The Perfect Storm

THE PERFECT STORM THE PERFECT STORM THE POLITICAL ECONOMY OF THE FISCHLER REFORMS OF THE COMMON AGRICULTURAL POLICY JOHAN F.M. SWINNEN (EDITOR) CENTRE FOR EUROPEAN POLICY STUDIES BRUSSELS The Centre for European Policy Studies (CEPS) is an independent policy research institute based in Brussels. Its mission is to produce sound analytical research leading to constructive solutions to the challenges facing Europe today. The views expressed in this report are those of the authors writing in a personal capacity and do not necessarily reflect those of CEPS or any other institution with which the authors are associated. ISBN-13: 978-92-9079-766-1 © Copyright 2008, Centre for European Policy Studies. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the Centre for European Policy Studies. Centre for European Policy Studies Place du Congrès 1, B-1000 Brussels Tel: 32 (0) 2 229.39.11 Fax: 32 (0) 2 219.41.51 e-mail: [email protected] internet: http://www.ceps.eu CONTENTS Preface & Acknowledgements.......................................................................................i 1. Introduction...........................................................................................................1 Johan F.M. Swinnen Part 1. Theory 2. Impact of External Changes and the European Commission on CAP Reforms: Insights from Theory.............................................................................9 Jan Pokrivcak, Christophe Crombez & Johan F.W. Swinnen 3. Institutional Reform and Agricultural Policy Reform in the EU.........................25 Christophe Crombez 4. EU Enlargement: Driver of or Obstacle to Future CAP Reforms? .....................41 Christian H.C.A. Henning Part 2. Empirical Analyses 5. External Influences on CAP Reforms: An Historical Perspective ......................57 Tim Josling 6. The Internal and External Forces Driving CAP Reforms ...................................76 Rolf Moehler 7. Constraints and Causes of the 2003 EU Agricultural Policy Reforms................83 Alessandro Olper 8. An Inside Perspective on the Political Economy of the Fischler Reforms........102 Corrado Pirzio-Biroli 9. An Uncommon Policy: Theoretical and Empirical Notes on Elite Decision-Making during the 2003 CAP Reforms .............................................115 Barbara Syrrakos Part 3. Conclusions and Implications 10. The Political Economy of the Fischler Reforms of the EU’s Common Agricultural Policy: The Perfect Storm?...........................................................135 Johan F.M. Swinnen 11. Implications for Future Reforms.......................................................................167 Wyn Grant Glossary......................................................................................................................179 Contributors ..............................................................................................................180 It was ‘the perfect storm’ – a tempest that may happen only once in a century – a nor’easter created by so rare a combination of factors that it could not possibly have been worse. Sebastian Junger The Perfect Storm: A True Story of Men Against the Sea Glasgow: HarperCollins Publishers (1999) PREFACE & ACKNOWLEDGEMENTS his book has a long intellectual history and a short production period. The intellectual history goes back to my early work, jointly with many colleagues, Ton the political economy of agricultural and food policies in the late 1980s and early 1990s. It continues through my later work on the reforms of the common agricultural policy (CAP) in the late 1990s and early 2000s, both within and outside the European Commission, again benefiting from the exchange of views and insights with many colleagues. The history of the book itself is much shorter. It is a direct result of a workshop I organised at the Centre for European Policy Studies (CEPS) on the political economy of the mid-term review (MTR) of the CAP in the spring of 2007. The workshop brought together a relatively small group of those involved in the policy-making process surrounding the MTR and outsiders, from both the academic world and the policy world. The exchange of views provided such a rich set of arguments and hypotheses that many participants encouraged me to pursue the idea of publishing a book on the topic, including some of the main contributions to the workshop. The book is unusual and unique in its effort to bring together contributions from academics and policy-makers, and from different disciplines. The organisation of the workshop and the publication of the book were financially supported by CEPS, the LICOS Centre for Institutions and Economic Performance of the University of Leuven and the European Commission. Eleni Kaditi, as always, ensured impeccable organisation and administration. Kathleen King and Els Van den Broeck at CEPS did a wonderful job in copy- editing the book and designing the page lay-out. I would also like to thank Anne Harrington for her continuous encouragement and patient guidance throughout the book publishing process. Allan Buckwell, Jorge Núñez Ferrer, Ewa Rabinowicz and Alessandro Sorrentino made important contributions during the workshop (and in the many years before) by sharing their many insights and critical comments, which are very much appreciated. Jan Falkowski and Robin Smith of LICOS assisted with the processing of the discussions from the workshop. Finally, I also want to thank several colleagues at the European Commission for their time, discussions and insights on these issues, including in particular Franz Fischler, John Bendsen-Smith, Tassos Haniotis, Wolfgang Münch, Martin Scheele and Rainer Wichern. Needless to say, none of these persons is responsible for the arguments and conclusions of the book, which are the sole responsibility of the respective authors of the chapters. Jo Swinnen Brussels, September 2008 | i 1. INTRODUCTION JOHAN F. M. SWINNEN Franz Fischler est l’architecte de la réforme la plus profonde de la Politique Agricole Commune Henri Nallet Former French Minister of Agriculture (September 2007) n 1995 when Austria joined the European Union, Franz Fischler, a then largely unknown Austrian politician, obtained the post of European Commissioner for I Agriculture. Previously, Fischler had been Minister of Agriculture in Austria and had led the Austrian accession negotiations. There was some surprise that a new member state had been given the powerful agricultural Commission chair, but no major expectations surrounded his arrival in Brussels. A decade and two tenures later, Fischler leaves behind a common agricultural policy (CAP) that is dramatically changed from the one he inherited and he is recognised by friend and foe as the architect of the most radical reforms of the CAP. The Fischler reforms First, let us define ‘the Fischler reforms’. There were several reforms prepared and implemented over the two terms that Franz Fischler was Commissioner for Agriculture and Rural Development of the EU, which spanned almost a decade (1996–04). Some of the reforms, such as the Agenda 2000 package, were very important. Still, his name is most closely associated with the reforms of 2003, which at the time were generally referred to as the ‘mid-term review’ (MTR), a term that in hindsight does not do justice to the extent and substance of the reform package that was decided in 2003. These reforms are assessed by many experts as the most radical reforms of the CAP since its creation. The essence of the Fischler reforms is well summarised in various publications, including those by the European Commission and in several chapters in this book, and reference is made to these chapters and some Commission publications for details. The 2003 Fischler reforms contain the following main elements (see Tables A1.1-A1.3 in the appendix to this introduction for a more detailed summary): | 1 2 | SWINNEN 1. The key innovation of the Fischler reforms was the introduction of the single farm payment (SFP) on the basis of historical entitlements (although with some flexibility of application), decoupling a large share of CAP support from production. 2. Two new instruments, ‘cross-compliance’ and ‘modulation’, were introduced. Cross-compliance requirements ensure that the SFP is only paid to farmers who abide by a series of regulations relating to the environment, animal welfare, plant protection and food safety. Modulation refers to the shift of funds to rural development policies (i.e. from pillar I to pillar II) by reducing transfers to the larger farms. 3. The reforms introduced changes in several market organisations, especially in the dairy and rice sectors, by increasing dairy quotas and reducing rice support prices, replacing them with direct support to be integrated in the SFP. 4. Financial discipline was another element. Yet, as will become clear from the chapters in this book, the 2003 MTR cannot be seen in isolation from other reforms and policy decisions. This point not only relates to Agenda 2000, but also to several decisions on the EU budget of which the CAP budget takes a very large share – and is thus a major aspect in the negotiations for the budget decisions. In particular, the budgetary decisions in autumn 2002, at the European Council summits in Brussels and Copenhagen, are considered by Fischler himself to be major achievements. The 2000–06

Load more