EU agriculture, the WTO and enlargement

The planned reform of the CAP will be insufficient for the EU to meet its existing WTO commitments on the volume of subsidised exports, unless there is a substantial upward movement in world prices. The problem that the EU faces arises from the partial nature of the reform process, partial cuts in the difference between the intervention and the world price and partially decoupled direct payments have not reigned in EU output of key products such as cereals. This reflects the desensitisation of farmers to changes in prices under the CAP and the stimulus to intensification of land use under the direct payments scheme. Farmers in Central and Eastern Europe, on the other hand, will face greater market stability in the EU as well as higher prices in a range of products. The combination will create incentives to increase production. This will only exacerbate the problems of the EU in meeting current limits and handicap the scope for genuine concessions by the EU in the next round of WTO negotiations on agriculture.

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