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European Affairs
Letters to the Editor: A Welcome Primer for Americans
Kevin J. Brosch: U.S., EU Must Decouple Farm Aid From Production
I have just read, with great interest, Corrado Pirzio-Biroli's article "The EU is Ready for Broad Negotiations on Agricultural Reform" in the Winter 2001 issue of European Affairs.
As a former U.S. farm trade negotiator, I am persuaded by Mr. Pirzio-Biroli's argument that the current political environment - and principally the political commitment to accept Eastern European countries into the European Union in the not-too-distant future - creates a favorable climate for negotiations toward reform of international rules governing agricultural support and trade.
A necessary prerequisite, however, is agreement on what "reform" actually means. Although the word may simply mean a "change from one shape to another," according to my dictionary, the more common usage, which I favor, is "correction of error or removal of a defect." In my view, the "defect" inherent in most government intervention in agriculture is that support given to the farmer is typically tied to the farmer's current production.
This connection, which has pervaded both European and American policymaking, invariably results in government programs interfering with normal market signals to producers, encourages overproduction and unneeded surpluses, lowers market prices, and thwarts comparative advantage and efficient allocation of resources.
We should agree at the outset that "reform" means a commitment to decouple support to farmers totally from considerations of current production. The time-frame and modalities to achieve that aim would, of course, be the grist for the negotiation.
Mr. Pirzio-Biroli describes Europe's well-publicized concerns about various environmental, social and health issues. I do not read that as suggesting (as others have done disingenuously) that the United States and the Cairns Group of agricultural exporting countries are oblivious to these issues. Nothing is further from the truth. There is no real dispute that a society may legitimately decide to support farmer income, to maintain and enhance rural life, or to protect and improve the environment.
The coining of a new term, "multifunctionality," wrongly suggests that these are novel or even controversial ideas. The importance of rural life, of the environment and of a safe food supply is acknowledged by all countries.
These various societal goals were thoroughly considered during the Uruguay Round negotiations and are, to a large degree, already accommodated in the "Green Box" provisions of the current WTO Agreement on Agriculture. Indeed, the United States spends more than Europe on "Green Box" programs, which are aids to agriculture that are permitted to continue for domestic reasons. The flag-waving for multifunctionality unfortunately obscures the real issue, which is whether support given, actually or ostensibly, for these various social purposes has to be tied to farmers' current production.
It is important to acknowledge that the European Union has made important strides to partially decouple its support to farmers, beginning with its reform of the arable crop regime, and continuing through more recent proposals in other sectors.
These various "blue box" regimes, which limit payments to farmers based on fixed historical acreages and yields, are certainly improvements over the hugely distorting price support schemes that they have replaced. But "blue box," or partially-decoupled payments, still fall short of true reform.
They are, as Mr. Pirzio-Biroli correctly writes, only a "[start to a] reform process in which [the EU countries] have been moving away from a high price support system toward a more market-oriented system, with compensation to producers not linked to current production."
I am greatly encouraged by Mr. Pirzio-Biroli's comments that the EU is prepared to negotiate further reform in agricultural support. I suggest that the key to progress will be acknowledgement that real reform means eventually decoupling support totally - and not just partially - from current production. I would add that this prescription applies not only to the European Union, but to the United States as well.
Kevin J. Brosch
Washington, DC