Decoupling was a good start because those types of subsidies [direct income support not linked to production] are already defined as in in the green box” . Fischler’s goal was to have the EU enter the round with its system of payments already in the “green box”. In order to do so, payments would have to be fully decoupled from production. Fischler felt that the EU would be better positioned in the negotiations if it came in with its agricultural subsidies already in compliance with WTO standards, rather than having to play catch up. Fischler was thus able to use the Doha Round to press the member states for more dramatic reform than they might have considered otherwise. Finally, Fischler knew that reform would be easier to pass if it occurred during an already scheduled CAP review, rather than in response to WTO negotiations . If reforms came during WTO negotiations, it would seem as though the CAP was caving into the demands of external actors. Fischler anticipated that the perception that non-EU actors were driving CAP reform would not play well with the public and would make reform even harder . Indeed, MacSharry’s approach to the 1992 reform was driven by this concern, as his reform overlapped with the GATT Uruguay Round. For this reason, MacSharry went to great lengths to present, explain, and justify his reform proposals as responses to internal EU needs and as improvements to CAP functionality rather than concessions to GATT officials, or, even worse,vertical farm system the United States.Enlargement, like WTO negotiations, was placing pressure on the CAP.
The accession of ten new member states, all poorer and less developed Central and East European countries, posed a serious threat to CAP spending. A CAP that remained coupled would be completely untenable under enlargement, when millions of new farmers would join the CAP. These new member states, where 26% of employment was in farming, were far more agrarian than the EU 15, which employed only 2-3% of the population in agriculture, and agriculture accounted for a much higher share of GDP . According to some estimates, the number of farmers in the EU would increase by 120% and the area of land under agricultural cultivation would increase by 42% after enlargement . The CAP would be responsible for providing income support to these farmers and rural development assistance for all agricultural land. Projections of the financial impact of enlargement suggested that, if the CAP remained unreformed, the budget would need to double. At the time of the MTR, the CAP was already the EU’s single largest program, consuming approximately 40% of the total EU budget. A doubling of CAP spending was political and financially unfeasible. At the time the member states agreed to the Agenda 2000 program, it was thought that the accession countries would not receive direct payments. The prevailing belief was that the new member states had no right to payments that were compensating current CAP farmers for price cuts they had been forced to accept in past reforms. The new member state farmers had not been part of the CAP at the time of these price cuts, and thus had no right to compensatory payments. In 2002, however, the Commission, anticipating that a two-tier CAP would be politically unsustainable, reversed course and decided that the accession states would be allowed to receive direct payments.
The new member states would be allowed to access these payments gradually, not reaching payment levels commensurate to the existing EU-15 until 2013. Direct payments were to be phased in starting in 2004 from a base of 25% of the EU level upon accession and increasing by 5% per annum until 2007. Then, in 2008, the EU base payment would increase by 10% annually until 2013 at which point direct payments received by the new member states would be equal to the level of those received by the EU-15 . The graduated plan of access to the CAP bought EU reformers a small window of relief, but did not solve the fundamental problem of reconciling the existing CAP budget with the addition of ten new, largely agrarian, member states. Even though the new member states would not be integrated fully into the CAP payment system until 2013, Fischler needed to adopt change quickly because the new member states would be party to CAP negotiations upon formally joining the EU in 2004. Reform needed to happen before these new member states could enter and block changes that threatened to reduce the amount they received. The MTR was thus the last opportunity for reform before the new member states would be included in CAP negotiations. Enlargement’s threat to the budget gave Fischler a real, time-sensitive justification to push for massive and immediate changes in the operation of the CAP. These financial concerns allowed Fischler to construct a narrative that reform was not only desirable to improve the operation of the CAP, but necessary to save the CAP itself from total collapse.
In addition, by arguing that decisions could be taken more easily now than after ten new member states joined the EU, he was able to make reform an immediate priority. Another problem facing the CAP was food safety. Consumer advocates were critical of the CAP in light of recent outbreaks of food-borne illnesses, and the apparent failure of the CAP to do anything to address or control them. Agenda 2000, the most recent CAP reform, did nothing to assuage these concerns, and on top of that inaction, new crises continued to emerge. In 1999, there was a dioxine crisis in Belgium and in 2001 an outbreak of foot and mouth disease in the UK . The UK’s second bovine spongiform encephalopathy crisis broke out in 1998 , concurrent with Agenda 2000 reform discussions. Logically, the BSE crisis in the UK should have compelled reformers to realize that existing environmental, animal welfare, and food safety standards were not sufficient. Making matters worse, new cases of BSE were detected in Belgium, France, Germany, Italy, and Spain. These crises also coincided with increasingly heated debates over the presence of GMOs in food for both human and livestock consumption . Reactions in the member states to the appearance of Mad Cow were varied but swift. All of the member states with confirmed cases of BSE moved to quarantine areas near the infection and culled herds containing cows that tested positive. In France, officials also tripled funding for the study of BSE,vertical indoor farming ordered a review of slaughterhouse practices, banned the use of animal feed containing meat, and extended an import ban on British beef for a further three years beyond the EU-imposed ban. Germany also took action, replacing its SPD farm minister, Karl-Heinz Funke, with Green Party member Renate Künast, a Fischler ally and vocal advocate of CAP reform. Künast advocated strict standards for animal welfare, tough environmental regulation, and greater oversight of and limitations on industrial farming. Prior to the MTR, commitments to meaningful environmental measures were tepid at best. Environmental policies were optional, and implementation was left to the discretion of member states, who mostly ignored them due to farmer resistance. The series of food scares increased pressure on the CAP from consumers, environmentalists, and animal welfare advocates. Public opinion of the CAP in these matters was quite negative. While 90% of respondents in a 2001 Eurobarometer poll expressed a belief that the CAP should “ensure that agricultural products were healthy and safe”, only 36% thought that “food bought could be safely eaten” and just 34% felt that “food bought is of good quality” . As a result, Fischler saw an opening to push for meaningful, mandatory reforms that would increase food safety and security, including the adoption of environmental and animal welfare regulations. There was also a growing recognition among the public that farmers were significant polluters . According to Eurobarometer surveys in 2001 and 2002, just under 90% of respondents stated that the CAP should be used to “promote respect for the environment” while only 41% of respondents across the EU 15 felt that the current version of the CAP actually “promoted respect for the environment” . The environmental goal was second only to the objective of “ensuring the agricultural products are healthy” . The CAP bore the brunt of the blame for agricultural pollution, given that it allowed for the industrialization of agriculture and by extension tacitly promoted the use of environmentally damaging farming practices, designed to extract the highest possible yields.
The CAP directed most of its support to only a small number of farmers. For example, in France, 40% of all aid went to fewer than 10% of French farmers, overwhelmingly the large cereal cultivators . This problem, known variously as the 80/20 problem or the “Queen of England Problem” had plagued the CAP for a number of years. Reformers were under pressure to, if not correct this imbalance in support distribution entirely, at least attenuate it. The unequal allocation of CAP benefits, and reports inthe press about disparities in payments received by large and small farmers, led Fischler and his associates to be concerned that public opinion would turn against the CAP. Declining public support was a real worry because EU officials, particularly other Commissioners, already questioned why such a large sum of money was being spent on an increasingly small faction of the population. The challenges and opportunities posed by enlargement, WTO negotiations, and poorly operating CAP programs offered Fischler and his associates an opportunity to propose far reaching reforms of the CAP under the auspices of the MTR. Such reforms were seen by Fischler and his team as necessary to “reduce the ammunition of those demanding large budget cuts and [to] create a new support base for the CAP” . If the CAP remained unreformed, unsustainable spending and environmental destruction would make it an easy target for other commissioners and member states who preferred a much slimmer CAP budget. Their case would be helped by increasingly negative attitudes from the general public. As Pirzio-Biroli, Fischler’s deputy, noted, “[we] concluded that, if we wanted to preserve the CAP, we needed to change it” . Fischler’s agenda was not just about cutting spending . Rather, he sought to reform the CAP to save the CAP- most notably by making it financially sustainable, viable under enlargement, compatible with WTO rules, and responsive to public concerns about food safety and the environment. Some critics saw Fischler as a bean counter, looking to make cuts wherever he could to get CAP spending under control. While it is true that Fischler was attempting to radically restructure CAP spending, these critics misread the motives behind his actions. Fischler was himself a former agricultural minister. He was seeking to reform the CAP and to make cuts not to please his colleagues in Brussels, but rather to make sure the CAP continued to be viable. Fischler truly viewed his task in these reforms as saving the CAP from collapse.Fischler benefited from a high degree of personal credibility within the Commission, having been a minister of agriculture and the leader of Austria’s accession negotiations. He was considered to be both an expert on agricultural policy and a reform-minded official, who was willing to pursue the tough changes necessary for preserving the overall health of the CAP, no matter the criticism he might face from farmers or their member state representatives. As evidence of the high regard in which Fischler was held, Commission President Romano Prodi completely devolved agenda-setting competency to Fischler and reportedly “had no firm ideas one way or the other about agriculture and issued no directive to Fischler about how or whether to reform” . Although the MTR was intended only to be a health check and not a revision of existing CAP policies, Fischler believed that the CAP needed much more than a status report on the functioning of existing programs. A program that could neither work within the EU budget nor meet basic environmental and health standards ran the risk of being cut drastically by European technocrats, if not entirely eliminated. In addition, without reform, the CAP would stand to be an anchor inhibiting the EU’s ability to negotiate in the Doha Round of WTO negotiations. Fischler thus constructed his reform objectives around making those changes necessary to ensure the CAP’s long-term survival.