Mariann Fischer Boel, Member of the European Commission responsible for Agriculture and Rural Development, Canberra, Australia
EU perspectives on WTO outcomes: ABARE Outlook Conference
Ladies and gentlemen,
Its a great pleasure to be back in Australia to speak at this prestigious event.
One of the things I appreciate about Australia is that, like in my homeland of Denmark, people are in the habit of saying very clearly what they mean. Straight talk seems to be the rule. Thats good, because weve already heard some straight talk today, and I can promise you more of the same now.
I just hope that my comments live up to the accuracy of an Australian Bureau of Agriculture and Resource Economics (ABARE) forecast a demanding challenge!
So, where are we in the Doha Round following the Hong Kong ministerial meeting of last December?
Before Hong Kong, some people were worried that we were about to run out of road. Well, after Hong Kong, the show is still on the road, and we have enough momentum to keep going.
I acknowledge the valuable political will shown by all of those who joined me at the negotiating table. We all have our domestic constituencies to please. But although there were some difficult moments in Hong Kong, there was a common desire to maintain or increase our pace, to hit that goal of agreeing modalities by the end of April.
I make no apology for once again underlining now that the European Union has already made a very solid contribution to the current Round the Doha Development Agenda.
Even before the Round got underway, I believe the EU was already doing far more to assist development through trade than some people gave us credit for.
It is a fact that the EU imports more food from developing countries than do all the other Organisation for Economic Co-operation and Development (OECD) members put together. This is true in terms of absolute volume, and in terms of per-capita volume.
It is also a fact that our Everything But Arms agreement, which give duty-free and quota-free access to the Least Developed Countries, covers all agricultural products. No exceptions: not even products which we consider sensitive. Note that our willingness to include sugar in these provisions has forced us to take some very difficult domestic policy decisions. I acknowledge that Australia has made similar commitments to LDCs; but not all developed countries have yet followed where we have led.
The EU came to the Doha Round with a strong record in many respects, and we have built on that with an ambitious agricultural offer and considerable flexibility in subsequent negotiations.
Not only have we offered to abandon export refunds: we have now agreed to a final cut-off year of 2013. If my memory serves me well, this was the only substantial unilateral concession that any party made in Hong Kong.
But how quickly some people have changed their tune on this issue! Not long ago, many influential politicians and commentators damned export refunds as the most destructive element of the EUs Common Agricultural Policy. What happens when the EU offers to end these forever? Our critics simply move on to the next item on their hit list, making fresh demands.
But lets take a look at what the EU has proposed in other areas.
We have offered to lower the ceiling on trade-distorting domestic support by a huge 70%. This is a big number. Does it mean less than it appears to mean, as some argue, simply because internal reforms already undertaken allow us to meet that target?
That would be a strange way of thinking. The EU is home to nearly 11 million farms. After accession of Romania and Bulgaria this number will be even increased by another 2 million farms. You cant make sweeping changes to a sector like that overnight. It was sensible of us to plan ahead, to set in motion domestic reforms which would allow us to play a leading role in the Doha Round. We will not be penalised for being the first to get out of the starting-blocks in this respect.
Besides, agreeing to this limit within the WTO carries a distinct advantage for our trade partners: the change is locked in. There can be no back-sliding at a later date.
We have also offered meaningful cuts to agricultural import tariffs: an average reduction of 39%, which would halve the average tariff from 23% to 12%. Its true that we have asked to treat a number of products as sensitive. But that status would not exclude them from commitments to extra market access.
Now that the issue of export refunds is out of the way, some of our WTO partners are turning their fire on our proposal on tariffs. They claim that our offer does not imply substantial gains in market access. I reject this claim completely. Let me make two points in connection with this.
First, much of the criticism rests too heavily on the slender foundation of a report by the World Bank. That report has strong points, but also flaws. It does not give details, commodity by commodity. And much of its research is based on a scenario of full trade liberalisation, which is not a likely outcome of the Doha Round. There are other reports, from various sources, which reach very different conclusions.(By the way, the same World Bank report suggests that the benefits of liberalising agricultural trade would go mainly to developed countries, and that developing countries would actually reap greater rewards more from a more liberal approach to services and trade facilitation. Those points seem to get played down in many quarters.)
Secondly, agricultural market access is not only about import tariffs. The value of the EU offers on market access rests on the strength of all three agricultural pillars not just market access itself, but also domestic support and export competition.
The principles here are relatively simple. If the EU cuts trade-distorting support, there will be some shrinkage in domestic production. And the abolition of export refunds will cut exports. Between them, these two developments make space for our competitors on our markets and on third-country markets.
The gain will in some cases be a double gain, because as the EU retreats somewhat from the world market, world prices will rise. So others will be exporting more, at higher prices.
On the other hand, in sectors in which the EU exports less or imports more, our domestic prices will fall, adding to pressure on our farmers.
Now is not the time for me to throw detailed numbers at you: doing so often raises more questions than it answers. But overall, according to our analysis the EUs offer would slice many billions of euros off our farm sector receipts, handing corresponding gains to others.
Ill give some quick examples. We would lose most of our share of the world export market in dairy products, and would import more cheese. Our exports of coarse grains would fall sharply. Beef and poultry imports would rise.
These changes would have a very real impact on jobs, individuals and communities across the EU. So let no one say that we are not taking our responsibilities seriously in the Doha Round!
Why, then, is there such a wide gap between the reality of the EUs offer and the way it is sometimes presented?
Perhaps one reason lies in different interpretations of what is meant by the substantial gains that WTO members need to put on the table. By this term, I understand that the overall impact of an offer needs to be substantial. But I think others take the view that it means, I have to get substantially what I want. That is a different matter altogether.
Let me say this. The EU must make sacrifices in this round, like everyone else. That includes sacrifices in the area of agriculture. But we are under no obligation to lay out the entirety of our agricultural markets like items in a confectionery store, inviting people to carry off whatever takes their fancy, at a knock-down price. The Doha Round framework commits us to making an overall offer of value not to satisfying every individual agenda.
Perhaps another reason for the clash of perceptions lies in contrasting views of the relationship between past and present. It seems that many feel there is unfinished business from the Uruguay Round, and that agriculture and the EU somehow have to catch up.
On this basis, the EU is expected to make deep concessions on agriculture before our trade partners will even begin to get serious about services and non-agricultural goods.
If we want success in this Round, this misconception must end.
The Uruguay Round was a separate round. All WTO members signed up to its result . The Doha Round is shaped by its own framework, not by grievances about the past. And that framework does not say that agriculture or the EU must make a special contribution. In fact, one of the conclusions from the Hong Kong meeting was that there should be a comparably high level of ambition for market access in agricultural and non-agricultural goods.
Having challenged a number of points of view, let me give the EUs point of view about whats needed in the next few weeks.
Time and time again, the EU has shown leadership and given a hard push to keep the Doha Round moving. It is time for others to match our efforts and get their hands dirty, not stand aloof and preach sermons.
What does this mean? With regard to agriculture, it means real disciplines, disciplines that bite, on the subsidy elements of food aid, state trading enterprises and export credits. It means serious commitments on trade-distorting domestic support. And it means paying more than lip service to Geographical Indications.
With regard to non-agricultural goods, it means respecting that essential paragraph about showing the same ambition as for agriculture. And it means recognising the considerable benefits that could arise from a more liberal services market.
Ladies and gentlemen, the hour is late, but success in the Doha Round is still within reach. However, if we are to grasp it, everyone must reach a little higher, not just the EU. If that reality is understood, nothing is beyond us.
Thank you for your attention.