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Economy and Environment: Shaping the Development of European Agricultural Law.
Brian Jack
Lecturer in Law, Centre for Law in Rural Areas, University of Wales, Aberystwyth
© Copyright 2001 Brian Jack
First Published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd.
Summary
There has been a great deal of speculation about the effect of the foot and
mouth crisis upon the future of agriculture within the United Kingdom. However,
in relation to the potential effect of the current crisis on agricultural
law, it should be remembered that the United Kingdom’s agricultural law is
largely governed by the European Community’s Common Agricultural Policy (the
CAP). This article seeks to examine the legal structure of the CAP. The article
commences with an examination of the legal structure under which the CAP
initially operated This initial structure has been the target of a great
deal of criticism from both economists and environmentalists over many years.
For example, in 1990, the Economist referred to the CAP as ‘the single most
idiotic system of economic mismanagement that the rich western countries
have ever devised.’ (Economist (1990) p.15) Elsewhere, Shoard has described
the CAP as a policy which gave ‘subsidies for destruction.’ (Shoard (1980)
p.21). The CAP has, however, undergone a number of reforms in recent years.
Within the United Kingdom these reforms culminated, at the end of 2000, in
the adoption of seven year rural development plans by each of the United
Kingdom’s regional governments. Today, as a result of these reforms, the
modern CAP is very different from that which the Community initially designed
and put into operation. This article examines both the pressures for reform
which existed and their effect upon the legal structure of the CAP. Additionally,
the article concludes by asking whether these recent reforms provide any
guide as to the potential for the current foot and mouth crisis to act as
a catalyst for further reform of the legal structure of the CAP.
Contents
2. The Initial Common Agricultural Policy.
3. Factors Which Led to Policy Reform.
- 3.1 Surplus Production.
- 3.2 Budgetary Problems.
- 3.3 World Trade Negotiations.
- 3.4 Community Enlargement.
- 3.5 Rural Development.
- 3.6 Environmental Issues.
4. The Modern Common Agricultural Policy.
1. Introduction.
As a consequence of joining the European Economic Community, as it then was,
the United Kingdom agreed to adopt the Common Agricultural Policy (the CAP)
as the principal guiding force behind British agricultural policy. The creation
of the modern CAP can be traced back to the 1960’s when common measures were
agreed in several agricultural sectors, following intense negotiations between
the original Member States (Tracey (1982) p.261). Perhaps unsurprisingly,
the operation of the initial CAP was largely influenced by the domestic
agricultural policies of the original Member States of the Community. These
national policies, which mainly evolved in the post second world war period,
had generally sought to encourage increased agricultural production. Such
encouragement for agricultural expansion had provided a means by which
agricultural incomes could be increased, food shortages tackled and scarce
foreign exchange reserves preserved (Fennell (1997) p.1) . From such beginnings,
however, the CAP has undergone radical reforms in recent years. Piecemeal
reforms to individual areas of the CAP in the 1980’s have given way to more
substantive reforms adopted in 1992 and 1999. As a result, the modern CAP
is very different from that which the United Kingdom initially adopted.
2. The Initial Common Agricultural Policy.
2.1 Market Policy.
In creating the CAP, Article 34(2) of the EC Treaty required the Community
to establish a Common Organisation of Agricultural Markets. The article further
provided for this common organisation of the markets to be achieved in one
of three ways:
(a) adoption of common rules on competition; or
(b) compulsory co-ordination of national market organisations; or
(c) creation of a European market organisation.
The approach actually adopted by the Community was to establish several European
market organisations (Snyder 1985 p.71). The community divided the agricultural
industry into major agricultural produce groups and created market organisations,
known as Common Organisations of the Market (common organisations) for each
produce group. Today some 22 such common organisations exist, each governed
by Community legislation regulating the marketing of particular produce.
No two common organisations operated in the same manner. However they were
generally based upon the principle that farmers’ incomes should be determined
by market prices. In turn, however, these market prices were heavily influenced
by a price structure imposed by the Community. The common organisation in
cereals was of particular importance, since cereal prices also determined
animal feed costs and these costs in turn influenced farm incomes within
the common organisations in pigmeat, eggs and poultry (Usher 1988 p.53).
However, in practice, the common organisations could be divided into three
groups, according to whether they provided complete, partial or no price
guarantees to farmers. (Snyder 1985 p.73). The common organisations regulating
important United Kingdom agricultural sectors, such as cereals, dairy farming
and beef farming, provided farmers with complete price guarantees. The common
organisation in cereals can be taken as an example. This common organisation
was established by Council Regulation 120/67 (JO [1967] 2269). It provided
for three prices to be set annually by the Council of Ministers. Firstly
a maximum price, known as ‘the target price’, was fixed. This was the maximum
price which it was hoped that produce might attain in the market place. Beyond
the target price, cereal prices would be regarded as being unreasonable for
both producers and consumers. Secondly a minimum price, known as a threshold
price, was fixed. This was the minimum price at which the Community judged
that producers would be able to earn a reasonable income. Member States were
required to designate national bodies, known as ‘intervention agencies.’
This role was fulfilled in the United Kingdom by the Intervention Board for
Agricultural Produce, which was established under section 6 of the European
Communities Act 1972. The intervention price was the price at which national
intervention agencies would purchase that produce in order to provide a floor
for market prices and also to provide a market for unsold produce. Finally,
the Council of Ministers also annually fixed a threshold price. This was
the minimum price at which produce could be imported into the Community.
This threshold price was calculated so that the price of imported produce
would correspond to the target price which the Community had fixed. Since
the inception of the CAP, Community prices had generally been maintained
at a level which was much higher than prices which prevailed upon world markets.
(Usher 1988 p.37) Variable import levies were therefore added to imported
produce to prevent that produce from undercutting Community prices.
This price policy was also supported by a system of export refunds. Where
the Community produced a surplus of particular produce, that surplus could
be removed by exporting the produce to third countries. Given that Community
prices were higher than world prices, export prices had to be reduced to
world levels in order to secure a sale. To compensate for this price reduction,
exporters received export refunds which compensated them for the difference
between these price levels. (Snyder 1985 p.140)
2.2 Structural Policy.
Agricultural productivity and farm incomes were also affected by other
considerations. For example, large farm units offered the possibility of
greater productivity and were more efficient users of labour and machinery.
However, in 1960 more than two thirds of all farms in the original Member
States were less than ten acres in size (European Economic Community Commission
(1960) Chapter 1 p.15). Additionally, a direct link was noted to exist between
defective agricultural structures and low farm incomes (European Economic
Community Commission (1960) Chapter 2 p.8. To deal with these issues the
Community created a structural policy, as a second pillar of the CAP, which
sought to create larger, integrated farms which embraced modern technology
and became highly productive.
At the time that the United Kingdom joined the Community, structural policy
was based upon three directives, which the Council of Ministers had adopted
in 1972. Directive 72/159 (OJ [1972] L96/1) authorised Member States to provide
financial assistance for investments upon farms which were suitable for
development. Directive 72/160 (OJ [1972] L96/9) authorised Member States
to make financial payments to farmers and farm workers aged between fifty-five
and national retirement age. In the case of the farmers, this directive sought
to encourage the amalgamation of their farms with neighbouring farms to create
larger, more economically viable farm units or the use of the land for
non-agricultural purposes. Thirdly, directive 72/161 (OJ [1972] L96/15)
authorised Member States to provide socio-economic education and training
to farmers. This last directive sought to ensure that farmers could both
receive advice to enable them to decide whether to remain in farming or to
seek employment elsewhere and also receive training designed to improve their
agricultural skills. In addition to these measures, the Community in 1975
also adopted a further directive, directive 75/268 (OJ [1975] L128/1) on
mountain and hill farming in agriculturally less favoured areas. This directive
sought to maintain farming and rural communities in agriculturally disadvantaged
areas and sought to prevent environmental damage to the countryside caused
by the abandonment of agricultural land. The directive required Member States
to designate the areas within which the directive was to apply. Within these
designated areas, Member States were then authorised to make direct income
payments to farmers and to provide financial grants for farm development
or diversification into the tourist or craft industries. This directive was
a direct product of the United Kingdom’s membership of the Community, since
it largely replicated the provisions of the Hill Farming Act 1946 under which
the United Kingdom itself had previously made similar financial provisions
for hill farmers. The poor quality of agricultural land in these areas has
resulted in their being predominantly utilised for livestock farming.
Consequently today, they have all been directly affected by the foot and
mouth crisis.
2.3 Funding the Common Agricultural Policy.
In order to fund the operation of the CAP, Regulation 25/62 established the
European Agricultural Guidance and Guarantee Fund (EAGGF). The EAGGF formed
an integral part of the Community budget. Income generated by the CAP, such
as through import levies or customs duties, formed part of the Community’s
own resources. Equally, however, the CAP was not designed to be self-financing,
so the EAGGF had access to the other budgetary resources of the Community.
Under Regulation 17/64 (JO [1964] 586) the EAGGF was divided into a guarantee
section and a guidance section. Under the original policy the guarantee section
financed the operation of the common organisations. This included the provision
of export refunds and also intervention payments intended to stabilise
agricultural markets. In contrast the guidance section provided financial
assistance in relation to the Community’s structural policies. In both cases,
payments were initially made to farmers by Member States and then reclaimed
from the Commission. In accordance with the Community legislation creating
the common organisations, Member States received a full refund upon all eligible
expenditure which they had incurred under the guidance section. In contrast,
however, the Community directives establishing the various structural measures
merely provided for Member States to receive a partial refund, typically
between twenty five and fifty per cent, of their expenditure under these
measures.
3. Factors Which Led to Policy Reform.
3.1 Surplus Production.
Increased agricultural production within the CAP led the Community beyond
high levels of self-sufficiency to a position in which many agricultural
sectors were producing surpluses. Today, just five common organisations,
concerning production of milk, beef and veal, cereals, pigmeat and fresh
vegetables, account for over fifty per cent of the value of the Community’s
entire agricultural production (European Commission 1999a p.T26). By the
mid 1980’s each of these common organisations was producing surpluses, as
were those concerned with sugar, wine, eggs and poultry (European Commission
1987 p.344). This caused adverse publicity for the Community as attention
was drawn to butter and beef ‘mountains’ and wine ‘lakes’ which were a by-product
of the purchase of excess produce by national intervention agencies.
3.2 Budgetary Problems.
Production surpluses also had important consequences for the Community budget.
The commitment given by the Community to reimburse national intervention
agencies, in respect of the costs which they incurred in the intervention
purchasing of agricultural produce and the payment of export refunds, meant
that this cost accrued to the Community budget. By 1985 the guarantee section
of the CAP was absorbing seventy per cent of the entire Community budget
(European Commission 1986 p.261). Expanding agricultural production resulted
in Community expenditure increasing more quickly than budgetary receipts.
Under Council Regulation 243/70, (OJ [1970] L94/19), these budgetary receipts
included one per cent of Member States’ national VAT revenues. In 1985 the
Member States agreed to raise these contributions from 1 to 1.4 per cent
of national VAT revenues. (Council Decision 85/257 OJ [1985] L128/15). However,
by 1986 even this additional expenditure had been consumed (Bladen-Howell
and Symons 1991 at p.371). In response to this situation both the United
Kingdom and the Netherlands refused to agree additional funding for the Community
budget until the issue of agricultural overproduction had been tackled (Swann
1995 p.260).
3.3 World Trade Negotiations.
Pressure for reform also came from international competitors. This can be
evidenced at the Uruguay round of trade negotiations within the then General
Agreement on Tariffs and Trade, held between 1986 and 1994. At these talks
other agricultural exporting nations sought major reductions in the levels
of domestic agricultural protection which existed throughout the world
(Ingersent, Rayner.and Hine 1994 p.260). In relation to the European Community,
radical reductions were sought in the levels of export refunds and of domestic
agricultural support provided by the Community. Additionally, greater access
was sought to Community markets through the removal of variable import levies.
Ultimately, under the terms of the 1994 GATT Agriculture Agreement, the Community
agreed to reduce levels of domestic agricultural support by twenty per cent.
In return, direct payments, which were independent of production levels,
were exempted from this requirement. The Community also agreed to cut subsidised
exports by thirty six per cent in value and twenty per cent in volume, to
amend all import restrictions to fixed customs duties and to reduce these
duties by thirty six per cent (Josling, Tangerman and Warley 1996 p.179)
The 1999 reforms of the CAP were similarly motivated by considerations of
world trade. Under the 1994 GATT Agreement GATT had been replaced by the
World Trade Organisation
(WTO).(1) The GATT Agriculture
Agreement made provision for a further round of negotiations in relation
to international agricultural trade to begin in 1999. Article 20 of the agreement
provided that the rationale for these negotiations was that:
“the long term objective of substantial progressive reductions in support and protection resulting in fundamental reform is an ongoing process...”
Levels of domestic agricultural support in the European Community were still
high in comparison with those of our international competitors. Calculations
of domestic support, known as Producer Support Estimates (PSEs), are assessed
as a percentage of the value of overall agricultural production. By way of
analogy, in 1998 average PSE’s in Australia and New Zealand were seven and
one per cent respectively, whilst in the European Community and the United
States they were forty five per cent and twenty-two per cent
respectively(2) (Legg 2000 p.21).
The prospect of international pressure for further agricultural trade
liberalisation therefore contributed to the 1999 reforms of the CAP.
3.4 Community Enlargement.
In the course of the early twenty first century the Community proposes to
enlarge to incorporate several new member states, including ten central and
eastern European countries.(3)
This provided a further incentive for the 1999 reform of the CAP. Agriculture
generally forms a larger part of the economies of many of the applicant central
and eastern European countries than it does within the current Member States.
For example, the average percentage of the population employed in agriculture
in the European Union is currently 5.1 per cent, whilst that of the ten central
and eastern European countries is 21.1 per cent (European Commission 1998
p.T.24). Similarly, whilst agriculture accounts for an average 1.7 per cent
of gross domestic product in the economies of the current Member States,
the equivalent average figure for the ten applicant central and eastern European
countries is 6.8 per cent. (European Commission (1998) ibid). Many, though
by no means all, of the applicant countries have large farming sectors, which
are of central importance to their economies. Additionally, in most cases,
these farming communities are composed of large numbers of small
farmers.(4)
The European Commission has stated that, without reform, the extension of
the CAP to the applicant countries would have created an annual budgetary
expense for the Community of 11 billion ECU and would also have made it difficult
for the Community to meet the commitments which it had made under the GATT
Agriculture Agreement (European Commission 1997 p.6).
3.5 Rural Development.
A final economic force for reform of the CAP in 1999 was the fact that
agriculture was no longer the predominant employer in rural areas. Agricultural
mechanisation, together with the encouragement to amalgamate and enlarge
smaller farms into larger, more viable units have been accompanied by reductions
in agricultural employment. For example, in the United Kingdom the agricultural
labour force fell from 896,000 people in 1964 to 511,000 in 1998 (European
Commission 1976 and 1998). In this situation the European Commission noted
that :
“ In terms of regional income and employment, agriculture no longer forms the main base of the rural economy. It represents only 5.5 per cent of total employment on average and in very few regions is its share higher than twenty per cent. The long term trend is a further drop in the numbers of farmers, at a rate of 2-3 per cent per year.”(European Commission 1997 p.26)
In this situation the Community recognised a need to develop the CAP into
a more broadly based policy which provided, not merely for agriculture, but
for rural development as a
whole.(5)
3.6 Environmental Issues.
Aside from economic factors, environmental considerations were also an important
element in the reforms of the CAP which occurred in 1992 and 1999. Historically
agriculture has been regarded as being environmentally beneficial and farmers
have been considered to be ‘the guardians of the countryside.’ For example,
the prized landscapes of modern Britain are generally semi-natural landscapes
which were cleared from forest by medieval farmers and which agriculture
has subsequently maintained (Green 1990 p.365). Equally, however, it has
become increasingly recognised that many modern agricultural practices have
become a source of environmental damage.
Additionally, this environmental damage has been encouraged by the manner
in which the CAP has operated. The system of farm support provided through
the CAP encouraged farmers to increase their output. Simultaneously, rapid
development in agricultural technology, coupled with the availability of
financial assistance to conduct farm improvements also led to further
agricultural intensification. This agricultural intensification has had important
consequences for the British landscape. For example, in 1984 the then Nature
Conservancy Council noted that in the period 1945 to 1984 there had been
a loss of, or significant damage to, between thirty and fifty per cent of
ancient woodland, ninety five per cent of flower rich meadows, forty per
cent of lowland heaths, sixty per cent of lowland raised peatbogs and thirty
per cent of upland heaths and blanket bogs (Nature Conservancy Council 1984
p.49). The Nature Conservancy Council identified agricultural intensification
as being a major source of these landscape changes. Additionally, the Nature
Conservancy Council also estimated that agricultural modernisation had led
to the removal of 140,000 miles of hedgerows in the period 1946 to 1974 (Ibid.
p.55). These landscape changes have also had important consequences for wildlife.
For example, one agricultural trend has been the ploughing up and replacement
of semi-natural grasslands with perennial rye grass mixtures. One commentator
has estimated that, by 1987, unimproved or semi-natural grasslands made up
only eleven per cent of English and Welsh lowland grasslands (Fuller 1987
p.281). Farmers prize improved grasslands precisely because they do not contain
the botanical diversity of semi-natural grasslands. However, within the food
chain the affect of such limited diversity have also been linked to declining
insect and bird populations (Green 1990 p.365).
Away from physical alterations to the landscape, another example of agricultural
intensification has been the greater usage of artificial fertilisers. For
example, the Council of Ministers has identified a sixty-three per cent increase
in the use of artificial fertilisers in the period between 1970 and 1988
(Council of Ministers 1993 p.23). The usage of large amounts of fertiliser
not only has potential repercussions for water pollution, it also has a direct
consequence for nature conservation. For example, there has been shown to
be a strong link between high nitrogen fertiliser usage and declining populations
of large grassland insects. (Beintera., Thissen, Tensen et al 1991 at p.31).
In turn, declining insect numbers have been linked to declines in bird
populations, such as lapwing and redshank, for whom these insects are an
important food source (Beintera 1991 p.97).
Overall agricultural intensification has had an important effect upon wildlife.
In Great Britain it has been reported that in the last fifty years ten species
of flowering plant, three or four species of dragonfly and one species of
butterfly have become extinct. These extinctions have been linked to land
use changes associated with agricultural intensification. Additionally some
149 plants, eleven species of dragonfly, thirteen butterfly species, thirty-six
bird species, four species of reptile or amphibian and several species of
mammal, especially otters and bats, have sustained serious population declines
(Nature Conservation Council 1984 p.61-64). More recently the World Wide
Fund for Nature predicted that a number of species, namely the marsh fritillary
butterfly, the high brown fritillary butterfly, the song thrush, the skylark
and the grey partridge would become extinct within the next twenty years
(WWF 1998).
Environmental issues also play an important role in protecting rural economies.
Although agriculture is no longer a predominant rural employer, agricultural
land still dominates the rural landscape. In the period since the end of
the second world war, urban dwellers have increasingly travelled into the
countryside, attracted by rural scenery. However, although the tourist industry
had become an important element of the rural economy, farmers previously
obtained little benefit. This is an example of market failure. For example,
well maintained hedges and stonewalls contribute towards a picturesque rural
landscape. However, in 1996 the Department of the Environment noted that
the loss of hedgerows through neglect and lack of management had become a
greater problem than deliberate removal (Department of the Environment 1996
p.8). Additionally, the Department reported a loss of some 8,000 kilometres
of stonewalls (ibid. p.8). For modern farmers it is often much cheaper and
easier to erect wire fences than to maintain hedges and stonewalls. Although,
in terms of their contribution to the landscape, hedges and stonewalls had
some economic value in helping attracting tourism, none of that economic
value accrued directly to the farmer who was responsible for their creation
and maintenance (Bowyers, Cheshire 1983 p.142).
4. The Modern Common Agricultural Policy.
4.1 Market Policy.
4.1.1. Price Reforms.
Today, the operation of the CAP is still centred around individual common
organisations, each dealing with distinct agricultural produce. However,
within these common organisations major reforms have occurred. In response
to its GATT commitment to reduce levels of domestic support and to cut levels
of subsidised exports, the Community has reduced the prices fixed for major
groups of agricultural produce. Such price reductions also have the benefit
of easing the burden of agricultural spending within the Community budget,
by lowering the gap between Community and world prices and hence lowering
the amount of any export refunds which are paid. In regard, for example,
to cereals Council Regulation 1766/92 (OJ [1992] L106/18) provided for target,
intervention and threshold prices to be reduced by twenty-one per cent over
a three year period. Subsequently, Council Regulation 1253/99 (OJ [1999]
L160/18) introduced further price reductions from 2000. In the common
organisation in beef and veal intervention prices were also initially reduced
by Council Regulation 2066/92 (OJ [1992] L215/49) and then further reduced
from 2000 under Council Regulation 1254/99 (OJ [1999] L160/21). A similar
situation also exists in relation to the common organisation in milk and
milk products. However, in this case, price reductions were first agreed
in 1999, under Council Regulation 1255/99 (OJ [1999] L160/48). This regulation
provides for the target price fixed for milk and the intervention prices
fixed for milk products such as butter and skimmed milk to be reduced over
a seven year period operating from 1st July 2000 to 1st
July 2007.
Alternations have also occurred in the manner in which agricultural prices
are set within these common organisations. Previously agricultural prices
had been fixed by the Council of Ministers on an annual basis. It had originally
been intended that these prices would provide a reasonable profit margin
for rationally operated family farms, whilst not maintaining in production
farms which were inefficient and obsolete. Farmers falling into this latter
category could instead utilise Community structural policy to develop their
farms. In reality, however, the prices actually fixed by the Council of Ministers
were often much higher than those which had initially been proposed by the
European Commission. This situation was generally the result of political
compromises required in order to obtain agreement by qualified majority and
by agriculture ministers’ need to placate national interests (Van der Velde;
Snyder 1992 p.5). In view of such difficulties and their consequences in
forcing higher agricultural prices, the common organisations in cereals,
beef and veal and milk and dairy products now all operate upon the basis
of fixed prices which will apply over a number of years.
4.1.2. Limiting Intervention Expenditure.
Away from measures relating to agricultural prices, measures have also been
introduced which have limited the Community’s commitment to finance intervention
spending. For example, as is further discussed below, one of the major changes
to the common organisation in cereals has been the introduction of direct
compensatory payments to farmers, known as arable area payments. However,
farmers who claim these payments upon an area of land which is greater than
that which would be required to produce more than ninety two tonnes of cereals
are required to set aside a percentage of their arable land, currently ten
per cent, from arable production. These calculations are based upon average
regional yields. This compulsory set aside requirement was first introduced
in 1992 by Council Regulation 1765/92 (OJ [1992] L181/12) and has been continued
by Council Regulation 1251/99 (OJ [1999] L160/1). These provisions replaced
a previously unsuccessful voluntary measure, introduced in 1988 by Council
Regulation 1760/87 (OJ [1987] L167/1) under which farmers could receive payments
in return for agreeing to set aside at least twenty per cent of their arable
land from arable production for at least five years.
In relation to beef farming, the current intervention system follows the
pattern of a reform of this COM in 1987 which introduced the concept of a
‘buying in price’. Intervention purchasing no longer occurred when prices
fell to the intervention price, but when they reached a lower ‘buying in’
price. Under Council Regulation 467/87 (OJ [1987] L48/1), intervention buying
was only authorised when average Community market prices were less than
ninety-one per cent of the intervention price and the national or regional
average market price for the particular area was less than eighty-five per
cent of the intervention price. The actual ‘buying in’ price was then calculated
on the basis of the average Community market prices (Usher 1988 p.83). Today
Regulation 1254/99 (OJ [1999] L160/21) provides for intervention purchasing
to occur where, for a period of two consecutive weeks, both the average Community
market price falls below eighty four per cent of the intervention price and
the average market price in a particular Member State or region is also less
than eighty per cent of the intervention price throughout this period.
Additionally the Community has prescribed a ceiling for intervention purchasing
in that, in the Community as a whole, a maximum of 350,000 tonnes of beef
can be purchased in this way. However, a further safety net is provided in
that the Community will also authorise intervention spending to occur upon
specific cattle if for two consecutive weeks the Community market price for
these cattle remains below seventy per cent of the intervention price and
additionally the market price in that particular Member State or region also
remains below sixty per cent of the intervention price. Cattle purchased
into intervention under this safety net provision are also not counted toward
the 350,000 tonnes intervention ceiling.
Intervention measures likewise apply within the common organisation in milk
and milk produce. However, given that milk is highly perishable, intervention
measures in this area have been developed with regard to milk produce such
as butter and skimmed milk. Council Regulation 1255/99 (OJ [1999] L160/48)
fixes intervention prices for these products and, in relation to butter provides
for intervention buying to occur if market prices fall below ninety-two per
cent of the intervention price in one or more Member States. Similarly, the
regulation makes provision for intervention purchasing of skimmed milk powder,
though in this case such purchasing can only occur in the period
1st March to 31st August and the Commission is authorised
to limit intervention purchasing to a total of 109,000 tonnes throughout
the Community. The production of large quantities of surplus milk has been
one of the principle problems faced by the CAP and the Community budget.
In 1984 the Community introduced milk quotas as a means of limiting its financial
exposure. Initially national quotas were imposed upon Member States, based
upon milk deliveries made in 1981 plus one per cent. This figure itself provided
for increased surplus production and subsequent Community legislation reduced
these quota levels. This legislation was consolidated within Council Regulation
3950/92 (OJ [1992] L405/1). Today the quota system remains in operation and
indeed Council Regulation 1256/99 (OJ [1999] L 160/73) makes provision for
it to continue to apply until 1st April 2008. The quota operates
by dividing the national quota into individual reference quantities which
are given to individual producers. If in any year the national quota is exceeded,
Member States will then apply a levy upon producers who exceeded their individual
reference quantity. In situations where farmers sell their milk to dairies,
the levy is imposed upon the dairy, which will recover it through the prices
which they pay to those farmers for their milk. Alternatively, where farmers
directly market their own milk for sale, the levy is imposed directly upon
those farmers. In either case the levy is 115 per cent of the target price
for milk.
4.1.3. CAP and World Trade.
Reforms to the common organisations have also reduced the Community’s insulation
from world markets. Within each common organisation variable import levies
have been replaced by fixed customs duties. Initially, under the GATT Agriculture
Agreement, the Community was able to fix these customs duties at a level
which actually exceeded the previously prevailing variable levies (Fennell
1997 p.393). However, under the Community’s GATT commitments these initial
customs duties have subsequently been reduced by thirty-six per cent between
1995 and 2000. A safeguard does, however, give the Community the right to
impose additional duties where the stability of the Community market will
be affected by either a surge in imports or a fall in world prices. Farm
incomes have also potentially been affected by the Community’s GATT obligation
concerning export refunds. Today, export refunds are only available in any
year to the extent that the Community will remain within its GATT obligation.
4.1.4. Direct Payments.
In the light of these reforms, in particular in a response to the reduction
in agricultural prices within particular common organisations, the Community
has introduced a number of compensatory direct payments. As outlined previously,
the GATT Agriculture Agreement committed the Community to the objective of
reducing levels of domestic agricultural support. However, direct payments
made to farmers which were independent of their production levels were exempted
from this requirement. Under a, so-called, ‘peace clause’ in the 1994 GATT
Agriculture Agreement the direct payments introduced by the Community were
accepted as coming within this exemption, even though, in practice, they
were not actually independent of farmers production levels (Swinbank and
Tanner 1996 p.149). The direct payments which the Community has introduced
include arable area compensatory payments and also livestock based payments
made to beef farmers. These complement direct payments, the sheep annual
premium, which have been paid to sheep farmers since Council Regulation 1837/80
(OJ [1980] L183/1) introduced a common organisation in sheep-meat. In the
case of the common organisation in sheep-meat, this payment was introduced
as an integral part of the common organisation to compensate sheep-farmers
for income losses caused by the pricing system through which this common
organisation operated. The losses were determined by calculating the difference
between a basic price fixed by the Community and the arithmetic mean of the
weekly prices which farmers actually obtained upon Community markets.
For arable farmers, Council Regulation 1251/99 (OJ [1999] L160/1) provides
for arable area payments to be paid upon land which is either used for growing
arable crops or is subject to compulsory set aside requirements. In order
to prevent farmers from entering arable farming simply to obtain these payments,
a stipulation provides that in order to be eligible for payment land must,
on 31st December 1991, have been neither under permanent pasture,
permanent crops or forest, nor used for non-agricultural purposes. Similarly,
in order to prevent currently eligible farmers from simply subsidy farming,
that is sowing a thin crop simply for the purpose of claiming the payment
but without necessarily intending to harvest the crop, further conditions
are also imposed. The crop must be sown in accordance with local standards
and maintained until at least the beginning of flowering, in normal growth
conditions. The actual level of payment is calculated by multiplying the
hectarage of eligible land farmed by a claimant by a figure calculated by
the Member State to represent the historic annual yield per hectare of the
region in which the land is located. This latter figure is obtained by
calculating the average yield per hectare obtained in that region over the
period between the marketing years 1986/87 to 1990/91. The figure representing
the average historic yield of the claimants land is then multiplied by an
amount per tonne, set out in the Regulation, to provide the actual arable
area payment which is due.
The concept of direct payments to beef farmers was initially introduced by
Council Regulation 467/87 (OJ [1987] L48/1). Today, Council Regulation 1254/99
(OJ [1999] L160/21) provides for a number of direct payments to be made to
farmers. The most important of these payments are the special beef premium
and the suckler cow premium. Farmers can claim special beef premium once
upon up to ninety bulls aged from nine months, or twice in the life of up
to ninety steers, at nine months and twenty one months. Contrastingly suckler
cow premium is paid annually upon suckler cows which are retained by farmers
for at least six months after they lodge their payment application. Again,
the level of payment is stipulated by Council Regulation 1254/99. Farmers
who receive either special beef premium or suckler cow premium may also be
entitled to an additional extensification payment if they keep their livestock
densities to 1.4 livestock units or less per hectare of forage area upon
their farm. Regulation 1254/99 does, also, give Member States a discretion
to vary this provision by providing a graduated series of extensification
payments to farmers whose stocking rates are between 1.4 and 2.0 livestock
units per hectare. In each case these livestock units are calculated by attaching
the following notional values to farm livestock:
1. 0 Livestock Units: dairy cattle, cattle upon which suckler cow premium has been claimed, cattle upon which beef special premium has been claimed which were aged over 2 years at the date of claim
0.6 Livestock Units: cattle upon which beef special premium has been claimed which were aged under 2 years at the date of claim.
0.15 Livestock Units: ewes upon which sheep annual premium has been claimed.
In addition to this raft of direct payments, a further direct measure, a
dairy premium, is to be introduced in 2005. This annual payment is designed
to compensate farmers for reductions in milk prices under Council Regulation
1255/99 (OJ [1999] L160/48). In this case payments will principally be based
upon the level of milk quotas allocated to individual farmers.
The price reductions and consequent introduction of direct payments represent
a radical change of direction within the CAP. At the same time, however,
each of the direct payment measures also includes provisions which are designed
to limit the degree of expenditure which is imposed upon the Community budget.
For example, in relation to the payment of arable area payments, Council
Regulation 1251/99 requires Member States to calculate base areas for each
of their regions. These base areas represent the average number of hectares
which in that region were used for arable crops or set aside land in period
1989 to 1991. If in any year the total hectarage in that region for which
arable area payments are claimed exceeds this base area then Member States
are required to proportionately reduce their arable area payments for that
region. In the case of claimants for beef payments, national ceilings similarly
fix the maximum number of cattle upon which Livestock payments will be paid.
Elsewhere claimants for suckler cow premium are affected by individual quotas
which limit their entitlement to payments to the number of suckler cows which
they owned on 31st December 1999. Indeed more broadly, claimants
for both special beef premium and suckler cow premium are also restricted
by a requirement that they should maintain stocking densities below 2.0 livestock
units per hectare of forage area in order to be eligible for these payments.
4.2 Community Rural Policy.
As a result of the reforms introduced by Council Regulation 1257/99 (OJ [1999]
L160/80), the second pillar of the CAP has now moved from operating as a
structural policy for agricultural development to being what the Commission
has referred to as a “coherent integrated rural development strategy” (European
Commission 1999(b) p.7) In the light of the alteration of agriculture’s economic
position in rural areas agriculture is now viewed as having a multi-functional
role, not merely limited to food production (European Commission 1999(c)
p.12). In this context, Council Regulation 1257/99 has authorised the Community
to provide financial support for projects seeking not merely structural
improvement, but also those whose objects include inter alia :
- the encouragement of non-food production;
- the diversification of activities;
- the maintenance and reinforcement of viable social fabric in rural areas;
- the development of economic activities and the maintenance and creation of employment with the aim of ensuring a better exploitation of existing inherent potential;
- the preservation and promotion of high nature value and a sustainable agriculture respecting environmental requirements.
Member States have been required to design rural development plans covering
a seven year period from 1st January 2000. In the United Kingdom,
competence for both agriculture and rural development now resides with the
United Kingdom’s regional governments. The governments of Scotland, Wales
and Northern Ireland and the United Kingdom government in respect of England,
have therefore been required to produce individual rural development plans.
In designing these plans, title two of Council Regulation 1257/99 specifies
a menu of measures for which the Community will provide partial financial
assistance. In accordance with the principle of subsidiarity, Member States
are authorised to decide which of these measures are appropriate to their
circumstances, though the Regulation does place an obligation upon Member
States to include an agri-environmental measure within these plans. Additionally,
Member States have been given a broad level of discretion, within parameters
set out in the Regulation to adapt individual measures to the needs of their
rural areas. Ultimately, however, the rural development plans drawn up by
the Member States require the approval of the Commission. The menu of measures
which Member States may include within their rural development plans include
many of the measures which had previously been available as part of the
Community’s programme to improve the efficiency of agricultural structures.
These include the provision of investment aid to enable farmers to improve
agricultural incomes, living conditions or production conditions; financial
aid for farmers under forty who are setting up in agriculture for the first
time; financial assistance for Member States to assist them in providing
vocational training for farmers; financial assistance for farmers located
in mountain, hill farming or other agriculturally less favourable areas and
the payment of early retirement aid to farmers and farm workers with a view
to farms being taken over by others who can improve their viability or use
the land for non agricultural purposes. Additionally, the measures also include
the provision of an agri-environmental scheme and also a new measure which
seeks to promote the adaptation and development of rural areas. This latter
measure authorises investments which come within a variety of categories,
both agricultural and non agricultural, encompassing for example, both
investments on land improvement and agricultural diversification as well
as the provision of rural services. Ultimately the rural development plans
drawn up by each of the United Kingdom’s regional governments to incorporate
these provisions were finally approved by the European Commission in September
and October 2000.
The Community continues to make a full refund to Member States of all eligible
expenditure which they incur in relation to the payment of export refunds,
intervention payments and direct income payments. However, the Community
only makes a partial refund to Member States of the expenditure which they
incur under their rural development plans. This rebate varies from between
fifty and seventy five per cent of eligible expenditure incurred within objective
one areas, areas whose gross domestic product is less than seventy five per
cent of the Community average, and between twenty five and fifty per cent
in other areas. Expenditure incurred through the rural development plans
therefore has a much more limited affect upon the Community budget. Nevertheless
the Community has recognised that rural development spending can have important
indirect consequences for budgetary spending. For example, investment aid
is not available for projects whose object is to increase the production
of agricultural produce of which a surplus already exists. Such expenditure
would merely result in increased Community expenditure upon intervention
purchasing and export refunds.
4.3 Community Agri-Environmental Policy.
In preparing for the 1992 reforms to the CAP the Commission noted that:
“Concern for the environment means that we should support the farmer also as an environmental manager through the use of less intensive techniques and the implementation of environment friendly measures.”(European Commission (1991) p3)
Similarly, in preparing for the 1999 reforms of the CAP, the Commission noted
that:
“ The philosophy underpinning the environmental aspects of the CAP reform is that farmers should be expected to observe basic environmental standards without compensation. However, wherever society desires that farmers deliver an environmental service beyond this base-line level, this service should be specifically purchased through agri-environmental measures.”(European Commission (1999b) p.28)
However, these endorsements of Community agri-environmental policy were not
induced merely by a recognition of environmental issues. In promoting less
intensive agricultural practices, Community agri-environmental policy would
also coincide with the need to reduce levels of surplus produce and Community
budgetary expenditure (Baldock and Lowe 1996 p.12). Similarly environmental
payments, given that such payments were specifically approved by the GATT
Agriculture Agreement, offered the Community the simultaneous opportunity
to pursue social objectives by supporting family farmers and encouraging
them to remain in farming (Sheele 1996 p.4). Such considerations have influenced
the development of Community agri-environmental policy. Today this policy
influences all aspects of the CAP.
4.3.1 Environmental Measures Within Community Market Policy.
Attention has been drawn to the introduction of a variety of direct income
payments to farmers in several common organisations. In return for receiving
these payments farmers have been required to observe a number of environmental
requirements. In 1992 Council Regulation 1765/92 (OJ [1992] L181/12) introduced
a requirement for Member States to require arable farmers to observe appropriate
environmental conditions in relation to set aside land as a condition of
receiving area arable payments. Similarly in 1993 and 1994 respectively
amendments were made to the common organisations in beef (Regulation 3611/93
OJ [1993] L30/9) and sheepmeat (Regulation 233/94 OJ [1994] L30/9) which
gave Member States the discretion to link direct payments under these common
organisations with appropriate environmental conditions. In practice only
four Member States put forward proposals under these latter measures (Cammarata
1997 p.23). Today Council Regulation 1259/99 (OJ [1999] L160/80) has replaced
and broadened each of these provisions by placing a mandatory requirement
upon all Member States to link all direct payments with appropriate environmental
conditions. The Regulation provides that the measures taken by Member States
may include requiring farmers to observe specific environmental requirements
as a condition of payment; or alternatively requiring all farmers to observe
mandatory obligations, such as criminal regulations; or providing payments
to farmers, for example through an agri-environmental scheme, in return for
those farmers accepting particular environmental undertakings. In reality,
therefore, the Regulation has also given Member States a broad discretion
as to the manner in which these environmental conditions might be imposed.
Given that concern to protect farm incomes remains high in many Member States,
it is likely that the third of these options will be chosen in many Member
States. In this way the measures will boost farm incomes rather than penalising
farmers who fail to observe given environmental criteria.
4.3.2 Environmental Measures Within Rural Policy.
Environmental measures have also become an important element of the
Community’s new rural policy. For example, in relation to investment aid,
Council Regulation 1257/99 makes specific provision for Member States to
provide financial assistance for projects which aim to preserve and improve
the natural environment. Additionally this regulation also provides that
all applicants for investment aid should at least comply with minimum, nationally
determined, environmental protection standards. Similarly, it is a condition
of eligibility for financial aid for farmers under forty setting up in
agriculture that their farms should also comply with such minimal, nationally
determined, environmental protection standards. Elsewhere Council Regulation
1257/99 also provides that vocational training provided by Member States
for farmers may include training on production practices which are compatible
with the maintenance and enhancement of the landscape or with the protection
of the environment. However, within Community rural policy, the largest
contributions to environmental protection policy have been made by the
introduction of agri-environmental land management schemes and by recent
reforms to the Community’s long standing less favoured area scheme.
The development of Community legislation concerning agri-environmental schemes
can be traced to Council Regulation 797/85 on improving the efficiency of
agricultural structures (OJ[1985] L95/1). Article 19 of this regulation gave
Member States a discretion to introduce agri-environmental land management
schemes within nationally designated environmentally sensitive areas. These
were required to be areas of ecological or landscape importance. Within these
areas Member States were authorised to make financial payments to farmers
who undertook to farm in a manner which preserved or improved the environment.
They would be required, for example, to avoid further intensification of
their farming practice and to ensure that both stocking densities and the
level of intensity of their general production was compatible with the capacity
of their lands. Initially this regulation made no provision for Community
funding and agri-environmental land management schemes were only implemented
by four nations: Denmark, Germany, the Netherlands and the United Kingdom
(Cammarata 1997 p.23). Even when Council Regulation 1760/87 (OJ [1987] L167/1)
provided for the Community to reimburse twenty five per cent of Member States
expenditure, implementation of the scheme remained limited to these four
nations. However, Council Regulation 2078/92 (OJ [1992] L) placed a mandatory
requirement upon Member States to implement national agri-environmental land
management schemes. Today, the provision of agri-environmental land management
schemes has been subsumed within Community rural policy under Council Regulation
1257/99. As such, agri-environmental measures are the only measures which
Member States are compelled to include within their rural development plans.
The regulation requires Member States to provide financial support to farmers
who accept agri-environmental commitments for a period of at least five years.
These commitments are required to go beyond the mere application of usual
good farming practices. However, in actually developing national
agri-environmental land management schemes, Member States have a large measure
of discretion. Regulation 1257/99 merely provides for these schemes to promote
the following objectives:
- ways of using agricultural land which are compatible with the protection and improvement of the environment, the landscape and its features, natural resources, the soil and genetic resources;
- an environmentally favourable extensification of farming and management of low intensity pasture systems;
- the conservation of high nature-value farmed environments which are under threat;
- the upkeep of the landscape and historical features on agricultural land;
- the use of environmental planning in farming practice.
These objectives would, for example, enable Member States to address the
problem of market failure identified previously, by providing payments to
farmers for the upkeep of landscape features. In the United Kingdom these
provisions have led to the introduction of a number of schemes. In England
and Northern Ireland areas of particular ecological and landscape importance
have been identified as being Environmentally Sensitive Areas and farmers
located within the designated areas have the opportunity to enter ten year
whole farm agri-environmental land management agreements. Outside these areas,
the Countryside Stewardship Scheme, in England, and the Countryside Management
Scheme in Northern Ireland are open to farmers who have particular priority
habitats or features upon their farms. Farmers again enter ten year whole
farm agri-environmental agreements which require the farmer to follow specific
management practices upon the part of the farm containing the priority habitats
or features and also regulate their general farming practice on the farm
as a whole. In Scotland and Wales, agri-environmental measures had also
previously distinguished between Environmentally Sensitive and non
Environmentally Sensitive Areas. However, today separate countrywide
agri-environment schemes, known respectively as the Rural Stewardship Scheme
and Tir Gofal, been implemented.
In many respects, the less favoured area scheme, introduced by Council Directive
75/268, was the Community’s first agri-environmental measure. One of the
objectives of the scheme had been to prevent ecological damage occurring
through the colonisation of abandoned farmland by scrub and forest. Ironically,
however, the scheme has come to be regarded as a source of environmental
damage. Under the scheme, livestock farmers received additional payments
based upon their livestock numbers. This encouraged overgrazing, since increased
livestock numbers equated to increased payments to farmers (Wathern 1992
p.194). Some payment limitations were introduced. For example payments were
only made to farmers who maintained livestock densities of 1.4 livestock
units per hectare. Additionally, the Community introduced a limitation upon
its willingness to reimburse Member States for their expenditure under the
scheme. Under Council Regulation 2328/91 (OJ [1991] L218/1), full reimbursement
was only made upon a maximum of 60 livestock units per farmer, whilst a fifty
per cent reimbursement would be made between 60 and 120 livestock units.
In practice these measures were economically inspired, designed to limit
Community budgetary expenditure. Such measures actually exacerbated environmental
problems by providing farmers with targets to attain in order to maximise
their incomes. Initially the Community attempted to deal with the environmental
consequences of the measure through a provision which gave Member States
a discretion to attach environmental conditions to these payments. However,
as in the case of Member States’ discretion to attach environmental conditions
to beef and sheep premiums, this was largely ignored by many Member States.
Today the less favoured area scheme has been radically reformed by Council
Regulation 1257/99. This regulation now provides that it should be a specific
objective of such payments that they should “maintain and promote sustainable
farming systems which in particular take account of environmental protection
requirements” (Council Regulation 1257/99 OJ [1999] L160/80 Article 13).
In this regard it is now a basic requirement of the scheme that, in order
to be eligible for payment, farmers should “apply usual good farming practices
compatible with the need to safeguard the environment and maintain the
countryside, in particular by sustainable farming.” Additionally Council
Regulation 1257/99 has also extended the range of areas which are eligible
for inclusion within the scheme. Under European Community nature conservation
law, the Community is presently in the process of declaring Natura 2000,
a Community-wide network of important habitat and wildlife sites protected
by both Community and national laws. Since these laws are likely to restrict
farming activities within these areas, Council Regulation 1257/99 provides
for them to come within the scope of the Less Favoured Area scheme, so that
farmers affected by these designations can be eligible for payments under
the scheme.
However the major reform which the regulation has introduced has been to
alter the nature of the less favoured area scheme from one in which payments
were based upon the number of livestock owned by farmers to an area based
scheme in which payments are determined by the size of their farms. Member
States which wished to implement the scheme were required to set out in their
rural development plans the manner in which this area based scheme would
operate. Indeed this requirement was the main reason that rural development
plans for each of the regions of the United Kingdom were only approved by
the Commission at the end of 2000. In each case concerns of farming unions
that an area-based scheme would cause financial loss to more heavily stocked
farmers led to initial proposals which sought to calculate payments on the
basis of the numbers of livestock owned by farmers in previous years. In
each case, these initial proposals were rejected by the Commission. Ultimately,
the proposals eventually accepted by the Commission in respect of England,
Scotland, Wales and Northern Ireland were area-based schemes, though the
Commission did also compromise by additionally agreeing to allow safety-net
measures. In each case, these safety-net measures will, for three years after
the introduction of area based payments, provide regressive compensation
to farmers who suffer financial loss as a result of this change. Indeed,
in England and Wales, the national measures adopted to implement the Less
Favoured Area scheme , known respectively as the Hill Farming Allowance and
Tir Mynydd, make additional provision for environmental protection by enabling
participating farmers to increase their payments by up to twenty per cent
in return for observing a number of environmental criteria.
5. Conclusion.
The basic structure of the CAP remains broadly similar to that which the
United Kingdom adopted upon joining the then European Economic Community.
The CAP remains supported upon two pillars. One of these pillars continues
to provide an agricultural marketing policy, through the operation of the
twenty-two common organisations which regulate the production and sale of
major agricultural commodities. Similarly, although the second pillar of
the CAP is now given the title of ‘rural policy’, each of the Community’s
early structural policy measures remains in existence within it. However,
a deeper examination of the CAP reveals the important changes which have
been introduced as a result of the broad range of economic and environmental
pressures which have been brought to bear upon it. The common organisations
may remain in position, but price reductions, together with limitations placed
upon intervention purchasing and decreased protection from competition from
third country produce, mean that today no common organisation provides farmers
with complete income guarantees. Although direct payments have been introduced
as compensation, farmers have had to adapt their practice to accommodate
these changes. Additionally the CAP has been reformed to take account of
environmental considerations. The European Commission has noted that some
twenty per cent of the Community’s agricultural land is presently enrolled
within the agri-environment land management scheme. (European Commission
(1999c) p121) As has been mentioned, these land management measures have
been influenced by social and economic considerations, in providing new sources
of income whilst encouraging reduced production levels, as well as considerations
of environmental enhancement. Indeed in this situation it is not always clear
that national schemes have given priority to this latter goal. However, the
compulsory requirement for Member States to introduce this scheme, together
with the introduction of environmental measures affecting direct payments
to farmers and the reform of the less favoured area scheme, show that
environmental issues have increasingly come to influence the framework of
the CAP.
It seems unlikely that the present CAP represents the end of the
Community’s agricultural reforms. In that regard, the question remains as
to the effect which the current foot and mouth crisis will have in relation
to future reforms. In the first place it is sincerely to be hoped that by
the time that such reforms are being negotiated the Community will be reflecting
upon a disease which has been completely eradicated within the United Kingdom
and neighbouring countries. Additionally, the lesson of recent reforms of
the CAP would appear to be that the after effects of the current crisis will,
at best, be only one factor amongst several which may be acting upon the
minds of policy makers. For example it is likely that the current WTO
negotiations and the consequences of the enlargement of the Community will
remain important considerations. Similarly it is necessary to look at the
future of the CAP from a Community, rather than a national, perspective.
In that regard the Community’s legislative procedure for agriculture, Article
37 of the EC Treaty, which requires that legislation concerning agriculture
should be adopted by the Council of Ministers by a qualified majority with
the European Parliament having the right merely to express an opinion, will
also be influential. For example, one effect of the current foot and mouth
crisis has been to place a spotlight on financial payments which are received
by farmers through the CAP. Arguably social necessity remains a justification
for financial payments made to farmers within agriculturally less favoured
areas. However, this still leaves the various direct payments received by
farmers through the common organisations. The United Kingdom, where government
policy promotes further liberalisation of the CAP, would be likely to support
the removal or reduction in value of such payments (MAFF 1999 p.7). Such
a reform, if coupled with a reduction in agricultural prices to world price
levels and a removal of production limitations such as quotas, would enable
farmers to export surplus produce without subsidy. However, the United
Kingdom’s situation, in having a very small agricultural economy supported
principally by large, efficient farms which are better able to directly compete
upon world markets, is unlike that which exists in other Member States. Countries
such as France, Germany, Greece, Portugal, the Republic of Ireland and Spain,
which have politically influential farming sectors made up of smaller family
farms, could be expected to oppose moves to remove or reduce such payments.
Objections by these countries would be sufficient to defeat any such proposals
within the Council of Ministers. Any reform on this issue is more likely
to be prompted by other issues such as WTO negotiations or the Community’s
eastern enlargement. Even then it is likely to be a hugely divisive issue.
Overall therefore it would appear that, in itself, the current foot and mouth
crisis in the United Kingdom will have only limited impact upon any future
reform of the legal structure of the CAP.
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Endnotes
(1) Previously the GATT structure
had been merely a contractual arrangement between members, with no rule-making
or enforcement mechanisms. However, the WTO was created with both a Ministerial
and General Council and a Dispute Settlement Body. See Davies D., (1995)
The World Trade Organisation and GATT 94: A Guide to the New International
Economic Law. Charlton Publishing and Printing Ltd. (London).
(2) Equally though, to put these
subsidy levels into perspective, it should be noted that Legg reports that
Iceland and Japan had PSEs of over sixty per cent and that Switzerland and
Norway had PSEs of over seventy per cent.
(3) These countries are the Czech
Republic, Estonia, Hungary, Poland, Slovenia, Bulgaria, Romania, Slovakia,
Latvia and Lithuania.
(4) Perhaps the largest potential
problem in this respect is posed by Poland. Twenty per cent of the population
there works within agriculture, whilst the average farm size is only seven
hectares. OECD (1995) Agricultural Policies, Markets and Trade in the Central
and East European Countries. OECD (Paris) p.65
(5) For example, the Cork Declaration,
the declaration of a European Community conference on rural development which
was held in Cork in November 1996 had called for the adoption of such an
approach.