Possible Light at End of EU Farm Policy Tunnel

Possible Light at End of European Farm Policy Tunnel

The mid-term review of the European Union’s Common Agricultural Policy (CAP) offers an opportunity for the EU to show leadership in world trade through genuine reform of the CAP, Trade Minister Mark Vaile said today.

Speaking from Dubai, in the United Arab Emirates, Mr Vaile said there is a glimmer of light at the end of the European farm policy tunnel.

“The damage done to Australian farmers by the CAP remains a serious issue of concern to the Government,” Mr Vaile said.

“Reforming world agricultural markets would provide a significant boost to Australian agricultural exporters, enabling them to compete on the basis of quality and price, not by the amount of Government support provided to producers.”

“I am encouraged by those elements of the European Commission's proposal which would be less trade - and production - distorting than the current system.”

The EU’s mid-term review proposes the replacement of various subsidies paid to producers, with a single farm payment not linked to production and this is encouraging. There is also a proposal to reallocate 20 per cent of EU funding from subsidies paid direct to farmers to rural development programmes.

“Australia has been arguing for decoupling of support for the last two decades and the announcement of the mid-term review signals that some sense may at last be injected into European farm policy.”

“However, the proposal does not address the concerns of Australia and the Cairn’s Group of agricultural exporting nations, about the overall level of expenditure, which will only be cut minimally (0.4 percent). Market access restrictions are also not addressed.

“Significantly, there is no commitment to phase out export subsidies - the most trade distorting form of agricultural support. Surpluses will therefore continue to be dumped on world markets.

“Australia will closely examine how the EU classifies its domestic support in the WTO, and we will continue to press the EU on the commitment made at Doha to the objective of substantial reductions in domestic support.

“I urge European Member States and the Commission to be as ambitious as possible in finalising and implementing this proposal and would welcome an outcome which held the promise of fundamental change to agricultural support” said Mr Vaile.

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