Franz Fischler: EU Issues: The CAP, the WTO, the Convention and the Constitutions

Ladies and Gentlemen,

If the man who played a defining role in shaping modern Europe were here today, I wonder what he would say about the way in which the concept of a "United Europe,"⁽¹⁾ is unravelling. I would hope that, almost sixty years on, Sir Winston Churchill, 'Britain's greatest Briton,'⁽²⁾ would feel that we are doing justice to the European idea. What was hypothesised over half a century ago is now a successful multicultural, multinational reality, and one of the most powerful economic bodies in the world.

We've come a long way from the "kind of United States of Europe" that Churchill spoke of in 1946 in Zürich, and we're still moving fast. We've got a new, revamped constitution on the way. We've got another 10 new Member States from central and eastern Europe joining us next May to make us 25, and we've got the first part of a comprehensive agricultural policy reform under our belt to give us a CAP that's leaner, meaner, and better equipped for the future. It's not an easy task for me to cover all these in a short address, but it is a great honour for me to have this opportunity to discuss some of the key issues that EU is currently dealing with.

I will start today with the competence with which I am the most familiar: CAP reform. In June this year, the EU Member States agreed to a comprehensive overhaul of one of our most controversial policies, the third in a decade, to make it less trade-distorting, more sustainable, and better able to support farmers in their multifunctional role.

A key principle of the new CAP is decoupling, which spells more market orientation, less trade distorting support, and places the focus on quality rather than quantity. It means that from 2005 onwards, the majority of subsidies will come in the form of a single farm payment, will be independent of production, and instead tied to farmers' meeting mandatory food quality, safety, environmental, and animal welfare standards under the principle of "cross-compliance". It also means that by the time it's fully implemented, we will have reduced our most trade-distorting support by 70%, and our export subsidies by 75% since our first revision of the CAP came into force in 1993.

Reform has also enabled us to revise certain elements of our market organisations and retune them with market realities. It is not only about more market orientation, but also about a more predictable future for farmers in those sectors where market imbalances had previously brought considerable uncertainty - and this is an ongoing process. We are currently discussing proposals for the second part of the reforms, covering olive oil, cotton, tobacco, and a set of options for the sugar sector.

CAP reform has also enabled us to reinforce our rural development policy. We will shift an additional 1.2 billion € a year from market support to rural development from 2005 onwards, enabling us to help farmers meet new standards, support new quality and environmental measures, and improve investment aid for young farmers. The outcome of all this? A simpler, less bureaucratic CAP for farmers, a more transparent and comprehensive policy for consumers and taxpayers, and a policy which is more compatible with the long-term goals of the international trading system, which brings me onto the next issue: the EU's position regarding the WTO.

Ladies and Gentlemen,

I could hardly come here today without citing the man whose name this conference honours, and there is one particular point that Sir Winston Churchill made that I would like to use in reference to the current WTO round. When asked to name the chief qualification that a politician should have, he responded, "It's the ability to foretell what will happen tomorrow, next month, and next year - and to explain afterward why it didn't happen." It is a point with which I can sympathise! Where the collapse of the Cancun talks was concerned however, I think there is more than one explanation. There were too many divergent views, there was too little flexibility shown by too many people, and the structure of the WTO leaves too much space for inefficient decision making. It is also perhaps a peculiar twist of fate that the name of the city chosen for the latest ministerial meeting should mean "snake pit" in the local Mayan language⁽³⁾!

Whatever the explanation you give however, one thing is for sure: everyone who went to Cancun hoping for a deal has lost out. We have all missed a prime opportunity to right the wrongs in the world trading system and, in particular, the chance to make it more open and inclusive for all. It is those countries that went there with the greatest margin to gain, however, that have really come away the greatest losers of all.

It was for the developing countries especially that a deal in Cancun would have really carried the weight. It would have spelled a meaningful further reform of the agricultural trading system, as well as of certain developed country policies where no changes have been made to date. It would have resulted in deep cuts in subsidisation, domestic support and other trade-distorting instruments. And it would have meant special and differential treatment for the developing countries to enable them to participate more effectively and more fully in the world trading system.

'What now?' is the question on many people's minds. Can we still meet the deadlines? Can the talks still proceed? I cannot answer either for sure, but what I can say for definite, is that as far as the EU is concerned, we remain ambitious, flexible, and fully committed to the international trade talks. I also believe that the potential for a constructive dialogue on agricultural issues was there, and with more persistence, we could have reached a deal on this subject. The way we will be able to move forward though, will be by pursuing a multilateral approach. I am afraid that bilateral discussions would only be a digression that would neither provide the answers we are looking for, nor the progress we need to make.

Our offer remains on the table. We have proposed up to a 60% cut in trade distorting domestic support, up to a 45% reduction in export subsidies, and an average reduction in agricultural tariffs of up to 36%. We also remain firm vis-à-vis our positions on the different boxes. Where the "green box" is concerned we, like the Swiss, believe that support that falls into this category is not about obstacles to trade, so much as it is about meeting the concerns of our citizens, and ensuring a sustainable agriculture system. Trade reform has to happen in a way that is compatible with the environment, and with public demands. We are representing our citizens in these talks, and we have no right to compromise on what they are asking for.

Similarly, we are resolute in our position regarding the so-called "blue box": it should not be negotiated, further reduced, or phased-out in the future. It is what has enabled the EU to reform its agricultural policy up to now, and it is what will enable us to keep our policy moving in the right direction in the future as well.

We cannot accept that reforms that have clearly moved in a direction that is fully compatible with the WTO objective to reduce all forms of trade-distorting support be penalised in these negotiations by compromising on this category of support. All the more so when the positive impact of previous CAP reforms on world markets is so clearly demonstrated by a constant decrease in the EU net export position over the last 10 years for various commodities.

One final reflection that I would like to make on the WTO today, is that the decision making process could be greatly facilitated and improved by modernising the structures and processes within the World Trade Organisation itself. I am afraid to say that the EU is not the only body that can be accused of operating on a "byzantine" policy framework. Too often the structures in place seem to hinder, rather than help, the decision making process. The difference in the EU is that we are doing something about ours to update it and improve it.

This brings me to my next point: the Convention on the Future of Europe, and its work in shaping a new constitution for a new European Union.

Ladies and Gentlemen,

To be given the job of designing a new institutional architecture for a modern and dynamic European Union is no easy task, and the Convention deserves to be congratulated on its work. Not only was it the first time in the history of the EU that modifications to, and improvements of, the existing treaties were discussed over a period of more than a year, rather than over a few days at an Intergovernmental conference. It also drew on the opinions of more than 100 high level representatives from the national governments and parliaments of both current and acceding member states, and invited representatives from civil society to participate in the debate as well. The resulting draft provided some real answers for the questions currently facing the EU.

And it makes considerable progress in a number of areas. For example, it foresees that the Charter of Fundamental Rights becomes a legally binding part of the constitution. It also introduces the idea of the EU having its own legal personality and its own foreign minister. And, in what is to me one of the most important areas, it also clarifies certain aspects on the principle of subsidiarity, or the division of power between the EU, member states, and regions. In particular, it stipulates that the EU should only become involved in the decision making process at national or regional level where its added value is clear.

There are however a number of points that still require further discussion. First, there is the question of how the Commission should look in the future. Should it comprise a representative from each Member State, or should it be a leaner executive body in which a limited number of Commissioners, and therefore Member States, exercise their voting right on a rotational basis?

The Convention favours the latter, arguing that a European Commission of 25, in which 15 members have the right to vote, and 10 do not, will both enhance the efficiency and the independence of the Commission. We, however, do not agree.

The initial idea of an independent, efficient system, would be undermined by position of the 10 non-voting Commissioners who, with no dossier, would effectively only be there to represent national interests. The Convention's idea does not only create a two-tier system, it also brings into question the coherency, equality, efficiency, and legitimacy of the Commission throughout the EU.

Then there is the issue of the voting system, and whether we should extend the principle of majority voting to the remaining policy areas. Retaining the national right of veto, to me, spells potential deadlock in an enlarged EU, particularly in relation to sensitive issues such as the budget. If we want to be able to take decisions that keep the EU up to speed, and prevent it from tripping over its own toes, there has to be some extension of the qualified majority voting system. It is also a question of avoiding the one-step forward, two-steps back scenario. The new Foreign Affairs Minister is, for example, a positive addition to the EU. Maintaining a policy whereby he or she can only take decisions following the unanimous 'Aye' of the Member States, however, considerably decreases their chances of being able to make efficient and effective decisions.

The constitution also needs to be flexible. The new treaty must lend itself to being updated and modernised as the EU enlarges and develops in the future. As I said at the beginning, we are on the move - setting the new constitution in stone would neither fulfil the objectives nor the intentions of a dynamic international body that constantly has to adapt to new situations.

Finally, the constitution must be simple and accessible to citizens throughout the EU. It cannot be another example of a policy document loaded with incomprehensible jargon. It must ensure consistency between our aims and our policies, it must streamline and simplify some of the cumbersome procedures that are currently in place, and it must support the evolution of the European Union, its ideas, and its principles.

The Convention presented its final draft in June, the Commission adopted its opinion on the paper last week, and the constitution will now be discussed at an Intergovernmental Conference due to begin in Rome next month. Whilst it still requires a little fine tuning, the fundamentals are there for a workable text that can be adapted to suit the EU as it grows and develops. We will have to wait and see what comes out of the IGC, but in the meantime the debate goes on. I think I am not alone however, when I say that it is an exciting time to be both part of the European Union, and part of the ongoing process that was started by our European forefathers over half a century ago.

Ladies and Gentlemen,

I conclude by coming back to another Churchill-ism. "For myself," he said, "I am an optimist it does not seem much use to be anything else." With the EU enlarging to 25 Member States next year, and no doubt welcoming more countries still in the future, with a draft constitution being drawn up to shape a new future for the European Union, and newly revamped common agricultural policy, it is hard to be anything but optimistic. There is nothing "kind of" about the European Union of 2003, and I am quite sure that the direction we're going in now would surpass many of the ambitions of Churchill and his contemporaries and this is only in the opening chapters.

Thank you for your attention.

^{(1)Winston Churchill, speaking in Zürich, September 1946}

^{(2)Churchill was voted Britains greatest Briton in a BBC poll in November 2002.}

^{(3)According to The Guardian, International Herald Tribune et al.}