Under the new system, farmers will continue to receive the highest subsidies of any nations in the world, but the subsidies will be indexed to payments from previous years and not tied to current production levels.
The reforms are also aimed at reducing payments to larger farmers and rewarding producers who follow more environmentally friendly cropping and animal husbandry practices. More funds will be targeted at rural development projects designed to soften the impact of the reforms.
U.S. Trade Representative Robert Zoellick and Agriculture Secretary Ann M. Veneman applauded the vote, saying it was a “necessary step forward” to ensuring the Doha Round of World Trade Organization negotiations will continue to move ahead.
"The next critical step is for the EU to promptly translate today's decision into meaningful WTO proposals in the three core areas agreed in the Doha declaration: harmonizing and substantially reducing trade-distorting domestic supports, eliminating export subsidies, and substantially improving market access through tariff reductions,” said Zoellick.
“Without new EU agricultural proposals in the WTO, the world cannot fully assess the impact of CAP reform.”
European Union agricultural ministers, in turn, challenged Bush administration officials to take care of their own knitting.
“There are a lot of schoolmasters who have been telling us that we have to do our homework,” said Franz Fischler, the EU’s chief agricultural spokesman, referring to U.S. criticism. “You should practice what you preach.”
Although the negotiations represented the biggest change in EP farm policy in 40 years, critics said they fell short of the reforms needed to reduce Europe’s agricultural production.
“Farmers will continue to produce more than we need and will continue to dump it on the developing world,” said a spokesman for Oxfam, a British-based charitable organization that seeks to address world hunger concerns.
The talks came dangerously close to being de-railed a week ago when French President Jacques Chirac brought the negotiations to a halt because of his displeasure with the direction they were heading.
The reforms announced on June 16 allows French farmers to retain their subsidy regime until 2007 while other countries must begin to “decouple” their payments from production in 2005.
USA Rice Federation staff members said the reform of the Common Agricultural Policy includes a fundamental revamping of the EU’s domestic rice support program, but that it could also lead to other problems.
“Unfortunately, the EU Agricultural Council also granted authority to the EU Commission (the administrative arm of the European Union) to open negotiations with the United States to renegotiate the margin of preference concession concerning rice,” said USA Rice’s Bob Cummings.
He said the EU Ag Council approved a one-step reduction of the intervention price by 50 percent, effective in 2004. The EU will also limit purchases of intervention stocks to 75,000 tons per year. The reduction in intervention payments will be offset by direct payments to farmers and supplemental payments for private storage.
“The duty on imported brown rice from the United States is tied to the intervention price as part of a complex formula,” said Cummings. “Under today’s reform, EU duties on brown rice could fall by over three-quarters, very god news for the U.S. rice industry.
“However, EU officials fear a substantial increase in imports from the United States, and, as a result, the EU wants to withdraw the margin of preference concession and compensate the United States.”
He said rice industry leaders will stay in “close contact with U.S. trade officials to maintain the market access benefits of the margin of preference in any renegotiation.