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SPEECH/99/160

Dr. Franz FISCHLER

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

International wto conference With the candidate countries

Bratislava, 12 November 1999

Ministers [/ Colleagues],

Ladies and gentlemen,

I am particularly pleased that this conference is being held just before the launch of the new WTO negotiating round, the so-called Millennium Round, which will be of fundamental importance for agriculture, but not only for agriculture. It provides a unique opportunity for the Community and the candidate countries to have a thorough discussion and to prepare not only the Seattle ministerial conference but also the agricultural trade negotiations in general.

I therefore extend my warm thanks to my colleague, Pavel KONCOS, and his staff for organising this conference and to all of you for being here today.

Please be patient with me while I go into some detail on the various aspects of these negotiations.

  • First of all I would like to set out the EU's position on agricultural trade matters.

  • Then I would like to discuss the so-called non-tariff topics.

  • Finally I would like to explain why I think it is so important for the EU and yourselves to work together on these questions.

I have already had the opportunity to speak to some colleagues about this.

1. The EU's position for the Millennium Round:

Unlike other members of the World Trade Organisation (WTO), since last September the European Community has had a clear and agreed position on the agricultural sector and the Member States' agriculture ministers have declared themselves unanimously in favour of it, which was not necessarily a foregone conclusion.

What is this position?

The cornerstone of Community strategy in the agriculture negotiations is the reform of the common agricultural policy (CAP), "Agenda 2000 ", adopted by the heads of state and government in Berlin last March, together with the reforms already carried out in various sectors. Both the heads of state and government in Berlin and now the agriculture ministers in September insisted that the Community's negotiating strategy must be based on the decisions on Agenda 2000 as a whole. Taken together, the cuts in support prices introduced by the 1992 reform and by Agenda 2000 result in a reduction of 45% in the support price for cereals and a reduction of 40% in the support price for beef. In addition, Agenda 2000 completely recasts the Community's rural development policy to turn it into a real second pillar of the CAP which takes full account of the relationship between farming and the rural environment in all its forms. Lastly, Agenda 2000 is not confined to reforming the cereals and beef sectors. Other sectors are included, and measures for still more sectors - including the milk sector - are in the pipeline. Taken overall, Agenda 2000 is an ambitious reform and the accusations of "mini-reform" made by certain trading partners are unfounded.

As regards the general framework for the forthcoming multilateral trade negotiations, all the institutions support the Commission's position that the negotiating round should be comprehensive, short and conducted as a single undertaking. Comprehensive, because we are convinced that the negotiations will be made easier if the number of sectors covered is sufficient to enable all the participants to benefit. Short - lasting for, say, three years - because the Uruguay Round showed that it is never a good idea to allow the negotiations to drag on. And, lastly, conducted as a single undertaking because we believe that there can be no agreement before there is agreement on the whole package.

The ministerial conference opening in Seattle later this month will launch the negotiations. Both the content and the modalities of the negotiations in all sectors will have to be decided. With Seattle only a few weeks away it is still not certain that the approach favoured by the Community, involving a comprehensive round, will be the approach adopted. At all events, whatever the outcome of the Seattle conference, under the WTO Agreement on Agriculture trade negotiations on agriculture will have to start in January 2000. It is therefore crucial to have a clear strategy regarding our objectives in these negotiations.

The European Community has already had the opportunity to stress several times in Geneva that the forthcoming agriculture negotiations should be balanced and not confined to increasing the liberalisation achieved during the Uruguay Round. This approach, moreover, is that recommended in Article 20 of the Agreement on Agriculture and it is soul-destroying to still have to fight to ensure that this need for balance is not denied, as appears from certain draft ministerial declarations which have been circulating in Geneva over the last few weeks under the influence of some WTO members, in particular the Cairns Group and, to a certain extent, the United States.

The EU agriculture ministers have clearly indicated that their agenda lists not only classic topics such as market access, domestic support or export subsidies but also other topics which are often mistakenly referred to as "non-trade" topics and which are of growing importance for our fellow-citizens, in particular food safety, product quality, environmental protection, rural development and animal welfare .

On the "traditional" topics the Community position is clear. First of all, we believe that some instruments of the Agreement on Agriculture have played an essential role in successfully implementing the Marrakesh agreements and should therefore be preserved. These are the famous "boxes", the peace clause and the special safeguard clause. The blue and green boxes have helped agricultural policy to move away from price support, a proven source of trade distortion, towards other types of support whose influence on production and trade is negligible or non-existent such as agro-environmental payments or aid to less-favoured regions (green box).

The special safeguard clause now makes it easy for us to take counter-measures in the event of a serious disturbance on the internal market.

Lastly, by guaranteeing the legal certainty of the commitments negotiated during the Uruguay Round and adopted in Marrakesh the peace clause has definitely consolidated the determination to subject agriculture to international trade rules.

Of course, in addition to preserving these instruments, the Community will seek in the forthcoming negotiations to improve its export opportunities. The negotiations on market access cannot be one-way. The Community is prepared to offer new tariff concessions, while stressing that some sectors are currently more open to exports than others, but it also intends to improve its access to the markets of third-country WTO members. Here I would like to emphasise that we do not view market access simply in terms of customs duties and tariff quotas. It is very important to improve protection for certain products whose reputation for quality is linked to their geographic origin. Geographical indications and denominations of origin are recognised under the TRIPS Agreement but the current legal instruments do not provide effective protection.

As far as domestic support is concerned, we are prepared to enter into negotiations aimed at gradually reducing it but we very much want the blue and green boxes to be retained. In this connection, I wish to stress that I will be particularly firm with some of our trading partners who rage against the support given to European farmers while they themselves do not hesitate to hand out increasingly generous financial aid to their farmers. The United States, for instance, has just approved an 8 billion dollar aid package for farmers !

Regarding export subsidies, the Community expects to come under strong pressure to cut them drastically. It is clear to us that there must not be double standards. We accept that export subsidies should be on the negotiating table. But all other, more or less transparent forms of support for exports must also be there, including export credits, marketing loan payments, State enterprises and/or export monopolies and certain forms of food aid.

2. The "non-trade topics

The agricultural agenda for these negotiations will only be a balanced one if the "non-trade" aspects of agriculture are fully taken into account because, for the Member States of the EU, agriculture is not just cereals, meat and potatoes. It is a multidimensional socio-economic activity. Preserving the multifunctional character of European agriculture is a must for future generations. The following aspects therefore seem to me to be particularly important:

1. Care for the environment and the landscape

2. Food quality and safety

3. Animal welfare

1. Care for the environment and the landscap

Whatever the outcome of the negotiations, agriculture must be able to continue to play its role of preserving the landscape and the environment and to go on being an important factor in the vitality and socio-economic development of certain rural areas of the Union. Its multifunctionality is no smokescreen, as the Cairns Group alleges. It corresponds to factors which are very real and important for our society, and therefore not negotiable.

Let me add here that what I have just said concerning the multifunctionality of agriculture in the EU is perhaps even more true for most of you, given the size of your farming sector and rural population. It is therefore in our common interest to have this idea recognised.

2. Food quality and safety 15:

If we want our agriculture to be successful in future we must take the demands of consumers for wholesome food into account. Consumers demand a high level of food safety and want to be well informed about the quality, safety and origin of products. In recent years the case law of the WTO's dispute settlement body has confirmed that a country can in principle set a higher level of protection than that required by international standards. This case law should be confirmed in the forthcoming negotiations, in order to ensure that international trade rules do not enforce the marketing of products about which consumers have legitimate fears. To this end, a more explicit recognition of the precautionary principle would be desirable.

BIOTECHNOLOGY

In this connection, I would like to draw your attention to biotechnology and genetic engineering. There is currently much discussion on genetically modified products at international level - in the OECD and the FAO - as well as in the Codex Alimentarius working party and in connection with the Convention on Biodiversity. The United States has already announced that it wants biotechnology to be an important item on the agenda for the next round of world trade negotiations. Canada and Japan have already put proposals to the WTO. The Canadians are calling for a special working party to be set up, while the Japanese are proposing the creation of an appropriate forum for discussions of this type.

I absolutely agree that these questions will grow in importance and will be discussed in Seattle. I believe that the present WTO agreements and rules and the current international discussions are quite sufficient to deal with special aspects of biotechnology (labelling).

As regards the environmental impact of genetically modified products, it is my view that this very important aspect must be gone into very carefully and thoroughly. The current discussions in connection with the Biosafety Protocols seem to me to be the right forum.

Biotechnology has great potential for improving food quality. As with any other technical development, we must weigh up the risks carefully and seek to reduce them. Only when we are able to rule out the possibility of threats to health and the environment will we be able to use this technology's positive potential. Improvements in risk analysis and in consumer information will be required before genetic engineering is used as widely in agriculture as in medicine. We will therefore have to go on applying the precautionary principle and defend it at international level.

3. Animal welfare

I know that some of you do not consider this a priority. But it is considered an important topic in the European Union, which has very advanced legislation for the protection of animal welfare and where concerns are raised in some quarters about the costs of this legislation and its impact on the competitiveness of our agriculture. For both ethical and economic reasons we think it important to reach agreement at international level on a set of rules on animal welfare. This would both meet the wishes of our citizens and prevent economic discrimination

That, briefly, is the Community's agenda for the negotiations. I have no doubt that, even if you have your own agendas for the negotiations, some objectives and approaches are similar or very close. In the light of enlargement, I think it is particularly important for us to coordinate our efforts and, where possible, to speak with one voice.

Let me explain.

Whatever the exact timetables for the multilateral negotiations and the negotiations on enlargement, it is probable that the two sets of negotiations will be very close together or overlap. In view of the specific WTO rules on customs unions and free-trade areas (Article XXIV of GATT 1994) it is in all our interests to conduct these negotiations in parallel and to coordinate closely.

The WTO rules on customs unions provide that, when the protection of an enlarged union is increased by means of the enlargement, the enlarged union owes the WTO members who are adversely affected a compensatory adjustment. To make myself perfectly clear, if the enlarged Community reduces its protection and steps up imports from non-EU countries as a result of the forthcoming international trade negotiations, after enlargement it will have to compensate those countries. There is therefore a real risk that unless we coordinate our approach we will have to pay twice (once in the Millennium Round negotiations and once in the negotiations following enlargement).

We know that already most of you have a level of protection which is lower overall than Community protection. If this difference were to increase substantially as a result of the future negotiations the price the enlarged Union would have to pay would be all the greater.

Far be it from me, however, to force the Community strategy on you. It is natural that you have your own agendas and you are the masters of how you conduct your negotiations. However, unless we act in a coordinated way the enlarged Union will have to undergo a difficult and costly exercise, the cost of which will be borne by all of its members and not only the current fifteen. With this in mind, I believe that it is neither in your interest nor in ours to go it alone. In particular, I believe that we should step up our trade flows, but in both directions. It is in our mutual interest to increase trade between the Community and the candidate countries, so that the candidate countries import more from the Community but the Community also imports more from the candidate countries. The negotiations which are under way on developing the present agreements are very important in this connection.

On the question of the present links between the Community and the candidate countries, I would like briefly to raise the question of the export refunds on Community exports to the candidate countries. I know your positions on the subject and wish to stress that, in view of enlargement, the use of refunds on exports to your markets is becoming harder and harder to justify.

Lastly I would like to point out that, while the details of the Community system of direct aid to the candidate countries, and the dates for its application, are a subject for the enlargement negotiations, whatever their outcome it is in your interest as well as that of the Community that rules enabling such aid to be granted should continue to exist at WTO level. That it why it is important to defend the idea of blue and green boxes.

To conclude I would like to return to the subject of

3. Increased cooperation between you and the Community

in preparing the agricultural negotiations.

How can such cooperation take place?

First of all, it should be said that such cooperation is already a fact, even though it should be strengthened. Already in Geneva our respective administrations have got into the habit of organising coordination meetings prior to meetings of the Committee on Agriculture or, more recently, in connection with the discussions on the draft declaration for Seattle. In addition, a technical seminar on the results of the Uruguay Round and preparation for the forthcoming agriculture negotiations was held in Brussels on 29 October. This seminar proved particularly fruitful and it was felt that the experience should be repeated so as to deepen the discussions. I am also convinced that such technical meetings will have to take place more frequently not only because of the WTO negotiations but also because of the enlargement process.

But apart from the technical level I think it essential for us to conduct a permanent dialogue at political level on the WTO negotiations. It is by engaging in dialogue and gaining a better understanding of our specific objectives that we will succeed in defining positions which are in the interest of all of us.

Thank you for your attention. I will listen with great interest to learn your approach to the forthcoming trade negotiations.


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