (DDA).

With its CAP reforms of 1992 and 1999 the EU has been on a steady path of reducing trade distorting domestic support. Furthermore, this policy has allowed the EU to significantly cut back on export subsidies.

The latest reform of June 2003 represents an even more radical reform by decoupling a major part of its farm payments from production together with substantial reductions of support prices. This will permit the EU to pursue an ambitious agenda as regards cutbacks on trade distorting domestic support, export subsidies and reductions of import tariffs in the Doha Round.

The overall impact is hardly too little and the timing of the recent reform is hardly too late.

In fact, what I have outlined does not even take into account forthcoming reforms of the sugar, cotton, olive oil and tobacco sectors, which are expected to follow, to different extents, the same path as previous CAP reforms.

These actions clearly demonstrate a path of reform that is fully compatible with what all WTO parties committed to do, the US and EU included: to move away from the trade distortions. We have certainly moved; it's time for others to do likewise.

Myth # 3: EU farm policy is detrimental for developing countries...

To understate the potential impact of developed world farm policies on developing countries and their agriculture is wrong, but to reduce this impact to mere slogans is equally unacceptable.

At the same time, to respect the sustainability of agriculture, and environmental, food quality and animal welfare objectives, which cannot be reached via market forces alone, is every country's right, provided it is not trade distorting.

The fact is that the EU is the largest market for the agricultural exports of developing countries. The fact is that EU market share for all major farm commodities has not gone up, but down in the last decade.

Both facts taken together show that the EU is hardly the international market predator it is sometimes painted as, but rather the most open market to goods coming from developing countries.

Let us be clear about what is really at stake in Cancun and beyond. The WTO has no competence to determine our respective agricultural policies, but to reduce and even eliminate trade distortion via balanced negotiation. The main issue is actually not how much money is spent in our respective farm sectors, directly or indirectly, but how it is spent.

This is why Europe and the US have every reason to work together to make the Doha Developing Agenda (DDA) a success. Despite having a different approach in our respective proposals for WTO modalities, we are both committed to further agricultural trade liberalisation, and to give the poorest countries in the world a better deal.

But since there remain important issues in these negotiations that divide us, it is important to work hard in the remaining time before Cancun. We must try to understand why these differences exist, and to explore whether some of these differences can be bridged, and how.

And we must do that being aware of the fact that success in Cancun will only happen, if all WTO members come on board. In the WTO it takes 146 to tango, not just the two "big elephants".

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• Commissioner Fischler's closing remarks at Montreal Mini Ministerial Meeting (31/7/2003)