The Fischler's Proposals for the Common Agricultural Policy: Paving the Way for the Future?

The Mid-Term Review proposals presented by the European Commission in July 2002 and January 2003 correspond no doubt to the most radical CAP reform since the latter was established in the early 1960's. This is not because these proposals include firm commitments on market access and export competition dossiers in the perspective of WTO talks. The proposals are silent on these points. This is because they finally achieve the shift from product to producer support by replacing all existing or newly introduced direct income payments, with a few exceptions, by a single decoupled payment per farm, based on historical references and conditional upon cross-compliance to environmental, animal welfare as well as food security and quality criteria. In addition, they expand the scope of rural development instruments to promote food quality, meet higher standards and foster animal welfare and they increase amounts available for rural development by transferring funds from the first to the second pillar via the introduction of an EU-wide system of degression and modulation. This paper discusses these proposals from both an external and internal point of view. We analyse to what extent the MTR proposals could facilitate the EU negotiation position in the WTO. From a domestic point of view, these proposals correspond to appropriate changes in the right direction with however some important qualifications. We analyse these qualifications. We also discuss to what extent the MTR proposals should be considered as the ultimate reform of the CAP or as the third step, after 1992 and 1999, in the long-term process where public intervention would be mainly reserved for correcting market failures, notably the promotion of positive externalities and public goods as well as the reduction in risk and instability faced by agricultural producers.