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From monetary policy to tariff barriers, Xenophon to Krugman
Economics & Trade
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euagriculturebudget | 9:46, 15 March 2010
When member states (finally) released detailed data on the individual recipients of its € 55 billion annual farm subsidies, they unleashed a flurry of media reporting. Public anger on big business and rich (possibly aristocratic) landowners swallowing big chunks of the subsidy pie was rampant. By contrast, knowledge of the distribution of public subsidies across member states has always been in the public domain. Regrettably, the inequities manifest in this distribution appear to interest only the farmers in the disadvantaged member states. But citizens should be concerned.
How to explain that farmers in Greece receive three times more income and production support per hectare than their colleagues in Portugal? And why does a hectare of agricultural land in Malta get five times more support than in Latvia? Even more troubling is the question of why other EU member states obtain five or ten times more subsidies per hectare to promote rural development and environmental protection than the UK. Are their birds more beautiful?
The reality is that the distribution of subsidies can only be explained by EU power politics – and rigidity. Nowadays, the EU’s Common Agricultural Policy (CAP) supports farmers’ income independent of their current production. But how much CAP money a member state gets for its farmers depends on how much it has got in the past when payments were coupled with production. Countries that produced a lot of highly-subsidized crops or meat therefore reaped – and still reap – the lion’s share of the CAP budget. Countries with an agricultural sector that is less productive or specializes in products that were less subsidized, such as fruits and vegetables, are the losers of this system.
A look at the CAP payments for rural development and environmental protection reveals the same picture. Member states’ subsidy levels are again strongly determined by how much they received in the past. Entitlements up to 2013 are based on payments dating back as far as 1994. It is embarrassing that the EU’s distribution of more than 40% of its budget to the member states has nothing to do with policy objectives.
In the future, member states should be rewarded for sustainable farming practices. How much money each member state receives should depend on its Natura 2000 areas (in which stricter environmental standards apply), its organic farming areas (which have positive effects on biodiversity, water quality, flood prevention …) and its forest areas (to support biodiversity-and-climate-friendly forest management). Further criteria for distributing payments could be devised, such as high-nature-value or extensive grazing areas. Whatever the best distribution key, it should not be past agricultural production or past payment levels.
This article is based on the ECIPE working paper ‘Public Money for Public Goods: Winners and Losers from CAP Reform’
Further information can be found at www.reformthecap.eu.
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When I attended the course “United Nations and International Law”, read by Lauri Mälksoo at the University of Tartu, we were shown a film about international conflict resolution, the UN, and the global politics. Unfortunately, I do not remember the name of the film, although I believe that it is quite a well-known one. Though cluster bombs were not [...]
European Geostrategy | 0:11, 20 October 2009
Latin America is often seen as the forgotten continent in many parts of the European Union. This is neither in the interests of Europeans, or the South American countries. How can the European Union capitalise on the upcoming Latin American and Caribbean Summit, to be held in Madrid in May 2010? This article offers a number of ideas.
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Announced in the past, the decision to switch is now official, following a decree signed by President Ahmadinejad. It will be particularly important for oil sales. With four million barrels a day, Iran is the world’s fourth largest “black gold” producer.
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Aukje van Loon | 16:00, 18 September 2009
Introduction:
The European Union (EU), as the most integrated and sophisticated regional actor in global governance (Telò 2009), also constitutes the largest trading actor in the world. It is the
world’s leading exporter and second-leading importer of goods and it is the leader in both exporting and importing trade in services.
A key feature of EU trade strategy is the combination of multilateral, interregional and bilateral approaches to international trade negotiations (Elsig, 2007a). While on the one hand, it has been one of the strongest advocates of a multilateral approach to trade liberalisation, the EU has paradoxically also developed an
extensive network of preferential trade agreements (PTAs). Hence, the EU is “not only a formidable power in trade [i]t is also becoming a power through trade” (Meunier and Nicolaidis, 2006: 907).
One can distinguish between two types of discriminatory EU international trade strategies, i.e. between those of an interregional and of a bilateral nature. In the case of the
former, the EU currently maintains either “strategic partnership relations”, “equal basis relations” or other types of trade relationships with most regions in the world (Hänggi 2006:
35). On the other hand, for a long time, the EU’s bilateral trade strategy (concluding bilateral trade agreements with specific countries), played second fiddle to the EU’s rhetorical
commitments to multilateralism and interregionalism. However, in October 2006 this policy was abandoned in the “Global Europe” communication, which stressed the importance of
strengthening bilateral trade relations with a set of carefully targeted emerging markets (Heydon and Woolcock, 2009). This trend towards discriminatory trade agreements appears
to be increasingly relevant as a new round of regionalism is widely expected to take off among WTO members, and “will further fuel the trend toward preferential agreements”(Dieter 2008: 2) following the renewed failure to conclude the multilateral Doha Development Round (DDR).
