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IPC Position Paper No. 4

Agriculture and
EU Enlargement to the East

An Overview

The enlargement of the European Union to the East is an exercise of immense importance not only to the participants but to the world in general. As the CEEC struggle with the complex process of transition to democracy and a market economy, the prospect of entry into the EU is seen as one guarantor of their place in Europe’s mainstream. The EU faces the significant challenge of turning the political commitment into a practical program which will make enlargement positive for both parties and not mutually damaging. As for the rest of the world, the contributions to political stability and the global economy that enlargement to the East represents are historic in scope. It is therefore in everyone’s interest that the process move forward smoothly and with a sense of urgency. The EU is entitled to look to other countries for help and understanding as it wrestles with the complex task of integrating up to ten new members with such a diversity of size, economic strength and cultural tradition.

Agriculture will play a significant role in the enlargement process because of its high profile in the EU and its economic importance to most of the applicant countries. A smooth and successful integration will require effort from both sides. The CEEC must proceed with the processes of institutional reform, legislative convergence, and implementation of the appropriate economic policies and democratic practices in order to prepare themselves for membership. In addition, the CEEC should focus on improving the efficiency of their promising agri-food sector, keeping in mind the important role that market-based agricultural reform could play in accelerating their overall economic development. They should not rush to embrace existing CAP policies nor raise support prices, but should follow closely the current EU discussions about the future direction of rural policies.

In those discussions, which are likely to carry forward the reforms initiated in 1992, the EU should remember the pending enlargement and avoid the use of complex schemes that rely on sophisticated administration for their effective implementation and which the CEEC are likely to find difficult or impossible to administer. Achieving a successful integration will require that the EU henceforth take the prospect of enlargement fully into account in all important decisions about the Community’s future. This applies particularly to forthcoming changes in the CAP but also applies to the changes in the EU’s institutional and decision making mechanisms, which are under discussion in the current Intergovernmental Conference. Similarly, the forthcoming review of the EU’s budgeting arrangements should agree on terms for the allocation of cohesion funds which not only achieve acceptable burden sharing among existing members but are suitable for an enlarged EU. In these ways it should be possible to ensure that the budgetary costs of enlargement are manageable.

The timing of accession—with appropriate transitional provisions—will vary from country to country, but should be linked to the achievement of pre-determined macroeconomic and structural criteria. Enlargement should not be impeded by the other interconnected issues which the EU faces over the next few years, including Economic and Monetary Union and the expected start of the next multilateral trade negotiating round. Nor should agriculture-related financial concerns prove a significant obstacle, since structural assistance funds can be applied in lieu of more costly compensatory payments for CEEC farmers.

The rest of the world will be interested in seeing how CEEC membership in the EU will alter its existing trading patterns and agreements. Concern will focus on the question of compatibility with WTO obligations regarding support levels, tariffs, market access and export subsidies. Regardless of how these developments play out, it seems clear that the expanded EU will continue to play a major role in the international trade of many agricultural commodities.

The IPC recognizes the political importance of a successful enlargement of the EU to include the countries of Central and Eastern Europe and hopes that it will proceed with due speed. Although agriculture and the CAP are sensitive issues, the process of integration can be achieved in a way which will give the enlarged EU a competitive agriculture, with sound and affordable rural policies, while at the same time allowing the CEEC to develop their own potential. Enlargement of the EU to the East need not and should not constitute a threat to the global trading system nor represent an obstacle to further trade liberalization in the agricultural sector.

FULL TEXT (.pdf format)

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