Dr. Franz FISCHLER
Member of the European Commission responsible for Agriculture, Rural Development and Fisheries
Agricultural changes in Europe and the prospect of Poland's accession to the EU
Conference on „Polish rural areas facing the challenges of European integration", organised by the Catholic European Study and Information Centre in collaboration with the Polish Bishop's Conference and the Minister of Agriculture
Warsaw, June 8th 2000
Your Eminence, Your Graces, Minister, Ladies and Gentlemen,
I am delighted to be here with you once again and to participate in today's events. In particular, I should like to thank you, Cardinal Glemp, for offering me the opportunity to address this very distinguished audience and to speak on a subject that is of crucial importance for all of us: the envisaged accession of Poland to the European Union.
This perspective makes me look back to the year 1989 when the iron curtain was lifted that had divided Europe for more than 40 years. I well remember the active role Poland, the Polish People and the Polish Catholic Church played in initiating and achieving this fundamental political and economic change. And I am grateful for their contribution. Today, more than ten years later Poland and the other Central and East European Countries are committed to become Members of the European Union. And the Union itself has invited you to join and participate in the process of European Integration. This means nothing else but the unique chance to further unite our continent, on the basis of common values and of common history and in a spirit of peaceful co-operation. And it also means to further develop the beneficial economic effects of European Integration for the sake of both the existing Union and the new Member States. As Pope John Paul II. said on his visit to Poland last year, Europe now has an historic opportunity to come together in unity, building on the common values of promotion of human dignity and the search for the common good. I share his view that this will lay solid foundations for consolidating peace and security, and will be to the benefit of all citizens. This is the overall context we should bear in mind when we discuss on enlargement in general and its agricultural aspects in particular.
I know that you, as representatives of the Church, care deeply about the welfare of your people - spiritually, socially, and economically. I know that this concern leads you to actively participate in the public debate on central issues of Polish society. I admire and appreciate this compassion that you have for your people, and the desire that it creates in you, to do all you can to improve their quality of life. The more I am grateful for the possibility to present you my views on enlargement. On the efforts that need to be made before accession can take place. But also on the tremendous opportunities that membership in the European Union will create for the applicant countries in general and Poland in particular.
Enlargement will be a major event and present challenges not only for the candidate countries but also for the EU. Therefore, it is clear that such a significant step requires careful preparation on both sides.
It is evident that the accession process will affect the institutions, the policies and the whole identity of the EU. In my personal view, there can be no enlargement without considerable changes in the EU decision making process. A Union of more than 25 Members could hardly be run with the rules that had been designed for a Community of six countries. Against this background, the EU is currently examining its own internal structures and procedures to ensure that they will operate smoothly and effectively with an increased number of Member States. This review is known as the Inter-Governmental Conference or IGC. Although the IGC is faced with a number of complex and politically delicate issues I have good reasons to believe that it will live up with its overall objective to "make Europe fit for enlargement". I am also confident that it will be completed under the French Presidency by the end of the year.
Apart from the institutional aspects of enlargement, in a number of key policy areas the EU has already made serious efforts to prepare itself for accession. The decisions of the Berlin European Council on the Agenda 2000 reform package last year revised the system of Structural Funds and overhauled essential parts of the Common Agricultural Policy. Without going into greater detail, let me just highlight the main elements of the agricultural reform. In key market sectors such as arable crops and beef we further reduced the institutional prices in order to strengthen the competitiveness of European agriculture on the international markets. These price will encourage farmers to produce for the real markets instead of intervention. They will also facilitate further price convergence with the Candidate Countries. On a horizontal level the concept of an environmentally friendly and sustainable agriculture was considerably reinforced. And, in terms of structural measures, the crucial result of Agenda 2000 was the creation of a comprehensive rural development policy covering the whole Community. I will come back to this last aspect later in my speech. After all, AGENDA 2000 consolidates a process of reform built around a model of European agriculture that is competitive, multifunctional and sustainable.
Moreover, Agenda 2000 established a comprehensive financial perspective for the years from 2000 to 2006. It is a quite remarkable characteristic of this financial perspective that for the first time enlargement has become part of the mid-term budgetary arrangements of the Community - years before it is expected to take place. Nobody should underestimate that the agricultural funds set out for the new Member States are foreseen to rise to almost 16.5 billion zloty in 2006. And even more important in addition to the PHARE programme two new pre-accession instruments have been put in place. I am quite proud to recall that the agricultural SAPARD scheme alone accounts for 2.1 billion zloty per year. Having said this, I am convinced that the Agenda 2000 reforms are a solid basis for the upcoming accession process even if certain elements might still have to be adjusted.
But not only the EU had and has to prepare itself for enlargement. Also, here in Poland, you face legal, administrative and economic challenges in the period prior to accession
In order to become an EU member you shall implement the whole body of EU legislation, that is the „acquis", as we call it traditionally. I will not say much about this today. However, accepting the acquis wouldn't be enough. Poland as well as the other Candidates will need to incorporate the „acquis" into its legal order and ensure its effective implementation upon accession. This includes the need to develop the administrative capacity to handle complex policies such as the CAP and the detailed legislation on food quality, food safety as well as veterinary and plant health standards. In this respect, I urge all those involved to continue the upgrading programmes for the food processing sector. I would like to underline that this is not a new or unusual hurdle to be taken but a condition that all candidate countries had to respect before joining the EU in the past. Quick adaptation to Community standards is also important to give access to the internal market immediately upon accession. This means that only products that are compatible with Community standards will benefit from the opportunities of the single market.
I understand that Poland is committed to satisfy these criteria. Having said this, I truly hope that the process of legislative and administrative alignment will carry on and, where possible, will even be accelerated. The signals we received from the Polish side over the last months were encouraging in this respect.
As regards the economy, you need to develop fully functioning markets in agriculture as well as upstream and downstream sectors. Equally important, particularly in the food processing sector, is the capacity to cope with competitive pressures and market forces in the Union.
The pre-accession process and the upcoming negotiations on Accession are about ensuring that Poland as the other Candidates take the necessary steps to meet these challenges before joining the Union. As regards agriculture and the agro-food industry I could mention a number of problems that Poland will have to tackle with a view to ensuring a successful accession:
Of course, economic challenges such as restructuring the farming sector, strengthening the rural economy and improving the competitiveness of the food processing industry are long-term processes. However, this must not be used as an excuse to put them off the agenda until after accession. Precious time would be wasted, the accession process would only become more burdensome and the negative consequences of such an approach would be borne in the first place by Polish farmers. Equally, we should not forget that, once it has begun, the economic development will continue, and most probably accelerate, after accession with the additional support of EU policies for rural development and economic and social cohesion. Nevertheless, it is essential to address the issues now, to ensure that on accession the sector is able to take advantage of the benefits of the CAP and the single market.
The EU fully recognises the difficulties of the restructuring task Poland and the other Candidate Countries are faced with. That is why considerable EU funds have been allocated under the SAPARD (Special Accession Programme for Agriculture and Rural Development) programme to support rural development during the pre-accession period. Let me underline that in none of the previous enlargement processes a similar measure had been set up. The annual allocation of SAPARD funds to Poland is around 694 million zloty per year (at 1999 prices). My services are currently negotiating the SAPARD programme with the Polish Ministry of Agriculture. Although there is always a certain risk to make forecasts in such matters, I would expect that the programme can be adopted within the next few months.
At the same time, the Polish authorities are working to put in place the implementing agency required to run the programme, administer the grant schemes and manage the expenditure. This national agency is an indispensable part of the decentralised management structure of SAPARD. In order to guarantee a proper management of EU money it needs to comply with severe accounting and control standards. As a consequence, individual projects cannot be selected or funded until the implementing agency is fully operational and the Polish SAPARD management system as a whole has been approved by the Commission. However, the allocation of EU funds to Poland under the EU budget for the year 2000 can be safeguarded once the programme is approved and the financial memorandum between the EU and Poland is signed. I look forward to the time when all the necessary procedures are completed and the Polish SAPARD programme becomes fully operational. I am sure that it will be of great value in supporting the Government's own rural development policy and will deliver real benefits to rural areas.
Ladies and Gentlemen, the European Union has a strong commitment to rural development. Rural areas have received specific recognition in the EC Treaty that states that "the Community shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least-favoured regions or islands, including rural areas (Article 158)". In the framework of Agenda 2000 we established a comprehensive rural development policy that we rightly see today as the "second pillar" of the Common Agricultural Policy. This EU commitment to rural development is based on an increasing recognition and acceptance that whilst agriculture remains an important activity in rural areas, rural economies are diversifying, and other economic sectors are gaining in importance.
Within the EU we have seen a steady decline in the numbers of people who make their living primarily from farming. As a reaction to this phenomenan we have therefore developed policies to address this shift and to ensure that rural communities are able to develop other activities and to remain stable cohesive communities.
This shift of labour out of agriculture is not by any means unique to Europe, but is mirrored in most major economies. As populations grow more prosperous, the proportion of income spent on food falls. There is only one way to prevent the gap in living standards between urban and rural areas becoming even greater than it is at the moment. We must increase productivity on farms, which will mean fewer people producing the same quantity of food. Improving productivity also means producing food of higher quality and value. At the same time we must ensure that conditions are right to allow other economic activities to develop in rural areas, to provide alternative employment for those no longer involved in food production.
As I have said, we have already faced this situation in most of the EU Member States, and so we have some experience and understanding of the difficulty that you face. We do also appreciate the particular factors, which have contributed to your situation, and which make transforming your rural economy an even more challenging task. Poland is undergoing an historic transformation. Many, particularly in rural areas, are feeling the pressures of this process. I know change is often difficult and that currently many Polish farmers feel threatened by what they see as an uncertain future.
However, I believe that EU membership will help you to address the challenge of restructuring the rural economy, through the experience that we have gained, and through the policies and resources which are put in place to support rural areas. The EU is committed to what we in our jargon call "economic and social cohesion". Put simply, this means helping the disadvantaged regions to catch up on their backlog. This approach seems to me to be completely in tune with the teaching of the church, and a good example of the common cultural heritage, which we share.
We must not be too pessimistic about the situation of rural areas. Whilst it is true that these regions face difficulties, we would be doing a grave disservice to rural communities if we did not also recognise their strengths.
It is my firm belief that the most valuable asset is the people themselves. Because of remoteness and poor communications rural communities have traditionally had to be self-reliant and able to provide for themselves. This has resulted in the development of strong community links, societies which care for one another, and people who have developed great determination through the struggles they have endured.
Perhaps in some areas these characteristics have been suppressed for a while, and people feel that there is nothing they can do to improve their situation. It is our role to overturn any sense of hopelessness, to ensure that there are opportunities, that initiatives are welcome and will be supported. Above all, to demonstrate that those in authority do care about the well-being of rural villages far from Warsaw and even further from Brussels.
It is up to those in government and authority in Poland, and in the EU, to ensure that the benefits I have been talking about do indeed materialise, and begin to make a real difference to the lives of Poland's rural population. Farmers and rural communities will only be convinced of the advantages of joining the EU if they believe that there will be definite benefits for themselves and for their children.
This highlights the importance of good communication, in both directions. It is important that the population should be well-informed about the accession process and the opportunities that EU programmes offer, during the pre-accession period, and also after membership. It is equally important that channels exist for rural communities to make their views known to the Polish Government and also to the Community institutions in Brussels. I believe that the church, with its well-developed nation-wide network and close involvement in every aspect of community life, can play an important role in ensuring that this two-way communication occurs and is effective. I would ask you to take the message I am giving you today back to your congregations, pass it on as widely as possible. I would also welcome feedback and comments. The EU is built on consultation, discussion and compromise, and I urge all your citizens to prepare to participate.
Ladies and gentlemen, we are all aware of the importance for the enlargement process of the agricultural trade relations between the Candidate Countries and the EU. Therefore, one of the major topics in the current bilateral discussions between the EU, Poland and the other Candidates is the question how the trade in farm products can be liberalised progressively.
Candidate countries are keen to have better access to EU markets. Better access will improve their competitiveness, ahead of their full accession to the EU, by encouraging agricultural production and food processing capacities to adjust to the requirements of the common market.
Applicant countries are also requesting the EU to stop subsidising exports to their markets. However, competition shocks after accession can also be avoided by progressively opening our markets for each other beforehand. For all these reasons, the Council authorised the Commission in March 1999 to open negotiations with each of the Candidate Countries in order to liberalise the bilateral trade.
So far, these negotiations have been carried out on a reciprocal basis and were based on the principle of neutrality with respect to the functioning of the CAP.
Our negotiation concept followed three basic principles:
I am quite satisfied with the results we were able to achieve with most of the Candidate Countries. As you know, however, the negotiations with Poland turned out to be more difficult than envisaged and to my great concern the situation as it stands now is rather unsatisfactory. Having said this I should like to stress that a positive approach to further liberalisation of agricultural trade is also an important indicator for a candidate country's ability and willingness to face the conditions of the single market - or in other words: to become a member of the EU.
In this respect we should not forget that the „double-zero-talks" are not traditional bilateral trade negotiations. They have been launched with a view to facilitating to the pre-accession process, that is to prepare Poland's accession to the EU. I am aware that in the agricultural trade relations between Poland and the EU there are elements that caused some dissatisfaction on the Polish side such as the use of export refunds by the EU in the past. However, in the perspective of accession this would not be the right moment to look back. We have to win the future and to take the necessary measures to be prepared. This is what counts today! Increasing tariffs might provide short term relief to some parts of Polish agriculture. In the long run, however, it would have damaging effects as it would be incompatible with the challenges resulting from the accession process.
Let me take a concrete example - pig meat - to illustrate our concerns. Poland decided in 1999 to increase the import tariff on pig meat from 60 % to 83,3 %. The Polish side explained that the main reason for the increase was the export refunds granted by the EU on pig meat. It is true that in late 1998 the EU export refunds for pig meat were exceptionally high. This was due to the low world market prices caused by the Russian crisis. Already in December 1998, however, the Community had reduced the refunds again to the normal level. The Polish tariff increase is still in force.
To understand the situation we have to see that that the internal prices for pig meat are more or less at the same level in Poland and the EU - or slightly lower in Poland., Against this background, the double-zero concept would be an ideal and mutually acceptable way out of the problem.
It would, indeed, reflect the actual competition conditions for the pig meat sector and allow the comparative advantages to play its role. With a unilateral removal of the EU export refunds, however, the increased Polish tariff would clearly lead to an overprotection of the Polish pig meat market.
Having said this, I still hope that we will be able to negotiate a mutually acceptable solution with Poland, too.
Although the agricultural enlargement negotiations will only be formally opened next week, we know already that agriculture presents some of the most difficult challenges for the negotiators. Poland presented the agricultural negotiation position in December and the Commission and Member States have been working since January on preparing the EU's response. Among the many problems your government has raised in the Polish position there are several issues that will be of particular sensitivity in the negotiations. In general, I do not think that this would be the right moment and place to comment in detail on questions that will be soon on the negotiating table.
There is, however, one question that has undoubtedly become one of the most debated negotiating issues: the request - by the way also raised by all the other Candidates of the Luxembourg group - that farmers should receive full direct payments upon accession.
The Candidate Countries look at the issue of direct payments in particular from the angle of equal treatment. As Commissioner for Agriculture currently responsible for fifteen Member States I can say quite clearly, without fairness and equal treatment there would be no Common Agricultural Policy. And I will remain committed to fair treatment of all members, old and new.
On our side it has always been argued that available financial resources would be used most effectively for rural development and restructuring. More generally, I am not convinced that direct payments as we know them under the CAP are appropriate to a period of rapid structural change. On the contrary, we must ask ourselves whether CAP payments will help to unlock the potential of Polish agriculture or hinder its adaptation to the conditions of the single market and create social dislocation. It might be better to help the Polish rural economy overcome its existing structural handicaps through well targeted rural development policies and transitional support for the worst off. This might be the best long-term-guarantee for maintaining rural incomes. I am sure that the Polish farmers are well aware of these aspects.
This is a discussion that we are yet to have. We also know that we need more information from Poland and the other Candidate Countries to reliably evaluate all the possible impacts. And we still have to examine in greater detail the consequences of direct payments for the rural economies concerned. At the end of the day, we will need to find reasonable solutions that best serve the interests of agriculture in the enlarged Europe once Poland and the other Candidate Countries are full Members.
But let me be clear on this point: I would be the last to accept in the long run a divided first and second class Common Agricultural Policy. But we also run the risk of a first and second class agriculture. Without the necessary structural reforms many sectors in Polish agriculture will not be able to compete effectively within the single market. We must ensure that we can deliver the promise of membership of the single market and the CAP.
The enlargement negotiations should not be an exercise in conflict and a fight to win points. Instead they should be a process where both sides seek to find solutions which will be just and fair, and which will lay the foundations for a mutually beneficial permanent relationship. This does not mean that there will not be difficult issues to tackle, but that we must approach them in a constructive manner in good faith.
To conclude, I want to stress that Poland's accession to the EU is not a dry technical exercise. It is rather like a marriage - no one will gain if either side feels cheated or hard done to. But also, like a marriage, it is not easy, and it requires effort and commitment from both sides. However, I believe that this effort and commitment is justified, and that we can achieve a united Europe, with benefits for all its citizens. We must all recognise that we are working towards the same goal Poland taking its rightful place in Europe and participating fully and fairly in all EU activities.
We have a truly historic opportunity, let us make the most of it.