Still a Thorn in the Side? The Reform of the Common Agricultural Policy from the Perspective of Policy Coherence for Development

Under Article 208 of Treaty on European Union (also known as the ‘Treaty of Lisbon’), the EU must take account of the objectives of development cooperation in policies that are likely to affect developing  countries. This commitment, which has in fact existed since the 1992 Maastricht Treaty, is commonly  referred to as Policy Coherence for Development (PCD). The EU’s Common Agricultural Policy (CAP) accounts for a substantial proportion of the EU budget (in 2009, the CAP represented 41% of the EU’s general budget). However, the coherence of the EU’s Common Agricultural Policy with development objectives is disputed.

In past CAP reforms, farm support has been largely decoupled and the role of market intervention  mechanisms has been significantly reduced to that of a safety net. This means that agricultural prices are now formed by the interplay of market supply and demand, although still with significant external protection for some commodities. Whilst the EU is the largest importer from developing countries, it also remains a big exporter to developing countries. The EU is no longer involved in the practice of dumping products directly in developing countries, as it was a decade ago. Export subsidies have been significantly reduced. Today, it is much more difficult to prove that the CAP has an adverse effect on developing countries.

Key Purpose of ECDPM Study

This study examines the current effects of the Common Agricultural Policy on developing countries and looks at the role Policy Coherence for Development plays, or could play, in reforming the CAP. It studies the most recent proposals presented in the European Commission’s November 2010 Communication, and member states’ positions on them, with a view to the compatibility with development concerns. This study is also negotiating the next EU budgetary framework for 2014-2020. 

Key Findings of ECDPM 

• The current debate on the reform of the CAP is a narrow one from a developing country perspective: it focuses on the CAP’s internal dimension and largely excludes its external aspects, notably trade policy, which is the main other EU policy affected by the debate on the CAP.

• It is difficult to draw clear conclusions about the implications of the CAP reform for developing countries as the effects are both country-specific and commodity-specific. The CAP is a highly complex policy encompassing a huge number of measures and it is virtually impossible to assess how these affect developing countries, directly or indirectly. Even if one had access to all the information, the likely conclusion would be that some countries – and certain groups within these countries – benefit from some CAP measures whereas others suffer from them. Countries benefit from different types of preferential treatment. Developing countries are a highly heterogeneous group, depending on whether they are net importers or net exporters and also depending on whether one looks at the interests of the rural or urban population. Some emerging economies have become fierce competitors of the EU in terms of agriculture.

• ECDPM makes the following recommendations in relation to the reform of the CAP:
  a. Rethink the two CAP pillars
  b. Reform trade measures affecting the CAP
  c. Improve the monitoring and evaluation of the global impact of the CAP
  d. Rethink EU support for agricultural development in developing countries