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Building coherence with development policy into the CAP

17 June 2013

According to an article posted in March by news and policy website Euractiv.com, although the CAP reform process undertaken to date has greatly reduced the need for the use of policy tools such as export subsidies, intervention payments and coupled payments, which were traditionally seen as the most trade-distorting forms of support, development NGOs have nevertheless stressed the importance of the EU assessing the impact of CAP measures on developing countries. Calls have been made for monitoring of the export and import effects of the CAP on developing countries. Some MEPs have supported this call, suggesting a need for “regular assessments [of] the global impact of CAP policies”.

The UN Special Rapporteur on the Right to Food has also argued that “in order for the CAP to work for farmers inside and outside the EU… detailed monitoring of the impacts of EU farm exports and imports on developing countries” must be undertaken.

However, this is not straightforward. As pointed out by the European Centre for Development Policy Management (ECDPM), developing countries are “a highly heterogeneous group”, making it “difficult to identify a common development interest”. ECDPM analysts have further noted that “the obvious negative effects of dumping through export subsidies [are] largely gone”, maintaining that there are now “bigger fish to fry when it comes to making sure EU policies do not undermine global food security”. This complexity, it is maintained, heightens the need for effective monitoring of the external effects of the CAP.

The Euractiv.com article notes that some development NGOs have gone further, linking calls for monitoring of the external effects of CAP measures to calls for the establishment of a formal complaints mechanism in relation to “dumping” of food and agricultural products by EU exporters on developing country markets. Particular concerns have been expressed over the impact of EU exports of poultry meat parts on the poultry sector in West Africa. The article also recalls an OECD report published in September 2012 suggesting that the EU “has ramped up [subsidies] for dairy and poultry exports in recent years”. 

Editorial comment

While the EU may have increased subsidies for dairy and poultry exports in the period subject to OECD review (for dairy particularly in 2009 and 2010 and for poultry in 2008, 2009 and 2010 – see Agritrade special report ‘ Special report: The EU’s agricultural policy toolbox: A sector-by-sector...’, 13 December 2011), export refund payments are not the principal source of the competition problems faced by ACP poultry producers. The main trade-induced competition problem arises from the residual nature of this poultry trade, as there is no significant commercial market for these poultry parts in the EU (see AgritradeExecutive Brief Update 2012: Poultry sector’, August 2012).

Provided that the cost of transporting these residual poultry parts to third-country markets does not exceed the costs of alternative methods of disposal, this trade will continue to grow in line with the growth in EU consumption of poultry meat (see Agritrade article ‘ Poultry exports to Africa on the rise’, 9 December 2012 and ‘ EU poultry exports continue to grow within shifting global patterns of d...’, 9 September 2012).

Since this trade can serve to drag down local poultry meat prices in countries targeted by EU exporters, ACP countries require trade policies that manage the problem while meeting growing consumer demand for safe meat products.

Considerable potential exists for consultation and collaboration between the EU and ACP governments in establishing appropriate policy frameworks to manage the problem of residual poultry meat exports (which is both a commercial and a public health problem), provided that the problem itself is recognised and appropriately analysed.

Similar issues arise in the dairy sector. The use of export refunds as such is no longer a major cause of problems in dairy sector relations with some ACP countries, as, since the final quarter of 2009, no export refunds have been available for EU dairy exports (see Agritrade article ‘ EU dairy sector developments and prospects’, 15 April 2013.) However, problems arise with regard to the impact of the wider, evolving EU dairy sector policy framework, which is designed to insulate EU milk producers from the worst effects of global dairy market price volatility. This policy framework is intended to sustain EU milk production during periods of price declines, in order to better equip EU dairy companies to take advantage of the overall trend towards rising global dairy prices.

With these underlying factors, there is a need for country/sector-level monitoring of the external effects of CAP policies and the deployment of CAP policy tools. However, this is not a simple exercise, since the effects in third countries are mediated through corporate trading and investment strategies and the domestic policies pursued by ACP governments.

In this context, such CAP coherence assessments could usefully be built into the EU Delegate’s annual country reports in countries where specific problems are identified as potentially arising. This would be particularly valuable if the assessment could include a process of public consultations with appropriate stakeholder bodies (the EC now regularly convenes on-line public consultations), and could even be subject to public discussions within the structure of ACP national or regional parliamentary committee structures.

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