Conference. on Accession to the European Union -Poland

.CONFERENCE. ON ACCESSION Brussels, 25 November 2002 TO THE EUROPEAN UNION -POLAND- CONF-PL 96/02 Document provided by Poland Subject: Additional information Chapter 7 - Agriculture 20915/02 CONF-PL 96/02 1 EN Warsaw, 20 November 2002 POLAND'S REPLY TO THE COMMMON POSITION OF THE EUROPEAN UNION OF 31 OCTOBER 2002 (CONF-PL 81/02) Chapter 7: Agriculture 1. The negotiating position taken by Poland, similarly to the position of the European Union, is subject to the negotiating principles adopted in the course of the Conference on the Accession of Poland, and in particular to the two following rules: Any and all opinions declared by either Party on a given negotiating chapter shall in no way be deemed to reflect the position which that Party may in the future take on the other chapters; Any and all Agreements reached during the course of the negotiations on individual chapters, as examined in succession, may not be deemed to be those that are final until the overall agreement has been reached. 2. Poland undertakes the efforts aiming at the creation, as soon as possible, and in any case prior to the Accession, of the conditions enabling the full adoption of the acquis communautaire in the area ofagriculture. Such efforts include, inter alia, the creation of an appropriate administrative infrastructure, which is to serve as the basis for the implementation of the Common Agricultural Policy (CAP) on the individual agricultural markets and structural policy in agriculture and rural areas. Poland attaches great significance to the achievement of full compliance with the acquis in the area of food safety and consumer protection, which will be ensured by the appropriate administrative structures being currently created and appropriate procedures being currently laid down. Poland wishes to inform, that by 31 December 2003 it will complete the process of the implementation of the regulations and institutional arrangements enabling the application of all the instruments of the CAP in Poland, as of the day of the Accession. 3. The readiness to adopt, by the day of the Accession, all the regulations concerning common organisation of agricultural markets, as declared by the Government of the Republic of Poland, is based on the assumption that Polish agriculture will be guaranteed full access to all the instruments available under the CAP, including directs payments. This approach is based on the principle of equal rights and obligations, which in turn forms the basis of the negotiating positions adopted by Poland. 4. Direct payments constitute that element of the acquis, which is directly linked with the volume of the production limits and the control of supply (e.g. the set-aside of agricultural land). Therefore, such payments are of great importance for the maintenance of the conditions of competition and proper functioning of many important sectors of the Polish agriculture, such as, for example, cereals, oilseeds, and beef sector, and in the near future their application is bound to have appreciable effect on the situation in the milk sector. 20915/02 CONF-PL 96/02 2 EN 5. Cohesion of the CAP is ensured by the complex nature of its instruments. The exclusion or limitation of any instrument thereof, and in particular of the system of direct payments, which guarantees equal conditions of competition on the Single Market, would deprive the CAP this very cohesion. 6. The full coverage of the agricultural sector in Poland by the CAP and the inclusion of Poland into the Single Market are both of vital importance for the process of the negotiations and the situation after the Accession of Poland to the European Union. Therefore, Poland fully supports the opinion delivered by the European Union (paragraph vi of CONF- PL 81/02) according to which: "transitional measures are exceptional and limited in the time-frame and scope of their application, and accompanied by a clearly defined schedule for the implementation of the acquis". The very same principles ought to apply to direct payments. 7. Poland reasserts its view, that direct payments constitute significant element of the acquis and are of fundamental importance for the ensuring of equal conditions of competition. The guarantee of such conditions forms the basis of the common organisation of agricultural markets and the Single Market (Articles 34 and art. 87 of the EC Treaty). The differentiation within the Community of the support proposed for the agricultural sector (i.e. the phasing-in) does not satisfy that condition. Direct payments have lost their original character of payments that where to compensate the drops in prices and have become a permanent, agricultural production and income support measure. The data presented in the previous negotiating positions indicates that in· Poland, prices of basic agricultural products, such as cereals, pigmeat, or poultrymeat, are higher than those in the EU. Similar, or higher prices on the Polish market, as compared to the prices in the EU, result, in conjunction with the high cost of the adjustment to the acquis, in the income situation of producers of such products not being improved following the Accession. 8. The position, which will be adopted by Poland on the instruments of the quantitative reduction in production, such as production quota limits, ceilings for premium entitlements, base areas, or reference yields, will depend on the extent to which the Community support for the Polish agriculture will ensure equal conditions of competition for the Polish farmers. Poland underlines the existence of direct link between the supply control and direct income support. 9. Poland reasserts its position that the production quota limits to be fixed ought to take into account the natural potential for the agricultural production, which is environmentally friendly, and the need to ensure the stable sources of income for agricultural population. Poland considers that the production quota limits should not be fixed, generally, on the bases of the production levels attained during the period 1995 - 1999. During that period, the agricultural production in Poland has seen regress associated with the economic transformation and restructuring of agriculture. The transformation has also caused a very serious deterioration in the relative prices in agriculture. Furthermore, considerable volume of imports into Poland of subsidised agri-food products has had the negative impact and caused the fall in production levels attained, as it has impaired competitive capacity of the Polish products. Consequently, the ability of Polish farmers to increase their production has been stifled. Additionally, the reduction in the agricultural production in Poland during that period has been caused by the distortions on the main export markets (i.e. East European markets) and the placement on these markets of the highly subsidised agri-food products, and even products provided in the form of aid, cost-free. Unfavourable weather conditions, such as extreme droughts and floods, have also had material adverse effect on the production levels attained during the period 1995 - 1999. Thus, quantitative reference levels based on the data for the years 1995 - 1999 are not at all representative for the Polish agriculture. 20915/02 CONF-PL 96/02 3 EN 10. Poland wishes to bring attention to the specific conditions of the production in Poland of, inter alia, milk, potato starch, sugar, isoglucose, and dried fodder. In the case of the production of milk, considerable quantities of milk produced are consumed, unlike in the Member Sates, directly by households of the producers therefore they are not placed on the market. Consequently, such quantities are not covered by the quota rules, as applied in the EU. Poland considers that the on-going structural changes in the Polish agriculture ought to find their reflection in the volumes of the production quota limits, to be fixed for Poland. 11. The EU Position (CONF-PL 81/02) on the gradual introduction of full direct payments (phasing-in), which assumes differentiated support for the agricultural sector in the enlarged Community, infringes the principle of equal conditions of competition. This is so, in particular, for the sectors such as cereals, rape-seeds, tobacco, and hops, in the case of which conditions of competition will have to be equalised. In turn, this occasions the necessity for Poland to request the implementation, during transitional, post-accession period, of measures aiming at the mitigation of the effects of the unequal conditions of competition. Such measures shall take into account: I. The more effective use of the instruments available under the CAP, by the change in the initial proportions between the I and II Pillar of the CAP offered to Poland; 11. The use, during the transitional, post-accession period, of instruments offering selective protection of the Polish market in some of the agri-food products imported from the EU, should the first solution not provide for the sufficient remedy of the effects of distortion of competition. The scope of application of the measures proposed, in terms of the products to be covered and the time-frame to be laid down for their application will depend on the decisions reached in the course of the negotiations, i.e. the decisions on the initial level fixed for the direct payments and the time-frame laid down for reaching their full application. Poland considers that the possible transitional period for achieving full direct payments should be limited as close as possible to the current financial perspective. Poland stresses that it considers reaching, in the course of the negotiations, an agreement concerning conditions for the immediate and effective use of the structural funds for the development of agricultural areas to be its priority. The capacity for the allocation of additional moneys from the national Budged, with a view to raising the levels of direct payments will be extremely poor.

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