French obstinacy threatens WTO

Article published on Jan. 5, 2006
community published
Article published on Jan. 5, 2006

This article has not been vetted by an editor at Paris HQ

After the budget, the issue of agriculture is tearing Europe apart. In refusing any reform of the Common Agricultural Policy (CAP), France undermines European unity at the WTO talks.

Over the years, the EU’s Common Agricultural Policy (CAP) has become the major sticking point for Europe and the World Trade Organisation (WTO). Created in 1957 and implemented in 1962 to raise productivity, stabilise the market and assure decent revenues for farmers in the EU’s six founding states, today the CAP seems obsolete, expensive and threatens fair trade. However, France, which particularly benefits from CAP subsidies, is holding its ground and demanding the maintenance of the budgetary framework and aid allocated to its farmers until 2013 when the current agreement expires.

A European or a French policy?

France is the principal beneficiary of the CAP. In 2004, it received around €9.4 billion euros – practically a quarter of all the agricultural expenditures of the EU, which themselves represent between 40 and 42% of the European budget. The differences over the subject between the European Commission and France, a country with a strong agricultural tradition, have been apparent since the 1960s when French president De Gaulle vetoed the entry of the UK into the EU on the basis that it could throw into doubt the agricultural interests of France.

Since then, Paris has continuously opposed any attempts at reform of the CAP in order to protect its farmers. If at the beginning of the Second World War 45% of the French population lived in rural communities of less than 2,000 inhabitants, in 2001 agriculture only represented 4.1% of French jobs. Likewise, according to the institute of statistics INSEE, the number of farms has been decreasing by 3.6% since 1988. In these conditions, the French reasons for conserving the CAP as it is are obscure. Especially when Oxfam points out that 60% of European subsidies goes to the richest farmers.

But France is currently the world’s biggest exporter of agricultural food products and agricultural lobbies, notably the Fédération Nationale des Syndicats d’Exploitants Agricoles (FNSEA) and regional agricultural organisations, know how to use this argument to pressurise the government. The representatives of the profession are also actively involved in the public management of agricultural affairs. The strength of the state-farmer link is reinforced at the heart of a large number of commissions, as well as local and national authorities. It is this system of co-management that is today threatened by the EU and the WTO.

Arm-wrestling between Paris and Brussels

Today, France is criticising Brussels for the “exorbitant” concessions it has made in the reform of the CAP. Prior to the WTO negotiations in Hong Kong, the EU Trade Commissioner, Peter Mandelson, had proposed a substantial decrease in Community aid to farmers: a decrease in subsidies by as much as 70% and lowering of tariffs by an average of 46%. A furious Paris accused Mandelson of going beyond his mandate. But if the 25 EU member states finally came to an agreement that the CAP would not be renegotiated in the framework of the WTO talks, it is Mandelson who is going to Hong Kong to discuss subsidies and tariffs with the EU’s commercial partners.

Will France use its veto? The recent declarations of the French Foreign Affairs Minister, Philippe Douste-Blazy, have not ruled it out. He reaffirmed “the determination of France” to reject any agreement at the WTO “which would bring the CAP into question” and stated that he expects “concessions from [France’s] international partners”.

Discrediting the EU

Peter Mandelson, in applying the principles of New Labour to negotiate with the WTO, is accused by Paris of playing the game of the economically liberal Blair: investing in the future (services, for example) and abandoning the policies of the past (agricultural subsidies). France, once again, speaks alone, without thinking about the repercussions at a European level. Has it started a period of isolationism? After the Bolkestein crisis, the failure of the European constitution, disagreement over the EU budget for 2007-13, Europe may be facing yet another blow.

One thing is sure: Paris’s stubborn protectionism is indefensible at a time when less developed countries are struggling to export their products to richer ones. Agriculture represents maybe less than 10% of international trade, but it is essential for the revenues of the developing countries which are home to 80% of the world’s farmers. French stubbornness contributes to making agriculture the theatre for a rich-poor collision. Let’s hope that this doesn’t lead to the failure of the WTO negotiations in Hong Kong, as predicted by Mandelson himself.