The trade war waged by the President of the United States is reshaping many political and economic cards. Paradoxically, this situation could be beneficial to the European Union if it allows it to rethink its project. The Common Agricultural Policy should not escape the questioning of certainties inherited from the end of the last century and the attack of Americans vis-à-vis the Spanish olives could well set fire to the powder.
Indeed, on July 25, the International Trade Commission, an American agency, confirmed the legality of the customs duties demanded by American olive growers on the grounds that they arrived in the United States at a price lower than their price. “Fair value” and benefited from grants. The main cause is the decoupled aid received by producers on areas planted with olive trees. And a fortiori what is valid here for olives could be for the whole of the productions benefiting from decoupled aids, is more or less directly the majority of the European productions.
What is important to understand in this decision is that it calls into question the rules of the WTO in agriculture, and therefore the current CAP as Europe is the only one to continue to want to be its good student. Since the 1992 reform, aid has become more and more decoupled, that is to say paid independently of production and price levels. This evolution was intended to lead to forms of support that were considered to have no effect on the markets, in the jargon “without distortion”. And there, patatras, the United States denounce the main agricultural rule of the WTO nevertheless written between Europeans and Americans and that already contests the rest of the world.
Yet criticized for their inability to respond to crises – aid is paid whether prices are high or low – and to shift production systems towards greater sustainability – paid regardless of production – decoupled aids have mostly the advantage for Brussels to claim to be the first of the class at the WTO. This is about to change!
It was already unlikely that the draft reform proposed by Commissioner Hogan last June would come to fruition before the European elections next May. With this US decision the sky darkens a little more above the defenders of the current CAP which turning its back on the regulation of the markets made it a policy of consumption of budget envelopes. And while some would like the European Union to seize the WTO to challenge the US decision, we think on the contrary that this to the endism would be a major strategic mistake for the construction of Europe and that it is urgent to work on a reform in depth of the CAP.
Jacques Carles, Chair of Agriculture Strategies
Frédéric Courleux, Director of studies for Agriculture Strategies