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Briefing 58; Prof Alan Matthews:- Impact of the CAP and lessons learned for Africa’s agricultural regional trade

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The Brussels Development Briefing n. 58 on “Africa’s Agriculture Trade in a changing environment” organised by CTA, the European Commission/EuropeAid, the ACP Secretariat, IFPRI, Concord and BMZ/GIZ was held on Wednesday 23 October 2019 (9h00-13h00) at Hotel Sofitel Brussels Europe, Place Jourdan 1, 1040 Brussels.

The briefing brought various perspectives and experiences around the new trends and opportunities in intra-Africa trade in the context of free trade agreements and regional integration. It also showed Africa trade within the broader global trade picture and with the EU as one of the main trade partners.

Experts presented trends and prospects of regional trade in Africa in the light of new policy developments as well as Africa’s recent performance in different markets. It also featured successes and innovative models in regional trade across regions in Africa and lessons learned for upscaling and expanding regional trade.

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Briefing 58; Prof Alan Matthews:- Impact of the CAP and lessons learned for Africa’s agricultural regional trade

  1. 1. IMPACT OFTHE CAP AND LESSONS LEARNED FOR AFRICA’S AGRICULTURAL REGIONAL TRADE Presentation to the Brussels Policy Briefing No. 57 ” Africa’s AgricultureTrade in a changing environment” Organisers: CTA, ACP Secretariat, European Commission/Devco, Concord, IFPRI, BMZ/GIZ Brussels, 23 October 2019 Professor Alan Matthews Trinity College Dublin, Ireland alan.matthews@tcd.ie
  2. 2. Integration of agricultural markets in the EU ■ Some early history – Food security and balance of payments problems in 1950s led to strong emphasis on national self-sufficiency policies supported by tariffs, quotas and administered price support ■ Treaty of Rome 1958 – Established goal of a common market, i.e. a customs union underpinned by commitment to free movement of goods, services, capital and labour plus common policies (e.g. competition, state aids, agriculture)
  3. 3. Integration of agricultural markets in the EU ■ Liberalisation of intra-regional trade took place in the context of a Common Agricultural Policy ■ Principles – Market unity – Community preference – Financial solidarity ■ Regulation 19/62 initiated step-by-step introduction of a common market organisation for cereals – Customs union fully in place in 1968, eighteen months ahead of schedule
  4. 4. Prices for certain agricultural products in the EU compared to world price levels, 1967/68 Product EU common price UC/100 kg World market price UC/100 kg EU price as % of world market price Soft wheat 10.7 5.8 185 Hard wheat 16.1 8.1 200 Husked rice 18.0 15.3 117 Barley 9.1 5.7 160 Maize 9.0 5.6 160 White sugar 22.3 5.1 438 Beef 68.0 38.8 175 Pig meat 56.7 38.6 147 Poultry meat 72.3 55.0 131 Eggs 51.1 38.7 132 Butter 187.4 47.2 397 Olive oil 115.6 69.8 166 Oil seeds 20.3 10.1 200 Source: Fennell (1997). UC is unit of account.
  5. 5. Income support and stability were main objectives of the classicalCAP 5 Guaranteed minimum price Peu Pw Variable import levies Variable export refunds World market World market EU market Price
  6. 6. Tackling non-tariff barriers ■ 1988 Cecchini Report – Found over 200 non-tariff barriers in just ten food sectors ■ Initial approach was to harmonise standards using EU legislation ■ European Court of Justice Cassis de Dijon ruling – Established principle of mutual recognition which led to ‘new approach’ to harmonisation ■ Introduction of Single Market 1 January 1993 – Facilitated by agreement to use Qualified MajorityVoting
  7. 7. Main lessons from the EU experience ■ Trade integration requires high level of domestic policy integration backed up by trust (judicial enforcement – Brexit) ■ Regional integration sets limits on the exercise of domestic agricultural policy – Solution is either to limit domestic agricultural policy toWTO Green Box measures or to operate agricultural policy at the supra- national level ■ Supra-national agricultural policy comes with its own set of policy issues with which CAP still struggles – Integrating agricultural policy does not require making the same mistakes as the CAP – Common policy vs subsidiarity; distribution of financing
  8. 8. Reading Matthews, A. “Food security as a driver of integration in Europe”, in Brennan, L. and Murray, P. Drivers of Integration and Regionalism in Europe and Asia, London and NewYork, Routledge, 2015

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