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Dr. Franz FISCHLER Member of the European Commission responsible for Agriculture, Rural Development and Fisheries Enlargement of the EU - Challenges and perspectives for the agricultural sector High-Level-Seminar within the PHARE COPA/COGECA/CEJA Project Brussels, 10 July 2000

European Commission - SPEECH/00/263   11/07/2000

Other available languages: none

SPEECH/00/263

Dr. Franz FISCHLER

Member of the European Commission responsible for Agriculture, Rural Development and Fisheries

Enlargement of the EU - Challenges and perspectives for the agricultural sector

High-Level-Seminar within the PHARE COPA/COGECA/CEJA Project

Brussels, 10 July 2000

Ladies and Gentlemen,

I very much appreciate the opportunity of speaking to you today on the topic that probably keeps me most busy at the moment, but which is also very dear to me: the enlargement of the European Union and its agricultural aspects. I want to thank COPA for organising this event and the Economic and Social Committee for housing the seminar. I think it is quite symbolic that we are talking about agriculture in the building of the ESC. It is a symbol for the fact that agriculture is not an isolated political issue, especially not regarding the accession negotiations. But we always have to see agricultural policy in its economic and social dimension.

"Europe is a big house!" Ladies and Gentlemen, it was my compatriot and writer Kurt Tucholsky who wrote these words 70 years ago. Fortunately, Tucholsky did not have to experience the terrible war that broke out years after his death and that split Europe in two isolated parts for more than half a century. We probably all have our own memories of this time when the borders between East and West were nearly impermeable, when many dissidents of the Communist regime were imprisoned, and when Soviet military power was an instrument of domestic politics.

I am recalling these facts because only 10 years after the fall of the iron curtain, many seem to forget the permanent nightmare that the Cold War was. In 1990 and after, people were full of joy and hope, and many politicians and statesmen announced the peaceful integration of East and West. Most of this seems to be forgotten today. Newspapers are full with detailed reports on the smallest aspects of the accession talks, and some politicians prefer to talk about the dangers and costs of the enlargement just to make political profit on the domestic political scene. No wonder why on the candidate's side, the citizens start to be frustrated, and enthusiasm is waning on their side as well.

Ladies and Gentlemen, I fully agree that we have to prepare enlargement properly and smoothly. Of course, I also will talk about technical details of the accession negotiations today. - However, let us never forget that we are not talking just about the introduction of an administrative act or a new legal regulation. We are talking about the unique chance to integrate all of Europe for the first time in history in a peaceful way!

This being said, let me start with an outline of where we stand and what our main challenges are in our common attempt to unify Europe. Since the opening of the negotiations on agriculture on 14 June, the following three key issues have emerged:

  • Firstly, trade questions,

  • secondly the fixing of quota,

  • and finally the question of direct payments.

1) Trade Questions

Regarding the first question of trade, we made a big step forward with the agreements on agricultural trade liberalisation that the EU concluded with nine Central and Eastern European countries. These agreements with the 'double zero'-approach entered into force just 10 days ago and will move things in the right direction - in the context of both enlargement preparation and WTO negotiations. As a consequence, nine of the candidate countries and the EU have eliminated in a reciprocal way export refunds and import tariffs for most agricultural goods, such as pig meat, poultry, cheese and some fruits and vegetables. This means that the amount of tariff-free agricultural exports from Central and Eastern Europe to the EU countries increases from only 37 to 77%. In the other direction, that is from the EU to the CEEC, tariff-free exports rise from 20 to 37%. The only products that were not included in the double-zero approach are products for which an internal CAP support system is in place. However, these products could be included at a later stage.

Ladies and Gentlemen, I would like to underline one thing: the elimination of trade barriers will not necessarily lead to a threat of either agricultural market with cheap products from the other side. 'Double zero' approach does not mean that either side will be left with zero profit… On the contrary, both sides can profit from these agreements that will enhance the overall trade volume in agricultural goods. This is why the EU continues its efforts to convince our Polish negotiation partners to conclude a trade liberalisation agreement, too. There can be no doubt that such an agreement to eliminate tariffs between Poland and the EU would facilitate the accession talks considerably.

Moreover, I am convinced that postponing liberalisation of agricultural trade does not help our common cause at all. When enlargement will occur in the near future, both sides have to lift their trade barriers anyway. However, the measure will be much more difficult to digest then. Postponing the abolition of duties to the day of accession makes things unnecessarily complicated.

There can be no doubt either, that transition agreements in the field of trade are not desirable. We have succeeded in eliminating customs controls among EU member states many years ago. Even some candidate countries have lifted their reciprocal customs controls, for instance Slovakia and the Czech Republic. I cannot imagine that border controls could be re-introduced because of enlargement!

Another argument that is often used in the call for transition measures for agricultural trade is the fact that some of the candidate countries do not comply with the EU standards of public and animal health. For me, this is only one more argument that we have to increase our common efforts in the pre-accession strategy. With the help of SAPARD, we should be able to ameliorate both the standards of production and the internal controls at the site of origin. As you can see, we have two options: either improving the production standards in the candidate countries or introducing border controls. I clearly favour the first option.

Moreover, the improvement of production standards is important not only for the future common market. The central and eastern European countries will profit from higher production standards already now under the conditions of the Europe agreements and the 'double zero'-agreements respectively. There is no other barrier to your exports to EU countries any more than the difference of standards. Improving production standards means improving your exports.

2) Fixing of quotas

The second important issue is the question of quotas. The question is which reference period should be taken for the fixing of the production quota for the candidate countries. Many candidates request quotas that are much higher than current production quantities. This request is based on taking production figures from the 1980s or 'potential production' from the future. Although nothing has been decided yet, I would like to bring the following into consideration: As we all know, production in the 1980s still happened under the conditions of Communist centrally planned system. Experience has shown that statistical data from this period is far from being reliable.

I also have difficulties to take 'potential production' figures for the fixing of quota. What we try to do is fixing quotas that meet the needs of the market, and not encouraging more production. We should consider these facts when we are trying to choose the best reference period.

3) Direct Payments

Let me finally talk about the third important hurdle on the way to enlargement: the question of direct payments. The Candidate countries look at this issue 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.

This being said, I would like to bring some facts into consideration. Firstly, I want to recall the fact that the Financial Perspective that the EU adopted last year for the years 2000 2006 did not include any direct payments for the candidate countries. More importantly however, I do not think that direct payments as we know them under the Common Agricultural Policy are appropriate for the evolution that the candidate countries currently undergo. Direct payments would considerably hamper the current restructuring efforts in the candidate countries. It would be a wrong incentive and a certain social risk if a farmer would earn much more because of direct payments than an industrial worker of the same region.

Moreover, I am convinced that there is another tool for rural development that is far more effective than direct payments: I am speaking of structural aid! Investments through structural aid have a multiplying effect, they are investments in the future of your countries. Direct payments, however, are not productive, but consumptive: they are payments which are made without necessarily preparing your farmers for the future. (This is true, by the way for farmers in both EU and CEEC). This is why I suggest to concentrate on structural aid when we want to compensate the consequences of enlargement.

SAPARD

We know that we need more information from the 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. But 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 your countries become full Members. But believe me: I would be the last to accept in the long run a division of first and second class members of the European Union.

Therefore I think we should concentrate on other ways of serving the interests of the people in rural areas. The Financial perspective did not include direct payments because it concentrated on another means of support: the Special Accession Programme for Agriculture and Rural Development, short, SAPARD.

  • To my opinion, we should concentrate together on making best use of this instrument. The main aim of this program is to support rural development. Compared to direct payments it has the advantage that all citizens in rural areas profit from SAPARD, no matter if they want to remain farmers or whether they would like to switch to another sector. It all depends on the ideas of the local people. As we all know, restructuring of the rural economy will be necessary with or without enlargement! Inside the European Union, approximately 5% of the population are working in agriculture, which is why we had to introduce programs that help creating alternative sources of income. In all candidate countries, the percentage is much higher, so we need rural restructuring and development even more!

  • Besides the fact that it supports rural development, SAPARD fulfils other tasks as well: It serves as an excellent tool to make local authorities familiar with the administrative procedures of the European Union programmes, thus it will be much easier for them to use Commission programs after the accession.

  • And finally, it is also fit to help the candidate countries to improve the production standards that are so important for a smooth, tariff-free trade between the EU and the member states. Thus, the funds of SAPARD can be used for investments in local food processing and in veterinary and phyto-sanitary structures. Shortly, SAPARD could be the instrument that removes some of the stumbling blocks of the accession negotiations.

COPA's PHARE-Project

However, SAPARD is not the only instrument on the way to enlargement. Another measure will have to be the exchange of know-how and ideas between the member states and candidate countries. This leads me directly to the organisers of this seminar and their partner associations from the Central and East European countries. You have been co-operating in the framework of a PHARE project. This project, which was initially designed for one year, has fulfilled and even exceeded the expectations that we all had at the outset. Clearly, I absolutely support the strengthening of associations that defend the interests of those working in agriculture.

Therefore, I was very pleased by the idea of your project to consult your partners from the CEEC to develop similar structures of representation in their countries. This will not only serve the interests of the farmers. The work of your associations is also a contribution to civil society and democracy. Finally, the work of agricultural interest groups in the EU member states is an important link between the work of the Commission and the farmers. Your associations in the central and Eastern European countries will definitely fulfil a similar role in the future.

As you can see, I warmly advocate the goal of the project that you have been undertaking together for one year. Also the progress reports showed positive results. For all these reasons, I consider the project worth to be continued. I have to add that the PHARE program does not fall under my responsibility, but under that of my colleague Commissioner Verheugen, who is responsible for enlargement, but I think that chances are high that the COPA project will be funded by PHARE. The remaining question is whether an interruption of the program can be avoided. Let us hope that we can find as solution to this problem as well.

Ladies and Gentlemen,

After all that I have said so far, let me repeat a point that I made on a recent visit to Poland: 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 that are 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, it only means that we have to approach them in a constructive manner in good faith.

We must not lose patience and our strong belief in the success of the project. Enlargement must be understood as an on-going process and should never be seen as crisis but as an opportunity. An opportunity for both sides!

Thank you for your attention.


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