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Mariann Fischer Boel

Member of the European Commission responsible for Agriculture and Rural Development

“The CAP in the European scenario"

International Forum on Agriculture and Food
Cernobbio, Italy, 20 October 2006

Ladies and gentlemen,

I'm very grateful to Coldiretti for its kind invitation to me to address you today – especially as it gives me the chance to make a visit to the south of Europe just as the sun is becoming a less frequent visitor back in Brussels.

When I received my invitation, I was interested to see the title for this section of the Forum: “The CAP in the European scenario”. The word “scenario” in English often refers to the plot of a dramatic work – perhaps at the theatre, perhaps on the television.

I suspect that most people would not see developments in the CAP as dramatic in the conventional sense. aren't quite dramatic enough (in the conventional sense) to provide material for the next Hollywood blockbuster with George Clooney. But for those of us who are closely involved with the CAP, the last few years have seen some strong storylines emerge in the plot. And this should continue in the years ahead.

But let me start with an element of the storyline which has us all guessing at the moment. What is going to happen to the WTO Doha Round, following its suspension in the summer?

I come to this issue first not only because it's unclear but also because it's so important to the European Union. In terms of agriculture, everyone knows that we have "defensive interests" in these negotiations; but we also have very strong offensive interests: winning greater international recognition for Geographical Indications, for example, or bringing discipline to trade-distorting domestic support in the US.

The Doha Round also holds great possibilities for European Union businesses that export services or industrial goods. And it’s the best means of spreading more of the gains of globalisation to those poorer countries which too often see its harsher face.

Therefore, we regret that the US has paralysed the Round for the time being with its refusal to give enough ground on its domestic support programmes. But the game isn't up yet. If the US can make a positive move after their mid-term elections in November, of course Trade Commissioner Peter Mandelson and I will be ready to come back to the table. We will do what we can to get the Round moving again.

But I must say that, if we haven't made any progress by next spring, the prospects for signing off a deal in the near future would not be good. We might have to wait years rather than months.

That would be very awkward for us. In that situation, what would we do about export refunds, which we conditionally agreed to abolish as part of a multilateral agreement? And how much should we concede in our various bilateral trade negotiations while there is still a large question mark right at the centre of our trade arrangements?

Therefore, life will be much easier for us if we can conclude the Doha Round sooner rather than later.

But I say this to you: whatever happens on the international stage, domestically, the show must go on. Even if the Doha Round does go into the freezer – which I hope to avoid – we cannot call a halt to the work to be done on the CAP.

Whatever happens, we must continue to build a CAP that supports our farmers and rural areas in the way that society expects.

That means using the CAP to increase farmers' competitiveness. It means achieving harmony between economic, environmental and social goals in the countryside. And it means a sharp focus on high-quality agricultural markets – because this is an area where we can compete with the world's low-cost producers, and win.

makes our farmers more competitive. A CAP that tends our countryside while supporting the rural economies and societies which are embedded there. A CAP that meets society’s developing expectations as fully and as efficiently as possible.

We have made a lot of progress in these respects over the last few years, but the work is not over – especially as the world keeps changing in the background.

So what are the next steps?

First, we must extend the process of reform to three further sectors: bananas, wine, and fruit and vegetables.

As you know, the Commission has already made proposals with regard to bananas. We think our proposals would give greater competitiveness and flexibility while taking fully into account the unusual circumstances of many of our banana-growing regions.

With regard to wine: the debate has made some progress since the Commission published its communication on reform options in June.

Everyone agrees that we can't bury our heads in the sand and keep the status quo in place. Everyone agrees that we must make our wine sector more competitive, to strengthen its reputation for quality wines and its leadership in the global market. And everyone agrees that we should do this via a thorough reform which takes some account of our wine sector's individual features.

The discussion has moved into areas of greater detail: in other words, exactly what measures are needed. We must keep working towards a common understanding consensus So we need to do something. Agreement on this point is a good start. But what should we do? Opinions on this still differ considerably, and we must keep working to narrow down these differences in in the Council while we wait for an opinion from the European Parliament.

With regard to fruit and vegetables: my staffs are still carrying out some of the thorough analytical work which is needed before we can present our proposals.

As in the case of wine, we must do all we can to stimulate competitiveness in the fruit and vegetables sector. If the sector is not competitive, there will be no lasting solution to the crises of the past.

Nevertheless, crises do sometimes appear even in the best of all possible worlds. I would like to put in place more effective tools for managing such crises. And of course, everyone wins if through well-targeted promotion we can persuade the European public to get the daily fruit and vegetables intake that they need.

Beyond these specific reforms, we have further work to do on the CAP in more general terms.

One of the general tasks is simplification.

I know that, in the past, this topic has sometimes raised ironic smiles in the European Union. Simplification is tough. It's one thing to talk the talk; it's quite another thing to walk the walk, especially when national governments realise that making things simpler often means ending special exceptions for which they fought hard several years earlier.

Nevertheless, with specific regard to simplification of the CAP, we have the wind in our sails. The Commission's recent conference in Brussels on simplifying the CAP was a resounding success that produced many ideas.

Very importantly, work has already started. We have picked out many details of the CAP to which we could make technical changes that would lighten the burden on farmers and administrators quickly, but without creating complications.

And we are almost ready with a proposal for a single Common Market Organisation, which would make it much easier for everyone to understand and navigate the complex rules that govern our market management regimes.

The steps which I have just described are steps of technical simplification. But technical simplification can prepare the ground for policy simplification. And the need for simpler policies will be one of the principles in our minds, along with others already mentioned, as we reflect generally on the CAP in the years ahead.

There will be two focal points for these reflections.

The first is what I call the "health check" of the CAP, to be concluded in 2008 or 2009. The legal origin of this lies in a number of review clauses included in the reforms agreed in 2003 and subsequent years. For example, the Single Payment Scheme, cross-compliance and certain market regimes must all come under the microscope.

The central purpose of the health check is not to change the essential direction of the CAP, but to ensure that it is working well, in line with society's expectations.

Within the health check, we may have to adjust some market tools. And we will think hard about the Single Payment Scheme. In particular, studies have suggested that the decoupling of subsidy from output could deliver further benefits if we moved closer towards full decoupling for all Member States and all sectors, ending at least some of the many exceptions applied at present.

We will also look at the strong case for raising compulsory modulation – transfers from direct payments to the rural development budget. And it may be justifiable to set a limit on the total direct payments which an individual farmer or company can receive through the CAP.

Furthermore, we may consider abolishing set-aside by harmonising the different sorts of entitlement to decoupled payments which currently operate.

Now let me move onto the second focal point for our reflections: a general review of the European Union budget, likely to be concluded in 2009.

The European Council called for such a review last December when it agreed the financial perspectives for the Union for the period 2007 to 2013. It will cover the whole budget but will certainly include debate on the longer-term future of the CAP – in other words, after 2013.

Part of the debate on the CAP will be about money – we can't avoid this. But money must not be the only issue on the agenda. Simplistic haggling about how much we spend on agriculture will not serve the European Union well. We should first think about the policy that we really need, then think about the funding.

At this stage, what seem to be possible areas of analysis?

Traditional market tools such as public intervention and production quotas could be back under the spotlight – this time with question marks over their continued existence. This is partly because, whatever happens in the Doha Round, we will probably be less and less able to rely on export refunds – a fact that has a knock-on effect on other market instruments. But also, we should ask ourselves to what extent these market tools really produce the competitive agriculture that we're looking for.

Then, we should do some further thinking about decoupling. Even if everyone applied full decoupling throughout the EU, there would still be large variations within the system – with individual models described as "historical", "regional", "hybrid", "static", "dynamic"... The adjectives say it all! There would be value in a debate about moving towards a single model – in which, for example, all farmers in a given Member State received the same per-hectare payment.

Perhaps it makes some people uneasy to hear so much said about the long-term future, especially as we are in just the second year of implementing the 2003 reforms. I am not trying to create an atmosphere of perpetual motion. Rather, I want us all to be able to prepare well in advance for change that may be necessary in view of the shifting context of the CAP. If more rebuilding work is needed on the CAP, we should do it in an orderly way, working to a clear plan as far as possible.

So now I find myself comparing the CAP to a building; but I would like to come back to the comparison suggested by my title for today – the CAP as part of a European "scenario", or storyline.

With that image in mind, the vital point is this: as the Americans say, we haven't "lost the plot"! I might take this out. The characters in the CAP drama change from time to time, occasionally there are twists and turns, but we in Europe have a fairly clear idea of where the storyline is going. We must.

Because, if we don't write the script, others will write it for us.

Thank you for your attention.

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