The impacts of European Union (EU) Trade Policy and the Common Agriculture Policy on Development

29 October 2012 11:00 - 16:00 GMT+00
Round-table

Session 1

Chair: Dirk Willem te Velde

Introductions to the project papers:
Nicola Cantore (ODI)
Sheila Page (ODI)
Alan Matthews (Trinity College, Dublin)
Michael King (Trinity College, Dublin)
Niels Keijzer (ECDPM)

Session 2

Chair: Simon Maxwell

Introductions on the essays by:
Dirk Willem te Velde - ODI
San Bilal - ECDPM
Sian Herbert - ODI

Description

The outputs of these projects were the background for the discussions. The first, a project on CAP reform, attempts to address the following:

  • What are the implications of the proposed CAP reform for development?
  • How can Policy Coherence for Development be made operational in future planning on CAP?
  • Is the current CAP still the most effective instrument for achieving the stated goals within the new context of high agriculture prices, financial pressures and increased environmental concerns of CAP? Are there any effective alternatives to the CAP?

The second, a project on trade and development, has attempted to address the following: 

  • What progress has there been on ensuring the coherence of trade policy with development policy?
  • Does the recent EC Communication on Trade and Development do enough to fight protectionism?
  • What are the implications of the EU’s policy on trade differentiation?
  • What is the EU doing on upcoming challenges (in 2014) such as loss of market access for African, Caribbean and Pacific countries that have not signed EPAs, withdrawal of GSP from some countries and possible failure to reform CAP? How might these policy changes affect relationships with developing countries?

The purpose of the roundtable (agenda pasted in below) was to discuss a project (funded by BMGF) on reform in the Common Agricultural Policy, with main questions as follows:  

  • What are the implications of the proposed CAP reform for development?
  • How can Policy Coherence for Development be made operational in future planning on CAP?
  • Is the current CAP still the most effective instrument for achieving its stated goals within the new context of high agriculture prices, financial pressures and increased environmental concerns of CAP? Are there any effective alternatives to the CAP?

The chair divided the session into three parts: (1) can we identify effects of  CAP on developing countries; (2) if so, how should this be monitored; and (3) more generally, should we re-assess CAP in the new context.

Part 1.  Identifying effects

There were two introductory presentations.

Prof Alan Matthews (Trinity College, Dublin) discussed his paper which identified ways to assess the impact of CAP on developing countries. To identify this, he asked three questions:   (i) what are the effects of CAP on world prices, (ii) how do these prices translate into the domestic economy, and (iii) which groups in an economy gain or lose from price changes?  For the last, he linked household data with CGE models.

Dr Nicola Cantore presented the results from two papers. First he examined the impact of the Common Agricultural Policy on food price volatility for developing countries, arguing that volatility can be harmful for development, that there are many factors behind volatility and that CAP, by reducing its own volatility, transmit greater volatility to the rest of the world. He also discussed the effects of greening: effective greening measures would increase developing country exports in the in the short-run and improve environmental stability globally.

Discussion

  • It was argued that the effects of the CAP on developing countries are small overall:  whilst there was agreement on this point, at the same time, some argued that stressing this risked obscuring the point that there are many different positive and negative effects on different countries. Even a country with relatively limited exposure to the CAP such as Uganda is exposed to some negative effects.
  • There was also general agreement that there are many other factors that are important for the state of agriculture in developing countries, including policies of other developed and developing countries, not only those of the EU..
  • Overall, the participants agreed 1) that there is a methodology that can be used to identify effects of CAP on developing countries; and 2) that such effects exist.

Part 2 How to monitor effects

Niels Keijzer (ECDPM) presented two papers on farmers’ and EU governments’ views on the CAP revision and on monitoring effects in developing countries. Food security and environmental public goods are used as concepts by most stakeholders largely to keep the CAP the way it is.  He found that the CAP legislative proposals do not acknowledge the external dimension.  He presented 4 possible ways in which the effects of CAP could be monitored:

  1. By providing for monitoring of specific effects in the legal text of the CAP
  2. By providing a monitoring mechanism without specific objectives  in the legal text
  3. By designing a general monitoring mechanism covering all EU policies   with potential effects on developing countries (as envisaged under some proposals of PCD)
  4. By designing a monitoring mechanism for use by external observers, such as  by OECD  or others

The discussion that followed suggested that the last option was the most feasible and promising: the OECD already has a role and a reputation in monitoring agricultural policies and could be asked to extend this to include the effects of agricultural policies on development.

Part 3 CAP in the new context

A number of comments were made on the new context in which CAP is being reformed: e.g. increased food price volatility, increased environmental challenges and budgetary challenges. The discussion suggested that we need to (i) question whether the CAP is still an effective way of addressing its objectives such as increasing food security; (ii) reconsider whether CAP is an effective  model that other countries could follow; and (iii) ensure that in future, CAP reform is seen in the light of a bigger picture of sustainable development. It is important to engage stakeholders on this now, so that we are not in the same position in 6 years as we are now (failure to see CAP in the bigger context).

Conclusion

In conclusion, there are identifiable effects of CAP on developing countries which may affect their development.  These need to be monitored, by observers within the EU or outside it.  In the future CAP reform needs to be seen in the context of changing global challenges.