MEMO/05/382

Brussels, 19 October 2005

Simplification of the CAP: background Memo

The Commission Communication on “Simplification and Better Regulation for the Common Agricultural Policy” examines the possibilities for and limitations to simplification of the Common Agricultural Policy (CAP). The plan was already announced at the December 2004 Agriculture Council and has since been made known to the European Parliament Agriculture Committee and to the public.

1. Framework:

The Communication forms part of the CAP’s contribution to realising the Lisbon strategy and the Commission’s overall legislative simplification strategy. A Commission-wide “simplification initiative” is being put in place by the Commission, to which DG Agriculture and this communication aim to contribute. The general aim is to reduce the regulatory burden and cut red tape.

At the same time, it forms part of a long tradition of CAP simplification activities (from improvement of content and presentation of agricultural texts to specific simplification projects and, especially, integrating simplification concerns in CAP reforms). This on-going activity from the early nineties has always been carried out by the Commission with the support and collaboration from national authorities.

2. What simplification is, and isn’t

The purpose of simplification in the public sector is to ensure that policies, the mechanisms chosen to implement them and the necessary legal framework are never more complex than is necessary to achieve the intended objectives effectively. Simplification as a process aims to identify and remove sources of unnecessary burdens.

There are different aspects to simplification:

• Technical simplification (i.e. within a constant policy framework) implies revision of the legal framework, administrative procedures and management mechanisms to achieve streamlining and greater cost-effectiveness and attain existing policy objectives more effectively, without changing the underlying policies;
• Policy simplification reduces complexity through improvements to the agricultural support and rural development policy instruments. It may be described as ‘policy development with simplification implications’. Impact assessment has a particular role to play here.

Simplification is not intended as an additional forum where interested or disappointed parties can attempt to reopen decisions which have already been concluded in the appropriate forum.

Simplification is not intended as a kind of ‘homogenisation’ process, it is intended to lead to the creation of appropriate solutions to needs and problems.

Control burdens are often cited by Member States as being one of their major concerns. Simplification actions must not be allowed to adversely affect the need to protect the financial interests of the EU. The CAP is largely a public expenditure policy, and no weakening of essential management and control rules can be envisaged in the name of simplification. This does not, of course, rule out the possibility of seeking to achieve the same degree of financial assurance using more streamlined and cost-effective procedures.

3. Why is the CAP so complex?

It is important not to have exaggerated expectations of the possibilities of simplification in agriculture.

The CAP will always be by nature a complex policy, since it reflects the heterogeneous realities of agriculture in the EU, and the more closely it resembles reality, the more it inevitably becomes complicated. There is not only a huge variety of natural environmental conditions to be found in the territory of the EU, but also considerable heterogeneity amongst Member States’ agricultural economies and administrative traditions. The recent enlargement of the EU has increased this heterogeneity. Careful analysis and well founded policy decisions may lead to justifiably complex legislation.

The fundamental political decision enshrined in the Treaties to provide financial support to the farming sector results in a public expenditure policy which requires a legal framework, control measures to protect the financial interests of the taxpayers and ensure sound management of the considerable sums of public money involved, and bureaucratic mechanisms to manage markets.

Simplification also has its limitations:

• The parties concerned may have different interests which cannot be satisfied simultaneously.
• In the decision-making environment and processes, Member States and the various interest groups in the agricultural sector naturally aim to negotiate the best outcomes for themselves.
• External pressures on the CAP can be in the direction of greater complication. The other Institutions sometimes press for more controls and increasingly complex solutions, and often take decisions without regard to the consequences in terms of complexity. There is a need to respect WTO decisions and rulings such as that recently made in the sugar sector.
• The CAP is now some 40 years old, and there has been plenty of time for the development of some long-standing traditions and expectations.
• Flexibility benefits users but at the expense of introducing complication – adapting and responding to the needs of users may result in better regulation but less simplicity.

4. The 2003 – 2004 reforms

Many features of these reforms will produce a more efficient and simpler agricultural policy in the longer term, which will be more effective in supporting the farming sector. The co-existence of different systems of agricultural support in the transitional phase – an option requested by Member States during discussion in the Council of Ministers – clearly carries a potential for greater complication rather than simplification, but there is no requirement for Member States to apply different support systems simultaneously, and the potential for simplification is available to them should they wish to take advantage of it. The replacement of several different premium systems with the Single Farm Payment greatly enhances the potential for simplification.

5. Examples of simplification work already achieved

Various types of simplification projects have been undertaken within DG Agriculture; specific simplification projects have tended to focus on processes rather than specific policy areas.

Examples of this include:

• Removal of obsolete legislation: over the last 5 years, DG Agriculture has carried out several exercises aimed at removing obsolete legislation from the acquis, partly through the traditional repeal procedure, but also through use of a new procedure to remove obsolete legislation from the Directory of Legislation in Force. DG Agriculture has carried out this type of cleaning for a number of years, and - following the creation of this new ‘obsolescence’ procedure - a Communication has recently been adopted, declaring obsolete around 100 agricultural acts which are no longer in force; around a further 100 obsolete acts are in the pipeline to be declared obsolete.
• Reform of the CAP financing system, with the creation of two distinct Funds. Simplification has been achieved through clear separation of the financing sources for support mechanisms including the single payment / refunds / intervention measures on the one hand and for rural development measures on the other hand, together with the introduction of a unified control and management system.
• Simplification of the rules relating to state aids has created significant benefits for Member States and economic operators, considerably reducing administrative burdens and reducing implementation delays.
• DG Agriculture has on two occasions published reports on its simplification activities, which have been transmitted to and discussed with the other Institutions.
• A study of Member States’ reporting obligations, which led to the adoption of a significant number of simplifications, and the drafting of guidelines for reporting.

6. The way forward

The Communication proposes in particular:

• to simplify the CAP’s legislative environment by extending the horizontal approach begun by the 2003 reform, to provide a single set of harmonised rules in the classic areas of market policy without changing the substance of the existing instruments and mechanisms. In this context, the adoption of a “single Common Market Organisation” replacing the existing ones (around 20) will be the major proposal linked to the new simplification strategy.
• to continue the activities already in place, aiming at improving access and clarifying EU agriculture law (improvement of legal drafting, withdrawal of outdated texts, codification and recast of modified texts)
• to develop a CAP simplification action plan in 2006 which will take into consideration the outcome of discussions on the present Communication (at Member State and stakeholders level), and will indicate the concrete measures envisaged.
• A simplification conference is planned for 2006, focusing on the views and needs of