FarmPolicy

August 21, 2019

U.S. – EU: Doha, CAP & The Farm Bill

Categories: Doha / Trade /EU /Farm Bill

Doha – Trade

The European Commission (EC) issued a news update yesterday, which stated in part that, “EU Trade Commissioner Peter Mandelson and US Trade Representative Susan Schwab have met in Brussels to discuss a wide range of bilateral trade issues as well as progress in the WTO Doha trade talks. The two sides also discussed relations with major emerging economies, as well as the contribution of trade policy to mitigation of climate change.”

The update indicated that, “On moving forward in multilateral trade talks, Mandelson said: ‘USTR Schwab and I agreed that both sides are committed to fully concluding the Doha Round by the end of this year. Both sides agree that this means moving rapidly towards an agreement on modalities by the very early spring. We believe that a modalities package should put equal emphasis on progress in agriculture, goods and services. We also believe that revised chairs’ texts must enable process to move to its next stage, and not erode the level of ambition of a possible deal’.

“The two sides also agreed that the EU and US needed to continue to work on relations with major emerging markets, including the shared view that Russia should join the WTO. On this issue Mandelson noted: ‘Both US and EU are interested in seeing Russia in the WTO, have given a great deal of assistance to Russia to bring this forward and want to maintain that cooperation between us. There are a number of substantive issues that need to be addressed and we will be doing so with the Russian authorities’. On trade relations with China, Mandelson recalled that both the US and the EU have strong records of cooperation and dialogue with China, and that this commitment should be maintained as the best way to resolve issues, even though other action could not be excluded if necessary.”

The news release also noted that, “Mandelson also noted on US subsidies for biodiesel producers that the European biodiesel industry had raised the issue with the European Commission. He added that the Commission would investigate and take action on any sufficiently substantiated complaint.”

Additional links were made available in yesterday’s EC update, including a video of the news conference with Commissioner Mandelson and Ambassador Schwab.

Reuters writer Jeremy Smith reported yesterday that, “The European Union and the United States said on Monday they still hoped to seal a long-delayed global trade deal in 2008, and trade ministers this week could help pave the way for a breakthrough soon.

“‘We are rapidly moving towards a moment of truth for the Doha round,’ EU Trade Commissioner Peter Mandelson said after meeting his U.S. counterpart Susan Schwab.”

Mr. Smith stated that, “Mandelson said a deal on core issues such as tariff cuts was needed by the ‘very early spring’ and he hoped a meeting of ministers on Saturday would ‘help put a clear roadmap in place in the direction that we want these negotiations to lead to.’

“Mandelson and Schwab and other trade ministers will gather in the Swiss Alpine resort of Davos this week, culminating in a lunch on Saturday, to discuss ways to rescue the World Trade Organisation’s Doha round of talks for a global trade deal.”

“Other trade ministers attending the World Economic Forum in Davos include those of Brazil, India and South Africa which have so far resisted pressure from wealthier nations to open their economies to more imports of goods and services.

“The next big step for the round is when the head of the farm talks issues a new draft negotiating text later in January or in February, followed by his counterparts in industry and services,” the article said.

Meanwhile, an AFP article from today indicated that, “Completing global trade talks is ‘doable,’ with a desire among World Trade Organization members to end negotiations in 2008, Chinese media quoted WTO chief Pascal Lamy as saying Tuesday.

“‘What I see from WTO members is a desire to try to finish the negotiations, which have been cooking for six years, some time during this year,’ Lamy told the China Daily in an interview.

“‘It is doable as we now have both political and technical conditions to make it possible,’ he said.”

In other Doha developments, an item posted on Sunday at The Age Online (Australia) stated that, “Trade minister Simon Crean leaves on Sunday on a 12 day visit to Japan, Europe and the United States in an effort to secure a successful outcome for the latest World Trade Organisation talks.

“‘Substantial political will is needed to conclude the global trade talks and to harness the significant economic and trade dividend to the world economy,’ Mr Crean said in a statement.”

The news item also stated that, “He will travel to Brussels briefly before arriving in Washington on January 30, where he will meet US Trade Representative Susan Schwab and others ‘to ascertain US views on the Doha round’.

“‘I will also register strongly Australia’s desire to see reform of US agriculture support through the next US Farm Bill and our commitment to developing the significant trade and investment relationship with the United States,’ Mr Crean said.”

EU- Common Agricultural Policy (CAP “Health Check”)

An article posted on Friday at Deutsche Welle Online (Germany) reported that, “Speaking before the International Green Week opened in the German capital Friday, Horst Seehofer announced he was spoiling for a fight over the EU commissioner for agriculture’s planned changes to the Common Agricultural Policy (CAP).

“Seehofer said that he was against the ground rules for EU subsidies being altered every year.

“Germany, as the primary funder of the CAP, is concerned that huge farms formed during the communist period in the east of the country would be hit if a maximum limit is applied to direct grants to farm enterprises.”

The article added that, “The European Commission is considering capping payments to the largest farms, increasing the minimum amount of land a farmer has to own to qualify for payments, and imposing tighter environmental rules on farmers as part of its so-called ‘health check’ on the CAP.

“‘Of course we have to be willing to compromise,’ Seehofer said. ‘But we are going to fight very, very hard for our corner.’ EU farm ministers are to negotiate on Monday in Brussels on the changes.”

The article explained that, “Under the ‘health check’, the Commission is set to consult with EU member states, farmers and NGOs over ways to make the CAP more effective without making it more expensive. The Commission is expected to propose legally-binding changes to the current CAP in spring 2008.”

(For more detailed background on the “Health Check,” see this FarmPolicy.com update from November).

Alan Matthews flushed out more details of the latest CAP developments in an update posted today at the “Health Check” Blog.

Mr. Matthews noted that, “Agriculture Ministers had their first discussion of the Commission’s Health Check proposals at the first Council meeting under the Slovenian Presidency yesterday. It appears that the two issues causing the most fuss are the Commission’s suggestions to introduce a progressive reduction in single farm payments to larger farms (inaccurately referred to as capping) and to increase the rate of compulsory modulation (which again would only affect larger farms), in both cases with the additional funds going to Pillar 2 rural development measures. At the same time, Ministers were clearly taken by the emphasis on risk management and safety nets in the Commission Communication and called for more specific proposals in this area.”

The update also noted that, “Somewhat clearer was the UK Guardian report of the meeting which quoted [EU Agriculture Commissioner Mariann Fischer Boel] as saying, in response to a question about likely problem areas during the debate over her policy changes: ‘I think the progressive capping of direct payments. And there’s not total unanimity about the necessity of compulsory modulation.’

“These were also the two areas highlighted by German and French farm leaders at the Berlin Green Week. Although, interestingly, it appears they are quite content to see further decoupling of the single farm payment and the elimination of compulsory setaside.”

Mr. Matthews also explained that, “There is now a clear timetable for the Health Check in place. The ministers will continue the debate at the Agricultural Council meeting in February. The Presidency intends to draw Council conclusions in March in order to allow the Commission to come back with legislative proposals which will be presented on May 20th with a target for final agreement in November.

“One of the key players, France, is due to make up its mind on the Health Check proposals in March. Until then, as one EU official noted, France is ‘talking in code’. Perhaps it was the country which helped to draft the final paragraph of that Council press release.”

An AFP article from yesterday provided an overview summary regarding some of these developments: “French and German farmers have joined forces to oppose two key elements in proposed reforms to the European Union’s Common Agricultural Policy, their representatives said Monday.

“German farmers are steadfastly opposed to a decrease in subsidies to large farms, a measure being considered by E.U. Agricultural Commissioner Mariann Fischer Boel as part of a CAP ‘check-up.’

“‘That would destroy lots of jobs in eastern Germany,’ where operations that began as cooperatives under the former communist regime are generally large, said Gerd Sonnleitner, president of the German farmers’ federation.”

The article noted that, “Half of all forecast subsidy cuts would affect Germany, and 90% of those would fall on farms in the east, added Gerd Mueller, deputy minister of agriculture.”

In addition, the AFP article stated that, “Another controversial subject is an increase in subsidies accorded to the ‘second pillar,’ or rural infrastructure, at the expense of direct aid to farmers.

“‘Rural development is first and foremost the work of farmers,’ declared Patrick Ferrere, general director of the federation of French farmers, the FNSEA.

“On all those points, ‘we are on the same page as the Germans,’ Ferrere added, ahead of a formal position to be taken by the French government in March on Fischer Boel’s proposed reforms.”

U.S. Farm Bill

Jerry Hagstrom, writing yesterday at AgWeek.com, reported that, “The American Farm Bureau Federation, the nation’s largest farm organization, will support Congress’ effort to use tax measures to increase funding for the farm bill even though that position will put the usually Republican-leaning organization in a direct confrontation with the Bush administration, Farm Bureau President Bob Stallman said in a Jan. 12 interview.”

Mr. Hagstrom added that, “‘The commodity title needs to retain what’s in the budget baseline,’ Stallman said, adding that money has to be found elsewhere for increases in food stamps, fruits, vegetables and other programs.

“In the bills they have passed, the House and Senate each used a tax measure to increase funding, but they were different. Democrats call both measures closing loopholes, while the White House and some congressional Republicans say they would raise taxes. Stallman said Farm Bureau already had signaled that either the House or the Senate tax measure would be acceptable to Farm Bureau because the group supported passage of both the House and Senate bills.”

“Acting Agriculture Secretary Chuck Conner has said frequently that if Congress does not eliminate the tax measures as a funding source and fix other aspects of the bill, he and other advisers will recommend that President Bush veto the bill,” the article said.

In a related item regarding Farm Bill budgetary issues, DTN writer Chris Clayton reported yesterday that, “House Agriculture Committee Chairman Collin Peterson held back little on Saturday when he noted with irony that the farm bill is gridlocked over costs, but President Bush has proposed a $145 billion economic-stimulus package without funding it.

“‘Nobody is complaining about that,’ said Peterson, D-Minn. ‘It looks like they are all going to head over the cliff and do this without paying for it and here we sit, we need $10 to $15 billion to have the biggest economic stimulus package rural America could ever have in this farm bill and we are in this quagmire. I mean that is ridiculous.’”

Mr. Clayton noted that, “Peterson spoke on a panel Saturday at the annual Pheasants Forever convention along with Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, and Acting Agriculture Secretary Chuck Conner. While the discussion leaned heavily on the farm bill’s conservation measures, there were still sparks over costs and the problems that could occur if the farm bill is not completed early this spring.”

Tom Hintgen
, writing yesterday at The Daily Journal (Minnesota) reported that, “Two issues stand out above the others as Congress tries to hammer out an agreement: how the bill will be paid for and how much the legislation will limit federal farm subsidies.

“The White House said neither the House or Senate bills do enough to limit payments to wealthy farmers, arguing that Congress should adapt an administration proposal that would ban subsidies to farmers whose gross income exceeds an average of $200,000 a year.

“Both bills, according to The Associated Press, attempt to limit subsidies somewhat. The Senate legislation would eventually ban payments to nonfarmers whose income averages more than $750,000 a year — defining farmers as those who earn more than two-thirds of their income from agriculture. The House would ban payments to farmers and nonfarmers who earn an average of $1 million a year or more.”

And Jane Roberts reported today at the Commercial Appeal Online (Tennessee) that, “If the biggest fight facing the farm bill is trying to persuade the White House to fund the $286 billion plan, U.S. Sen. Blanche Lincoln (D-Ark.) has her arguments ready.

“On Monday, the farmer’s daughter from Helena, Ark., ticked down the list, telling about 500 producers at the National Conservation Systems Cotton and Rice convention in Tunica that the taxpayer ‘gets an incredible return’ on investment in American agriculture.”

The article noted that, “”The next time someone starts bad-mouthing farmers,’ she told the crowd, ‘you tell them you give us the most affordable food supply and the safest, not to mention what you do in terms of the environment.’

“‘I come to you as a farmer’s daughter and as mother who buys food to feed her children,’ said Lincoln, a senior member of the Senate Committee on Agriculture Nutrition and Forestry. She encouraged listeners to tell their stories to their neighbors and congressmen.

“‘Talk to people, write a letter to the editor and let people know what your investment is,’ she said.”

***

And with respect to sugar and trade, The Wall Street Journal editorial board indicated today that, “The last planks of the 1993 North American Free Trade Agreement were fully implemented on January 1, meaning that the continent’s producers can now sell to a market of 425 million consumers. Then there are U.S. sugar growers, who are already reacting to this new era of competition by scheming to carve out a new continent-wide cartel.

“For decades American sugar producers have prospered from a government-guaranteed price. To keep this from bankrupting Uncle Sam, Washington has controlled supplies with import quotas and allotments to growers. This has kept U.S. prices two to three times higher than the world price and sent thousands of jobs overseas, while a political cartel of Senators from the South (cane) and Midwest (beet) has beaten back every attempt at reform.”

Concluding, the editorial stated that, “Even sugar growers can see the fuss this might create unless Mexican exports are restrained. So they are now circulating still another set of recommendations in Congress that would explicitly control the amount of sugar Mexico is allowed to ship to the U.S., and vice-versa. No new competition would enter either market. To supervise this cartel, the sugar lobby wants Congress to establish a new binational commission. The proposal would also ban the re-exporting of foods (notably candy) that use sugar imported from a third country, and would sharply limit how much sugar could come from third countries. In other words, sugar would be renegotiated right out of Nafta only weeks after it finally took effect.

“U.S. antitrust laws prohibit producers from uniting to fix prices, so this scheme could certainly stand some legal scrutiny. But the larger issue is the message the U.S. would be sending if it allows a special interest to rewrite a trade treaty in this unilateral fashion. Mexico is unlikely to go along with this without reciprocity, such as new protection against U.S. exports for its politically sensitive corn and bean farmers. That would damage U.S. farmers, and might well kick off a series of demands for more protection on both sides of the border.

“So Congress and the Bush Administration have to choose: Either defend the economic benefits from an integrated North American market, or bow to one of the world’s richest and most destructive special interests.”

Keith Good

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