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EU makes a step in the right direction

The reform package for the European Union's Common Agricultural Policy was a step in the right direction, Trade Negotiations Minister Jim Sutton said today.

Mr Sutton said the package took some serious steps towards breaking the link between government support for rural communities and levels of agricultural production.

"This 'decoupling' will be good for the EU, and good for the world. It is particularly welcome at a time when WTO Members are negotiating to reduce and eliminate similar agricultural trade distortions world-wide."

But he sounded a note of caution about the implications of the EU decision. Government assistance to European farmers would still be at huge levels, and the EU would pour its surplus production onto world markets.

"We need to study the detail of what has been proposed. While decoupling and some market orientation are part of the CAP package, the EU has not gone as far in reducing production distortions as the European Commission had originally proposed. And in other areas, such as the dairy sector, the reforms are not as deep as we might have hoped."

Mr Sutton said another critical question was the relationship between the EU decision and the Doha WTO trade talks. The WTO agriculture negotiations had been making slow progress despite an ambitious mandate, and he said he expected that the EU would now be able to come to the WTO table with new determination and focus.

"But we will need to see how the reforms are translated into a new position in the WTO agriculture negotiations not only in the area of government support to the agriculture sector, but also in two key areas not covered by the CAP package: market access and export subsidies.

We will be looking for EU ambition in these two areas, which are vital to New Zealand exporters and to developing countries. An ambitious outcome across all three areas, consistent with the mandate agreed by all WTO Ministers at the launch of the Round, is essential, not only for the success of the WTO agriculture negotiations, but for the conclusion of the Doha Development Round overall," Mr Sutton said

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