Mary Coughlan (Donegal South West, Fianna Fail)

I have noticed an increase in security since my last visit to the Seanad. I thought the Members of this House were all kept in the highest regard. I welcome this opportunity to address the House on the WTO negotiations on agriculture.

Agriculture continues to make an important economic and social contribution to Irish society, and the outcome of negotiation of the new WTO agreement on agriculture will be crucial for us. Agriculture will have a critical role in determining the final outcome of the round. While agriculture is only one element of a broad trade liberalisation agenda, it has a crucial bearing on the outcome of the negotiations for developed and developing countries alike.

Negotiations on trade liberalisation, or rounds as they are called, have been with us for many years. Up until 1995, the rules were largely ineffective in controlling trade in agricultural products. However, the current Uruguay Round changed this and agriculture trade is now firmly within the multilateral trading system. The Uruguay Round, which distinguished between the forms of support on the basis of domestic support, export subsidies and market access, and committed member states to specific reductions in each, was a significant first step in disciplining agriculture in a meaningful way. Concurrently, the Uruguay Round struck a balance between agricultural trade liberalisation and member countries' desire to pursue legitimate agricultural policy goals.

The current negotiations are a continuation of the process of trade liberalisation. The outcome of the current negotiations will determine the levels of protection and support which will apply to the agriculture sector in future and, given that the process of liberalisation will be significantly more advanced, the negotiations represent a real challenge to the future of the Common Agricultural Policy.

The negotiations were launched at the WTO Doha ministerial conference in November 2001 under a very ambitious mandate for trade liberalisation. In so far as agriculture is concerned, the Doha mandate provides for substantial reductions in trade distorting domestic support, with a view to phasing out all forms of export subsidy and substantial improvements in market access. Substantial reductions in tariffs, domestic support and export subsidies are therefore prominent issues in the negotiations. The Doha mandate also provides that non-trade concerns will be taken into account and, most importantly, that special and differential treatment for developing countries will be an integral part of the new agreement.

The European Union has prepared responsibly for these negotiations and has participated constructively at every stage. Recent reforms of the Common Agricultural Policy were deliberately designed to position the EU to contribute to a successful outcome of the round. The Agenda 2000 reform, which continued the process of reform launched by Commissioner MacSharry in 1992, provided for further cuts in institutional prices with compensation for farmers through direct payments. Further progress in reducing expenditure on domestic support and in reducing trade-distorting payments were made in the radical reform of the mid-term review of the Common Agricultural Policy agreed in June 2003.

The decision to decouple payments was a further step in fulfilling the Doha target of substantially reducing trade-distorting domestic supports. Decoupled payments, which by their nature are not linked in any way to production, are considered non-trade distorting by the WTO and qualify for the so-called green box category of payments. The EU move away from coupled payments and the gradual reduction in the more conventional market support measures, such as intervention, have reduced substantially our levels of trade-distorting supports, thereby enabling the EU to face into the negotiation from a position of strength.

I will briefly review the progress of negotiations since the launch in Doha. Little progress was made until the conclusion of a framework agreement in August 2004. Prior to this, negotiations were marked by failure to achieve consensus, as in, for example, the collapse of the WTO ministerial conference in Cancún. The framework agreement in August 2004, which set out the structure and content of the new agreement, represented a significant breakthrough. The intention was that the negotiations would concentrate on the details with a view to concluding the negotiations at the ministerial conference next week in Hong Kong.

It is no secret that I have been dissatisfied with the direction of the negotiations and with the negotiating strategy adopted by the Commission. There has been an insistence by the negotiating partners that they would not engage in meaningful negotiations on other issues until substantive progress has been made in agriculture. As I have stated, the Doha mandate covers a broad trade agenda and it is not acceptable that concessions in agriculture should be a precondition for movement elsewhere. Agriculture is vitally important to the livelihoods of millions of farm families in developed and developing countries and they should not be sacrificed for the sake of an overall WTO agreement. I am disappointed that the same commitment to securing an agreement has not been shown by many of the other developed countries among the negotiating partners who continue to put the EU under pressure on agriculture. In contrast, the efforts made by the EU in preparation for the negotiations and the constructive approach has clearly shown its commitment to achieving an ambitious outcome.

I have also been concerned that the Commission has been adopting an unnecessarily concessionary approach to the negotiations. The Commission negotiates in the WTO on behalf of the member states on the basis of a mandate which was agreed in the Council of Ministers. The mandate is designed to defend the CAP as it has evolved under successive reforms, including Agenda 2000 and the mid-term review, both of which were agreed with a view to positioning the EU in the WTO negotiations. The mandate aims to protect the European model of agriculture as an economic sector and a basis for sustainable development based on the multifunctional nature of agriculture and the part it plays in the economy, the environment and society generally.

My concerns are shared by a number of ministerial colleagues in the Council. In recent months, we have been active in indicating concerns to the Commission both in the Council of Ministers and in bilateral contact. Together with colleagues, I have urged the Commissioner to defend vigorously the EU position on agriculture in accordance with the mandate as agreed by the Council. As a result of our efforts, as recently as 18 October, the General Affairs and External Relations Council fully endorsed the negotiating mandate and concluded that CAP reforms are the EU's important contribution to the current negotiations and constitute the limit of the Commission's negotiating mandate.

Following a further round of negotiations with other key WTO negotiating partners, the Commission tabled an improved EU offer on agriculture on 28 October. I have a number of concerns about this latest offer. First, with regard to domestic support, I believe that the Commission's offer has reached the limit of the EU's bargaining position on trade-distorting payments. Protection of the green box is a fundamental priority for me. The green box is the category of payments which includes the EU's system of decoupled direct payments, which are classified as non-trade-distorting. I am extremely concerned that the Commission's latest statement with regard to defending the EU's direct payments is rather weak. These payments have been exempt from reduction commitments in the past and the Commission's latest statement accepts the notion of a review of the green box qualifying criteria, which is a cause of great concern for me. The protection of the decoupled payments in the green box is a red line which must not be crossed.

On export subsidies, I feel that the Commission has already gone as far as it possibly can at this stage and it is now vital that the parallel elimination of other forms of export subsidy used by other negotiating partners are adequately addressed. The critical issue in the round, however, is market access. The Commission has offered very high tariff cuts, especially in the higher tariffs, which I believe have the potential to open EU markets to increased competition from lower priced imports. The Commission will be seeking to protect the Internal Market through a sensitive product mechanism, the details of which have to be negotiated. This mechanism will be crucial if EU markets are to be protected adequately.

While the Commission has pointed out that the latest proposal is the EU's final offer on agriculture, extreme vigilance is needed to protect our interests. The offer is conditional and the Commission points out that the EU is not prepared to contribute to a new agreement at any price. The offer sets out the need for balance in other elements of the negotiations and within the negotiations on agriculture. It also identifies the contributions which others must now make in all areas of the negotiations, including agriculture, if progress towards a final agreement is to be achieved in Hong Kong.

The EU offer has been made by the Commission on the basis that it is within the terms of the negotiating mandate. While I have reservations in this regard, the offer has been made and cannot realistically be withdrawn. I am satisfied, however, that the actions which I, and other ministerial colleagues, have taken in recent weeks have succeeded in ensuring no further concessions have been made by the Commission and have clearly demonstrated to the negotiating partners that the EU has made a very substantial contribution to the agriculture negotiations and is not prepared to go further. The reaction of these negotiating partners to our offer has been disappointing, if not predictable, and they have not engaged in a meaningful way in any of the areas of interest to the EU. I firmly believe that we must not allow this reaction to force the EU into any further concessions on agriculture.

I will comment briefly on the development aspect of the negotiations. Special and differential treatment for developing countries in the form of longer timescales and lower reduction commitments is an integral part of the negotiations. The conventional wisdom is that integration into the world's trading economy will assist developing countries to prosper and address the problems of poverty and disadvantage. While I believe that trade liberalisation is only one element in an overall solution, I am fully committed and supportive of efforts to assist developing countries through the WTO process. The EU already provides substantial preferential trade access to developing countries and has made offers for further preferential treatment under the new round which I fully support.

The treatment of the least-developed countries, in particular, is critical to the success of the Doha Round. The objective of the round of promoting development through trade can be a powerful means of allowing the least-developed countries to expand their trade in agricultural products and so improve their integration into the global economy. However, we must also be realistic and recognise that there is a growing need for differentiation between developing countries. The needs of countries like Brazil, as a major world exporter of agricultural products, are fundamentally different than those of countries in sub-Saharan Africa, which have virtually no access to international trade channels. This reality must be recognised in the next WTO round.

As we enter the crucial Hong Kong ministerial conference next week, my overall objective remains to ensure that any new WTO agreement can be accommodated within the terms of the 2003 CAP reforms and that further reform will not be required. There should be balance in the negotiations as between the various elements and also as between the pillars of the agriculture negotiations. I do not accept, for example, that there should be an undue focus on market access issues. I will also insist that agriculture must not, under any circumstances, be sacrificed for the sake of an overall agreement. Concessions in agriculture should not be a precondition for movement for progress in other aspects of the negotiations. There are also a number of specific points that I will be pursuing in the negotiations.

In so far as domestic support is concerned, I want to ensure that the system of decoupled direct payments continues to qualify as non-trade-distorting payments under the green box and so remain exempt from reductions under the new round. As the House is aware, the EU system of direct payments, which are issued by my Department under the single farm payment system for the first time last week, makes a major contribution to farm incomes in Ireland. During the past week, payments amounting to €1.007 billion have been made to 113,000 farmers. My Department is continuing to process the remaining applications with a view to completing all payments. Remarkable progress has been made in introducing the new system and I am determined that all remaining cases will be dealt with as quickly as possible.

On export subsidies, I will be insisting on full parallel treatment of all forms of export subsidy and aim to ensure that the phasing out which has been agreed, is carried out over the longest possible period and in a manner least damaging to our interests. Ireland has substantial exports of milk products and beef to third countries which will require the longest possible elimination period.

On market access, I want to retain the maximum possible level of protection through a combination of tariff cuts and other mechanisms, including the designation of products of particular interest as "sensitive products", in order to protect our major EU markets from increased competition from imports from third countries. I am particularly concerned about milk and beef products and, depending on the outcome of the negotiations on tariff cuts, I will decide whether our interests are best served by seeking sensitive products status for those products.

It now appears that there will be no final conclusion to the negotiations next week and that it may be necessary to hold a further ministerial conference in the first half of 2006 to finalise all of the details. There is no doubt, however, that the negotiations in Hong Kong will be a very significant step on the road to a final agreement. I will attend these negotiations and I can assure the House that I will be taking a very active role in defending the benefits of the CAP to Irish and EU farmers and in pursuing an outcome which is the most beneficial for the Irish agrifood sector.