---

On May 16, GMF’s Washington office hosted an event for the Institut Montaigne, an independent French think tank, on homegrown proposals for reform of French agriculture. Speakers included Ambassador Joachim Bitterlich, President of the Institut Montaigne’s Working Group on Agriculture and former German Ambassador to NATO, Spain, and the German Permanent Mission to the European Union; Philippe Manière, Director General of the Institut Montaigne; and Amélie Castéra, raporteur of the recent Institut Montaigne report, Ambition for Farming, Freedom for Farmers, the English translation of which can be found here.   The public luncheon discussion entitled “Might the French Reform Their Own Agriculture?” was attended by over 60 people, including experts from the embassies, the Washington policy community, and Capitol Hill, and focused on the Institut Montaigne report. This event follows on as part of a luncheon series in Washington on agricultural policy reform in the United States and Europe.   Hopes for an ambitious conclusion to the Doha Round at the World Trade Organization have been fading, in large part because of the continuing stand-off over rich countries’ agriculture policies (and over agricultural market access in particular).  But European trade negotiators have to contend with a strict mandate from EU member states on agriculture policy, and France has expressed strong opposition to any further reforms to the EU’s Common Agricultural Policy (CAP).

Financing for the CAP is guaranteed in principle through 2013 under the terms of a 2002 agreement between French President Jacques Chirac and former German Chancellor Gerhard Schroeder, but included as part of the hard-fought agreement was a review clause that, combined with budgetary and other pressures, could open the door to a potentially wide-ranging review of the CAP in 2008.  Either way, France will continue to be at the center of EU decision-making in general and on agriculture in particular, and homegrown voices for reform in France could potentially have a huge impact on European farm policy — and, ultimately, on world trade and global poverty.   The recent difficulties in the Doha agriculture talks have brought the challenges of agricultural policy reform, multilateral and otherwise, into sharp focus.  On several occasions, the spotlight has fallen on the EU — and France in particular — as the principal obstacle to progress, blocking any resolution of the stand-off between Europe and the United States (not to mention key developing countries) over their respective offers on agriculture.  However, calls for reform from within France have begun to emerge, driven by concerns about the budget and — present policies notwithstanding — the severity of the problems faced by the French farm sector.  The Institut Montaigne issued their own proposals for reform in 2005 and the English translation of their report (specially produced for these events) formed the substance of the discussions in Washington.     One fundamental idea behind this luncheon was to highlight the link between agricultural reform within France, and, more generally, the EU, in order to allow for a reallocation of the EU budget to meet other and newer goals such as research and development, innovation, and neighborhood policies (“More value for money, more money for value”) in order to cope with the new challenges of the 21st Century.  Domestic reforms, a revamping of the EU economy, and an increase in available foreign policy tools would also strengthen transatlantic cooperation and make the EU a stronger partner for the United States, enabling them to work together on a more comprehensive international agenda.   The luncheon event, moderated by GMF’s Ulrike Guérot and Susan Sechler, saw a lively debate. After a brief introduction, Ambassador Bitterlich, President of the Working Group, laid out the Institut Montaigne’s vision for agricultural reform in France.  Bitterlich argued that, in spite of disagreements over global agriculture, there is both the need and potential for building a transatlantic partnership and shared policy agenda on farming.  The interests of both United States and French agriculture are not, in fact, fundamentally different: both countries seek an economically viable model for their farm sectors that will preserve their agricultural heritage and ensure a future for their farmers; both need to re-establish fair competition in a diversified agricultural sector that does more with less subsidization.  Because of the parallels that exist between French and U.S. agriculture, a common framework upon which to base policy reform is possible. The prerequisite to such a framework, however, is open dialogue.    Ms. Castéra, principal author of Ambition for Farming, Freedom for Farmers, followed on from Ambassador Bitterlich’s introduction by outlining the findings and policy recommendations of the report.  She began by explaining that there is an unprecedented feeling of unease in French farming.  The farmers themselves are on shaky financial ground, and there is heavy dependence on public aid.  Additionally, political and societal support for current agriculture policy seems to be weakening.  In spite of these problems, Ms. Castéra argued that now is not the time to “forsake” French agriculture.  In addition to new opportunities for expanded markets, French agriculture continues to be strategically important to European food security and the supply chain.  In order to seize on these opportunities, France must undertake comprehensive reforms that build an economically viable model of farming for the future. This will not only promote profitable farms that are not dependent on subsidies but create new room to maneuver for farmers in the EU and international policy environments.     To achieve these aims, the Institut Montaigne report suggests that France should:  

• Implement effective risk control which maintains public support as a safety-net only;
• Set up a framework for more balanced relationships between upstream (farmers) and downstream industries (retailers and agri-food industries);
• Make non-profit agricultural operations profitable;
• Streamline the administrative bureaucracy and loosen national controls and constraints added to the Common Agricultural Policy;
• Promote fairer international competition through burden-sharing among developing countries, the United States, and the European Union, and either eliminate U.S. marketing loans and counter-cyclical payments, or — in the event that this is not possible — adopt similar policies in the EU).

Ms. Castéra acknowledged that one of the major obstacles to reform is the political timetable on both sides of the Atlantic.  Due to several elections across Europe in 2007, comprehensive reform is not likely beforehand; conversely, the expiration of Trade Promotion Authority in the United States in 2007 jeopardizes meaningful reform in the aftermath. As a result, the Institut Montaigne maintains that neither the United States nor the EU is ready to push through major changes in the Doha Round.  The only way to get meaningful change is to bring the Doha Round to a close with an agreement based on what is currently on the table while committing to then pursue significant reforms at home in preparation for another trade round.   Following the Institut Montaigne presentations, David Orden, Senior Research Fellow at the International Food Policy Research Institute (IFPRI), provided a U.S. response.  Although 70 percent of U.S. agriculture is not dependent on subsidies, regional differences mean that some farmers and areas are much more dependent on subsidies than others.  As a result, neither France nor the United States is at a stage where subsidies can be completely eliminated.  He noted that the Institut’s policy recommendations have strong parallels in the United States, as exemplified by the 1996 “Freedom to Farm” Act, which cut subsidies and streamlined regulation.  Mr. Orden rejected the report’s recommendation to mimic U.S. marketing loan programs in the event that the United States does not take action to repeal them; he argued that, like French farmers, U.S. farmers want to be dependent on market forces, but they need a lowering of market access constraints around the world if it is to be politically possible for programs such as marketing loans and counter-cyclical payments to be abandoned.