Abstract
Food has always been regulated and it is the central idea of any form of civilization. Agriculture has been at the heart of the EU integration project, starting from the treaty.
Food has always been regulated and it is the central idea of any form of civilization.
Agriculture has been at the heart of the EU integration project, starting from the treaty of Rome, which creates the European Economic Community (EEC). In 1962 “the Common Agricultural Policy” (CAP) was introduced, because EU was a net food importer. Indeed, starting from the early 60s, CAP creates a sort of barrier with the rest of the world in order to control the movement of food from the world into the ECC. Fist of all, the aim was to stimulate the production within the ECC, setting higher prices than the world market prices. It was important to keep these target prices, and if it won’t happen the state guarantees a state intervention (intervention price). Second, it was important to introduce a subsidies system to promote productivity, research and development and then there was a shift from a consumer subsidy system towards a state subsidy system. EU started giving subsidies. EU moves to a self-sufficiency condition, which in some years turns in overproduction. In fact, at certain point, the farmers were stimulated too much, so the states were forced to intervene to bring the situation to a new equilibrium. In the EU, at the time, it was considered politically impossible to lower the prices because it would have started hitting the 80% of the farmers, so a system of production limitation was introduced. The situation became a little bit more complex and the only solution was creating exports and subsidise them because the world market prices were lower. Then, the prices started going down again and a subsidy war between USA and EU began after the introduction of the US Export Enhancement Programme. It is necessary to underline that USA sets the world price, so when the USA came to the problem of the EU dumping on the market, the USA saw it as a minor problem because it had to subsidise a much less amount of the EU. The success of the CAP in boosting EU agricultural production and the USA view of the world, created collateral damages: a lot of countries started to suffer from this situation; for instance Australia did not have enough money to be an active part in this subsidy game. As a result, the major agricultural exporters (14 countries) created the Cairns Group. Innovation and regulation about subsidies became a real need.
As agricultural products are goods, like industrial ones, the GATT applied, and still applies, to the products of agriculture. Agriculture in the GATT is present in several articles. First of all, Art. 16 applies to subsidies: domestic and export subsidies. Then, Art.20 provides a number of exceptions in which contracting parties could be exempted from GATT rules. Really important for agricultural policies is the exception for measures necessary to protect human, animal or plant life or health or those in relation to the preservation of exhaustible natural resources. Even if, GATT in all its parts try to deal with overprotection it did not prohibit it. Beyond, Art 1 (the Most Favourite Nation Principle), Art.2 (the Transparency Clause) and Art. 3 (the National Treatment Clause) of the GATT, suggest not to put in quantitative restrictions. To protect the market, it is necessary to introduce tariff; a tariff is money, so you pay and then you can do something. However, the main problem of the GATT is that it is characterized by the lack of binding disciplines on subsidies. Although, the Art. 16 of the GATT provides for disciplines on subsidies, it should have been implemented, because of a lack of effectiveness. Actually, a special treatment of agriculture was needed for several reasons (political, social, economic and cultural). Indeed, the “Uruguay Round” was conducted within the framework of the General Agreement on Tariffs and Trade (GATT) with main objectives of reducing the agricultural subsidies and disciplines the market access and the domestic support. In 1995, the Round led to the creation of the World Trade Organization (WTO), and in the same year the “Agreement on Agriculture” (AoA) entered into force. The AoA along with the WTO agreements where created in order to remedy to these problems.
From a European point of view, during the time of the development of the CAPs, there were several attempts within the GATT to influence and modify the general orientation of the emerging policy. Although, the subsequent CAP reforms were been interrelated with the three pillars of the AoA, market access, domestic support and export competition, also EU itself put efforts in order to discipline this field. In 1992, CAP reforms have been adopted, the CAP shifts from market support to producer support. Direct aid payments were given and began an increasing emphasis on food quality, protection of traditional and regional foods and caring for the environment. Thereafter, “The Agenda 2000” proposed to continue the development of the European Model of Agriculture, but at the same time introduces several measures to promote rural development. Since then, steps towards were made, underlining the fact that farmers have to respect specific environmental, animal welfare and food safety standards. During the mid 2000s the EU becomes the world’s largest importer from developing countries, because has given free market access to all developing countries.
Anyway, at international level agricultural production is mainly regulated by the “Agreement on Agriculture”. Both, WTO and AoA emerged from the GATT 1947. AoA is based on three central pillars (market access, domestic support and export competition) and provides provisions also on its relationship with the GATT. First of all, Art. 4 rules the market access (first pillar), and provides for tariffication. It also prohibits a return to the use of non-tariff border measures, including variable levies, for agricultural products. Then refers to the reduction of tariffs or non-tariffs barriers to trade by WTO members. Both developed countries and developing countries agreed to reduce their tariffs respectively by 36% and 24%. In addition, Tariff Rate Quotas (TRQs) play a key role because facilitate the movement of agricultural products, for instance fruits and vegetables and meat. In fact, for these products tariffs in many countries remain high. TRQs are also contained in Art. 13 of the GATT 1994. Regarding the domestic support (second pillar), the AoA includes the classification of subsidies in boxes (Art.6), depending on their effects on production and trade. Amber boxes, where all domestic support measures are considered to distort production and trade (with some exceptions), blue boxes are production-limiting programmes that still distort trade, and green boxes programmes that could only create a minimal distortion. Finally, the third pillar, export competition, is disciplined from Art.8 to Art. 11 of the AoA. These should be read in relation to Art. 16 of GATT 1947 on export subsidies for agricultural products. Art. 8 of the AoA says that all export subsidies are banned, except agricultural products that are subject to a reduction commitment. The AoA allows the export of agricultural products to be subsidised, but within disciplines related to the volume of the exports and the amount of money to be given. Also, it is important that all members must notify the Committee on Agriculture annually with respect to export subsidies. However, Art. 13, 15 and 16 are also fundamental for the regulation of the agricultural productivity. They introduce the peace clause, only applied during the implementation period and provisions for developing countries. The first one provides that Green Box domestic support measures cannot be the subject of countervailing duty action or other subsidy action under the WTO Agreement on Subsidies and Countervailing Measures. The other two articles set out special provisions in relation to developing countries and are very important because nowadays this is a fundamental aspect to integrate in every agreement. Nevertheless, Art.20 is another key element of the AoA, it says that agricultural trade and productivity are ongoing processes, which need continuative negotiations and implementation process. Therefore, after the success of the Uruguay Round in 2000 negotiations started and Doha Round began. The aim is achieve the progressive reductions in support and protection. It addresses each pillar of the AoA and proposes deep cuts in tariffs. It is fully a continuation of the Uruguay Round approach but introduces a very actual point: the sustainable development, in particular in developing countries, where about 75% of the population live in rural area. The “2008 Doha Round” does not impose a EU CAPs change, since CAP reforms had anticipated some issues before, but point out the crescent need to work together in order to keep updated CAPs and the AoA.
The lasts CAP reform was reached in 2013 and propose an evolution of policy and spending; only 5% of the total CAP expenditure represent the market management and intervention (while in 1992 was over 90%). The allocation of direct payments is dedicated to coupled support, young farmers, small farmers and the 30% to promote and respect sustainable agricultural practices in order to protect environment and face the issues of climate change. These are the so-called Greening measures. At the same time, the European Commission can activate market support measures. In addition, the idea of the rural development programmes, previously introduced, is implemented. Almost 25% of CAP funding, co-financed by national, regional or private funds, is dedicated to the investment in covers projects such as on-farm investment and modernisation, installation grants for young farmers, agri-environment measures, organic conversion, agri-tourism, village renewal, or providing broadband internet coverage in rural areas.
As said before, now sustainability of EU agricultural production is really taken into consideration. Several important steps have been taken into the CAP 2013. However, additional efforts are needed in order to improve the level of sustainability in a world of increasing food demand. In 1984, “The World Commission on Environment and development and the Brundtland Report” provided a modern definition of sustainable development. The WCED defined “sustainable development” as follows: “…development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” (1) It sets two key concepts: “needs”, in particular of the poor ones, and “limitations”, imposed by the society, the State, the level of technology and of course by the environmental resources. According to the WCED, this concept is not limited to the idea that it is what poor nations should do due to become richer, but involves several critical objectives. These include reviving growth, changing the quality of growth, meeting essential needs, ensuring a sustainable level of population, conserving and enhancing the resource base and merging environment and economics in decision making.(2) These objectives are strictly interrelated to the agricultural policies. In order to reach all these objectives, strategic action plans are needed both in developed and in developing countries. The political, economic, social, production, technological, international and administrative system must work together and communicate with each other. It is clear that the broad concept of sustainable development is based on three pillars: economic, social, and environmental. The States, EU itself and the International Community should make an effort: they have to balance and integrate the environment in economy, taking into account social and political aspects of the societies. It is important to say that the notion of sustainability incorporates the notion of the long-term availability and accessibility of food. In CAP 2013, it is required to farmers to start producing sustainably, respecting three main elements: crop rotation, preservation of the amount of grass on the basis that it is more friendly to climate change and obligation to maintain the habitat. However, in my opinion, the social aspect of Sustainable Development is not valorised enough. As the world population continues to grow, much more effort and innovation will be urgently needed in order to sustainably increase agricultural production, improve the global supply chain, decrease food losses and waste, and ensure that all who are suffering from hunger and malnutrition have access to nutritious food. Developed countries, which are now characterized by overproduction, have the duty to ensure the right to food to everyone. According to Art. 25 of the Universal Declaration of Human Rights, “everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services…”. Of course it is a universal duty, but every state has obligation in relation of it. For these reasons, EU should adopt specific reforms in order to ensure to developing countries: food security, this is when “All people, at all times, have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and their food preferences for an active and healthy life” (General Comment Number 12, of the UN) and food sovereignty, which is the idea that peoples should define their own food, production methods, have self-sufficiency in food and organise trade in food in such a way that promotes domestic production and limit access of foreign production. Also De Shutter, in his Report underlines that States should try to create systems in which people have their own food domestically, in order to eradicate poverty, and eliminate food insecurity.
To sum up, eradicating poverty and hunger are integrally linked to boosting food production, agricultural productivity and rural incomes. Agriculture systems worldwide must become more productive and less wasteful. An increase in integrated decision-making processes at European level is needed to achieve synergies and adequately address trade-offs among agriculture, water, energy, land and climate change. Nevertheless, are fundamental increasing investment in research and development of technologies to improve the sustainability of food systems everywhere.
NOTES
(1) Report of the World Commission on Environment and Development: Our Common Future, 1987.
(2) Report of the World Commission on Environment and Development: Our Common Future, 1987.
