Agriculture and Rural Development

EPAs and CAP Reform: a chance for innovative approaches to global food security

Brussels, 26.6.2012

Dr Klaus-Dieter BORCHARDTDirector

DG Agriculture and Rural DevelopmentEuropean Commission

2

Presentation outline

1. CAP reform process and food security

2. EU and the global food security debate

3. EU trade with developing countries

4. Economic Partnership Agreements

3

1. CAP reform process and food security

The CAP today:

• Fundamentally restructured: almost all payments are decoupled from production – they no longer encourage overproduction or distort trade

• Role of market intervention mechanisms is reduced to safety net level

• Export refunds in a decreasing trend for decades

0%

5%

10%

15%

20%

25%

30%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Re

fun

ds

as

% o

f e

xp

ort

s

0

20

40

60

80

100

120

Ex

po

rts

(b

illio

n E

UR

)

EU-12 EU-15 EU-25 EU-27

4

CAP Pillar I evolution of expenditure type 1990-2013

2013

92.6%

0.7%

0.0%

6.7%

2010

0,9% 8,2%

13,4%

77,5%

2006

5,9%

13,2%

43,0%

37,9%

2000

15,5%

14,2%

70,3%

0,0%

1990

30,8%

69,2%

0,0%

0,0%

Exportsubsidies

Marketsupport

Coupledsupport

Decoupledsupport

5

The path of CAP expenditure 1980-2020

Source: DG Agriculture and Rural Development.

billion EUR (current prices)

0

10

20

30

40

50

60

70

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

Export refunds Other market measures Market expenditure Coupled support

Decoupled support Direct payments Rural development

EU-10 EU-12 EU-15 EU-25 EU-27

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The CAP beyond 2013

• Food security is among the strategic aims of the CAP

• Enhanced competitiveness and improved sustainability through research, innovation and knowledge transfer

• Improved targeting of financial resources in a context of financial and economic budget constraints

• Further move away from trade-distorting support:  

- Decoupled income support and rural development support (WTO green box payments) have no, or at most minimal, trade-distorting effects

- Export subsidies reduced to minimal level – potential for abolition in DDA

- Abolition of production limiting measures

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Policy Coherence for Development (PCD)

• PCD means that the EU needs to pursue its objectives avoiding negative

spillover effects that might harm the development prospects.

• Adopted by Commission 2005; integrated in Lisbon treaty

• Food Security as a top challenge (amongst five) for 2010-2013 under

PCD.

• PCD is factored into CAP reform:

Consultation

Impact Assessment provisions on Developing Countries (Annex 12)

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2. EU and the global food security debate

• Global challenges: food security, price volatility, economic crisis, speculation and fund management, climate change, expansion of biofuels, investments in land, governance, etc.

• African Union role:

• CAADP (Comprehensive African Agriculture Development Programme)

aim: 10% Government spending on agriculture to attain 6% growth

• Supported under the Joint Africa-EU Strategy: 2012 renewed focus on agricultural cooperation

• International leadership: FAO, CFS, Rio+20 and G8/G20

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G20 and G8

• In 2011… G20 Action Plan on Food Price Volatility and Agriculture

Increased agricultural production and productivity

Agricultural Market Information System (AMIS)

International Policy Coordination: removal of food export restrictions

Risk Management

Improved functioning of agricultural commodity derivatives markets

• In 2012… G8 New Alliance for Food Security and Nutrition

mobilise private investment in food security in Africa;

scale-up innovation and research as a driver for increasing productivity

and post-harvest handling;

improve risk management.

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3. EU trade with developing countries

71%

50%

34%

22%

34%

28%

40%

0

15000

30000

45000

60000

75000

EU-27 Next 5 US Japan Canada Australia New Zealand

0%

15%

30%

45%

60%

75%

Average 2008-2010 % share from DCs (right axis)

EU is the most open market in the world for developing country exports:

World imports from developing countries (mio EUR)

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ACP agricultural trade

EU27 Agricultural trade with ACPs 1999-2011 in million Euro

15 000

10 000

5 000

0

5 000

10 000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Commodities Intermediate Final products Other products Confidential trade Balance

Source: EUROSTAT - COMEXT

12

African ACP states agricultural exports

African ACP states exports of agricultural product (COMTRADE data)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

EU

R m

illi

on

EU27

Intra-African

Rest ofWorld

Other upperincome

BRIC

13

Preferential trade relations with developing countries

Trade, growth and development Communication (2012):• Trade-led growth central to modern development agenda

• Increased focus on countries most in need

• Non-tariff issues (standards, services, IPR, public procurement) can make a difference

• Importance of private schemes (fair, ethical or organic labelling) to help smallholders differentiate their output and to foster sustainable, inclusive growth

Revision of the EU General System of Preferences (2012):• Currently trade preferences for 176 developing countries

• New GSP Regulation will apply from 2014: Country coverage: removal of upper-middle income countries (e.g. emerging

economies), high-income countries and FTA partners.

Product coverage: two agricultural tariff lines included (Fresh cut carnations and buds and Sun cured oriental type tobacco.

Duration: limited to 10 years from the date of application of the tariff preferences.

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4. Economic Partnership Agreements

• EPA agreements prioritise development, regional trade and gradual integration into the world economy:

Opening of 100% EU market Duty Free / Quota Free (except for South Africa given its high level of competitiveness)

Opening of ACP markets in goods slowly and progressively: 15-25 years

No undue competition – through the asymmetry principle, ACP countries can to keep permanently tariff/quota protection for the most sensitive 20% of goods, often in agriculture

Safeguard measures to protect food security and agriculture in the events of disturbance by imports

Cooperation in agricultural policy and development

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Concluding remarks

• CAP beyond 2013 consolidating the market

orientation of past reforms

• Policy Coherence for Development and food

security policy drivers

• Major EU participation in global food security, in

G8/G20 and partnership with AU

• EPAs are the vehicles for trade development and

EU partnership with ACP countries

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Further information

International Aspects of Agriculture meetings and documenthttp://ec.europa.eu/agriculture/consultations/advisory-groups/international/index_en.htm

The CAP after 2013http://ec.europa.eu/agriculture/cap-post-2013/index_en.htm

Thank you for your attention

Dr Klaus-Dieter BORCHARDTDirector

DG Agriculture and Rural DevelopmentKlaus-Dieter.Borchardt@ec.europa.eu