European Affairs

Winter 2000

 

Social Role of the European Farmer Must Be Acknowledged
by Karl-Heinz Funke

The differences between European and American agriculture, and the different roles farming plays in our societies, are not always clearly understood. I think it is important to be clear about these differences if we are to tackle the issues that confront us. In addition to the different geographic and natural conditions, as well as the agricultural structures which have evolved in Europe over many centuries, a great number of other factors should be mentioned. For instance, in Central Europe, which is highly industrialized, the population density is much higher than in the United States. This means that the activities of our agricultural sector are permanently observed by a critical, non-agrarian public, and that farming has to take much more account of its environment. The result is a great number of environmental, sanitary and animal welfare provisions, which make agricultural production more difficult and expensive.

From a purely economic point of view, you might conclude that it would be better to rely more on the international division of labor and to make greater use of imports. This, however, would be short-sighted. In Europe, and particularly in the European Union, we cannot and do not want to do without our own independent agricultural production, because we think that agriculture fulfils indispensable functions. European agriculture is not only a producer of food and raw materials. There is also a growing public awareness that agriculture is providing services - that it is necessary for the preservation of our cultivated landscapes and recreational areas, on which tourism, for instance, depends.

We also have to take account of the social situation in rural areas. One of our most important political concerns continues to be the fight against high rates of unemployment. That is why the German Govern-ment has initiated a so-called alliance for work, into which agriculture and rural areas have to be integrated. In our country every eighth job still depends directly or indirectly on agriculture, if you include the inputs industry, processing businesses and agricultural trade. Without our efforts, jobs would be lost - particularly in rural regions which, owing to the difficult situation on the labor market, are threatened by the exodus of young people.

Agriculture, moreover, fulfils a series of social functions that cannot be evaluated from an economic viewpoint only. This includes not only the production of healthy foodstuffs at reasonable costs. It means using environmentally friendly production methods that are consistent with animal welfare and meet consumers' expectations. Agriculture also serves to preserve our natural resources and biodiversity. All these functions are summarized under the catchword "multifunctionality." In this context, our agriculture is rendering services to society. For example, it manages without the use of certain chemicals which are still widely used in other parts of the world. So, its costs are higher.

If the state compensates agriculture for these services, this compensation is a so-called green box measure. According to WTO rules, such measures cannot be contested. The United States has itself included a number of measures in the green box. And during visits to Illinois and Iowa, I have seen how much US agriculture is suffering from current low world market prices. American farmers are demanding compensatory measures. So the European and American agricultural sectors are both affected. Frankly, we certainly do not intend to solve our problems at the expense of our trading partners, and to use multifunctionality as a pretext for protectionism. Yet green box measures alone cannot meet the justified demands of European agriculture. This is why the European Union has introduced premium payments per hectare or per head as part of the reform of the Common Agricultural Policy. As so-called blue box measures, they are exempt from the process of dismantling farm subsidies. They usually have only a minor link with current production, and thus distort trade much less than state price-support programs geared to production. The European Union will continue to need blue box measures, i.e. premiums per head or per hectare, in the future. If the United States or the countries of the Cairns Group demand that the blue box should expire, they will meet resistance from the EU and a number of other countries.

With its Agenda 2000 reform program, which was concluded under the German EU Presidency, the EU laid down important guidelines for the development of European agriculture in the next few years. Support prices for arable crops and beef were substantially reduced. In the WTO negotiations, discussion of a further reduction of export refunds will have to include all instruments that represent an export subsidy, including export credits.

We are also asking for the establishment of certain standards at an international level, in particular in the environmental and animal welfare fields, to ensure fair competition. These should be established in the relevant international organizations and agreements. They should also be safeguarded within the WTO by defining their relation to trade rules. There is no doubt that these standards must not lead to new non-tariff barriers to trade, but that they must always be oriented towards specific protection targets. Here, food safety is of primary importance governed by the agreements of the Uruguay Round on Sanitary and Phytosanitary Measures as well as on Technical Barriers to Trade. According to these agreements, trade-related measures in the field of health protection must be based on scientific justification. This means that in principle a contracting state can determine its own level of protection - albeit not arbitrarily, but always on a scientific basis. If scientific proof can be furnished, no WTO member can be forced to accept products on its market if there are justified doubts about their safety. Here I am thinking of the dispute about the use of hormones in cattle fattening. Recent studies submitted to the European Commission have intensified doubts as to whether some hormone preparations have unwanted side-effects that are hazardous to health.

In the EU, consumer protection is of major political importance, and we, the Ministers of Agriculture or Health, have to take this into account. In the United States, people often demand that the government should show leadership and aggressively advocate products that, following scientific examination, have been authorized by the competent authorities. However, in recent decades experience has shown how rapidly scientific and technical progress can force us to revise decisions that were thought to be based on sound scientific findings only a few years previously. In my country, especially, consumers are very sensitive when it comes to noxious substances and foodstuffs.

They still remember, for instance, the scientific dispute about BSE ("mad cow" disease). Even without final and irrefutable proof that the disease could be transmitted to humans, the EU took a precautionary approach, including far-reaching and costly measures. Although no BSE case has occurred in German cattle, many consumers have completely refrained from eating beef, because of the uncertainties about possible risks. One might dismiss this as an exaggerated reaction. But as a politician, and particularly as a German politician, I hesitate to present a finding as indisputable to our population. The Germans no longer trust in authorities as much as some people in other countries still believe.

In this context, people often talk about the "mature consumer." Should there be the option of a labeling system instead of a ban? Of course we can discuss this question. However, if part of the scientific world is of the opinion that a certain product has an adverse effect, the government must intervene on the grounds of precautionary health and consumer protection. For example, if a WTO ruling forced it to authorize the sale of this controversial substance, on pain of sanctions, then consumers will feel completely insecure and will end up being disenchanted with politics. I would also like to point out that the EU ban on hormone-fed beef imports met with widespread approval among the German public, despite the punitive duties imposed by the United States in the hormone dispute. And I have been told by my colleagues that the vast majority of consumers in most of the other EU Member States are of the same opinion.

Another field in which opinions can differ is green gene technology. In Europe, this topic has been highly controversial for many years. More and more retail chains have publicly committed themselves not to sell genetically modified products, following their rejection by consumers. As a politician, I have to take note of these reservations, even if I personally view genetic engineering positively. Combined with traditional breeding methods, it offers the possibility of increasing resistance to disease, of saving pesticides and of improving the quality of crops.

The following considerations are important to me. There must be clear benefits for farmers and consumers. Only in this way will we be able to increase consumers' acceptance of genetic engineering in the long run. Consumers must be able to decide whether they want to buy products produced with the aid of genetic engineering or products produced without the aid of genetic engineering. This requires an unambiguous labeling system. The authorization procedures for genetically modified organisms must be designed in a way that takes account of people's concerns and that, as far as possible, excludes ecological and health risks.

I do understand that the EU's authorization procedures for genetically modified crops might seem exaggerated from the American point of view. However, with regard to the great sensitivity of large parts of the European public to such products, such extensive procedures are currently necessary.

In the United States, too, the official position on genetic engineering has become more critical. At least this is what I conclude from a recent speech by Secretary of Agriculture Dan Glickmann. I also noted that, according to a study published by the USDA, the use of genetic engineering in US agriculture did not live up to all economic expectations.

The example of genetic engineering shows that the United States is once again the leading nation in the field of technical progress. One of America's hallmarks is that it is open to progress. Compared with the United States, the Old World seems to be full of concerns, always ready to apply the brakes, perhaps even hostile to progress. To my mind, however, that would be an over-simplification. On both sides of the Atlantic no one is safe from mistakes. That is why I think it would be good for us all to stop for a while and to question the side effects of progress. This does not mean that I advocate hostility to progress and pessimism with regard to the future.

The German food industry is the country's fourth largest economic sector and is deeply engaged in international trade. Germany is the world's fourth largest agricultural exporter. Most of these exports incidentally are not eligible for export support, as 60 percent of them go to other EU member states. On the other hand, the EU as a whole, and Germany in particular, are the largest agricultural importers and thus are among the most important buyers of US farm products - even though the EU's agricultural policy allegedly shields it from imports from the outside world. In 1997 the United States had an agricultural trade surplus with the EU of approximately DM 2 billion. In 1998, the surplus amounted to DM 1.7 billion with Germany alone.

The large economic area of the EU, which will be vastly increased with enlargement to the East, is an important factor of political stability. It is true that some Americans are concerned they could lose trade advantages as a result of the EU's enlargement. But you also have to keep in mind the economic advantages offered by an enlarged European internal market, particularly to the United States. That is another reason why the EU and the United States should work together to intensify the Transatlantic partnership.