[A-List] EU integration struggles: CAP reform

["Michael Keaney" <michael.keaney@xxxxxx>]

Blair attacks France for freeze on farm reform
Franco-German agreement on agriculture spending creates rift between London
and Paris
By Stephen Castle in Brussels
The Independent, 26 October 2002

Tony Blair launched a scathing attack yesterday on French efforts to
preserve Europe's controversial agriculture policy, as leaders agreed plans
to freeze farm spending from 2007 to help fund EU expansion.

On the back foot, after a Franco-German deal which restrains spending but
staves off pressure for far-reaching change, Mr Blair insisted that reform
of farm subsidies remained "inevitable".

As relations between London and Paris took a nosedive, the French President,
Jacques Chirac, responded with another attack on the UK's annual £2bn budget
rebate, and argued that, without a Franco-German axis, the EU would "grind
to a halt".

The Prime Minister, clearly irritated at being on the outside of the
Franco-German deal, nevertheless fell in behind the plan brokered by Mr
Chirac and Gerhard Schröder, the German Chancellor. The blueprint, which
opens the way to EU enlargement, will freeze the total farms budget between
2007 and 2013 to ensure there is no cost explosion when 10 new members join
the Union.

The EU leaders had to overcome a last-minute hitch as France and Germany
rowed over whether or not agriculture spending, due to hit ?45.3bn (£28.5bn)
in 2006, would be able to rise in line with inflation after 2007. Eventually
they agreed that increases would be no more than 1 per cent, meaning that in
real terms farm payments may go down.

But before leaving the Brussels summit Mr Blair insisted: "We understand the
issues that countries have and their concerns about the protection of their
farming industry but in the end the world is only moving in one direction -
and that is of liberalisation. The CAP does damage to the developing world
and its maintenance in its present form is inconsistent with the commitment
we have given to the developing world and we have to make sure that there is
change."

Mr Blair argued that the European Commission already has a remit to proceed
with agriculture reform. Moreover, under World Trade Organisation
negotiations the EU had to be able "to make an offer on agriculture reform",
he said.

In many respects the deal shaped by the EU heads of government last night
was satisfactory for the UK because it guarantees a cap on agriculture costs
and does not rule out reform of the Common Agricultural Policy. The document
makes no mention of the UK's annual £2bn rebate, although Mr Chirac later
told journalists that it was the last unreformed element of expenditure.

But after yesterday's agreement by the 15 heads of government the EU can go
ahead with an offer to farmers from the 10 applicant countries of 25 per
cent of the direct subsidies which go to their EU counterparts in 2004,
phasing in the full 100 per cent over a decade. The EU leaders also agreed
on ?23bn in aid up to 2007 to develop the poorest regions of the new
members.

Another battle looms in 2006 when the new, enlarged EU debates the next
financial package. At that point the UK budget rebate will be on the agenda.
Diplomats were divided over the prospects of the revived Franco-German axis,
particularly after yesterday's dispute over the detail of what the two
leaders had agreed. The next test is whether they can agree on ideas for the
future of Europe. One diplomat commented: "We have managed to start the
Franco-German motor but there is not guessing how long it will take to
stall."