This presentation explains how the European Commission's November 2010 Communication on the CAP post 2013 might impact on developing countries

1. HOW MIGHT REFORM OF THE EU'S COMMON
AGRICULTURAL POLICY AFFECT TRADE AND
DEVELOPMENT?
Professor Alan Matthews
Trinity College Dublin, Ireland
24 November 2010

2. COMMISSION COMMUNICATION BUILDS ON
PREVIOUS CAP REFORMS
Distinction between Pillar 1 and Pillar 2 spending

3. ANOTHER VIEW OF THE EU REFORM PATH

4. CHANGING EU NET TRADE POSITION PUTS
UPWARD PRESSURE ON WORLD PRICES

5. WHY ANOTHER CAP REFORM NOW?

6. WHY ANOTHER CAP REFORM NOW?
• To achieve greater equity in the distribution of direct payments
between Member States (from old to new)
• To secure legitimacy for CAP spending in the debate on the EU
budget
• To address new challenges
• Price volatility
• Food security
• Market power in the food chain
• Support for public goods (climate change)
• Territorial balance

7. CAP INSTRUMENTS POST 2013
- DIRECT PAYMENTS
• Redistribution between MS (what criteria?)
• Limited to ‘active farmers’ (how defined?)
• Better targeting
• Basic income support payment
• capping
• Green payment
• Natural handicap payment
• Continuation of limited coupled payments
• Small farm measure

8. CAP INSTRUMENTS POST 2013 – MARKET
MANAGEMENT
• Market orientation is maintained
• Safety net measures will continue
• Risk management toolkit (under Pillar 2)
• Ending of dairy quotas after 2015, future of sugar quotas to be
evaluated
• Improved food chain functioning

9. CAP INSTRUMENTS POST 2013
- RURAL DEVELOPMENT
• Greater focus on environmental challenges, climate change,
innovation
• More emphasis on outcomes in expenditure evaluation
• New distribution criteria to allocate funds between MS
• Greater coherence between Pillar 2 and other EU funds

10. TRADE EFFECTS
– WTO MARKET ACCESS PILLAR
• Communication silent on future of export subsidies
• Food security discourse could imply more active management of
import tariffs
• Maintenance of safety net intervention
• Highlights lack of realism in AMS market price support calculation
• Impact of dairy quota removal (and sugar?)

11. TRADE EFFECTS
- WTO DOMESTIC SUPPORT PILLAR
Developing country concerns about trade effects of EU Green Box spending

12. TRADE EFFECTS
- WTO DOMESTIC SUPPORT PILLAR
• Communication influences this argument in two ways
• Could change composition of EU green box spending
• More important will be decisions on overall budget envelope for CAP
and division between Pillar 1 and Pillar 2

13. IMPACTS FOR DEVELOPING COUNTRIES
• Need to take into account heterogeneity of developing countries
• Communication has limited impact on market access opportunities
• EU trade policy initiatives have been and will be more important in
creating new market access opportunities in this decade
• Proposed greater targeting of direct payments will reduce any
remaining trade-distorting effect of direct payments

14. NEXT STEPS
• Impact assessment early 2011
• Publication of legal proposals mid-2011
• Agreement on reform mid-2012
• Negotiations complicated by new powers for European Parliament
under Lisbon Treaty
• Negotiations will be extremely difficult, and outcome is likely to be
delayed