The great leap forward in Europe

Ireland has succeeded with CAP reform as Lithuania takes over the chair and Croatia joins as Member State 28 in the European Union, Joan Noble reports

As the European Union celebrated the accession of the 28th member state, Croatia, on 1 July 2013, Ireland had its own private celebration. From all accounts, the Irish presidency has been a success. Not only did the chair steer complicted negotiations between 27 diverse countries on important issues such as CAP reform, the budget outline from 2014 to 2020 and the deal to begin negotiations with the US on a significant free trade agreement, but they had to deal with diverse points of views amongst the EU institutions themselves. The fact that Ireland had received an economic bail out in 2010 together with rejections of EU treaties through referenda in the last decade, made it important for the Irish government, when in the chair, to show it can “pull out the stops” to achieve compromise on politically difficult dossiers. Some 2,500 meetings and six months later it has succeeded and, as a result, there are some major legislative changes being made to the statute book.

US and Europe

The free trade negotiations with the US are of huge importance for the future of both economies, and the Irish handled with skill the last minute threat to veto the whole thing from the protectionist French so that the negotiations could start. While Doha is still in the doldrums, this is an important move to increase international trade between the two trading blocs and prevent a slide into even more protectionism. Negotiations can now begin in earnest.

Second, the Irish achieved a political settlement on the multiannual financial framework (MFF), which sets the budget from 2014 and 2020, with some help from José Manuel Barroso, the president of the commission. The debate on the budget has been highly political. The council thought this had been settled in February, and the European parliament put a stop to the agreement the following month.

Both the presidency and the commission had to negotiate to get the parliament on side to make sure that the deal would not be blocked by them. The parliament had identified the need for more immediate financing to help the fight against youth unemployment, greater flexibility between the budget chapters as well as budget years and a review of the budget before the end of 2016. These issues have been included in the final agreement for the €960 billion budget.

The parliament also wants a shorter time to be included in future MFF, limiting it to five rather than seven years from 2020 to align the programme with the parliamentary elections and the term of European commissioners. While the parliament still had to vote on the legal texts at the time of writing, it is assumed that this will be finalised as well as the agreement on the current year’s budget to allow further spending in the current year.

CAP reform despite MFF

Third, the Irish government has done well to achieve the long awaited CAP reform, which the parliament had linked to the conclusion of the MFF. After 20 months of negotiation that highlighted the wide differences not just between the 27 member states but between the EU institutions, the Irish presidency of the agricultural council achieved the necessary compromise to settle the CAP for the next few years. Observers of Europe’s agricultural policy will realise that this is just the last of many CAP reforms since the policy’s inception as part of the original Treaty of Rome.

However, this reform was one of the most difficult to achieve because of the change in the way the compromise had to be found. It was no longer just up to the agricultural ministers from the 27 countries who had to find compromise between each other. The divisions between the three EU institutions involved, the European commission, the council of ministers and the European parliament were also stark. The parliament, whose additional power over agricultural policy reforms was granted under the Lisbon treaty, wanted to show the importance of its involvment in the legislative procedure by putting forward thousands of amendments to the commission’s original proposal.

The political compromise agreed on 26 June after three days of negotiations ends months of debate over the latest CAP reform. The latest rules on the CAP will be covered in four regulations on direct payments, the single common market organisation, rural development, and a financing and managing regulation. Historical references for the calculation of direct payments will be ended and the basic payment scheme introduced with a “greening element.”

The reform heralds the end of production quotas for the milk industry but extends them until September 2017 for the sugar industry. While the commission proposed an end to quotas in both sectors, the sugar lobby insisted that sugar producers needed more time to enable them to compete freely on the world market.

The high domestic prices caused by the quota regime will inevitably continue until the market is opened to the world. High import tariffs in both the dairy and sugar markets provide much protection for European farmers and are likely to continue until after conclusion of the Doha round at least. All eyes will be on the ministerial meeting of the WTO in December in Bali.

Always work to do

So does this mean there is nothing for Lithuania, the chair of the council from 1 July, to do? Certainly not: the agreements are political agreements and until they are converted into legislative texts they are not on the statute book. The texts have to be translated into the, now following Croatian accession, 24 official languages of the EU and then the parliament has to vote on these texts.

The first Baltic state to be in the chair, Lithuania is looking to focus on “three goals of a credible, growing and open Europe.”

They are looking to complete the internal energy market by 2014 and look for initiatives to increase confidence in the European economy, but they will also have to oversee the translating of the political agreements agreed under its predecessor into the legislation on the statute books.