Science - February 19, 2004

EU agricultural policy reforms still not up to WTO demands

Although European commissioner for agriculture Fischler declared last summer that European agricultural policy reforms were in compliance with the World Trade Organization requirements, the liberalisation measures so far fall short of the change proposed by the WTO. The Agricultural Economics Research Institute (LEI) made calculations for the Dutch ministry of agriculture.

LEI calculated the consequences of the reforms and compared their results with the proposed projections presented by WTO negotiator Stuart Harbinson in the spring of 2003. By introducing direct income subsidies to replace price subsidies, the reforms do deal with internal subsidies. This makes the agricultural sector less of a market interference factor because income subsidies affect producers’ choices less than price subsidies, explains Dr Siemen van Berkum at LEI. But the reforms have not included a reduction in import tariffs. Import protection remains and, for non-EU countries such as developing countries, this is a barrier that blocks access to the European market. Harbinson’s proposed measures also cover export subsidies and import tariffs as well as internal adjustments.

LEI also calculated that the agricultural reforms agreed to by the EU last summer will lead to lower incomes for farmers by 2012, but that the WTO proposals would lead to a much greater reduction in incomes. The EU reforms would lead to a reduction of two percent in income for Dutch farmers, the WTO proposals to a reduction of eight percent. For the rest of the EU countries the reductions would be three and ten percent respectively. The eastern European countries about to join the EU would suffer reductions of five (EU) and thirteen (WTO) percent.

Joris Tielens