16-03-2004
Speech of Dr. Franz Fischler Member of the European Commission responsible for Agriculture, Rural Development and Fisheries at National and International Economic University in Sofia
Rector Borisov, Members of the Academic Senate,
Minister Dikme
Ladies and Gentlemen!
“The achievements of the Sofia University of National and World Economy and its brilliant faculty, staff, students and alumni are remarkable for both breadth and depth of accomplishment. Students, faculty, and staff come together in a true community of scholars to advance knowledge, address societal challenges and pursue intellectual and personal fulfilment.”
That is how your university, dear Rector Borisov, characterises itself on its In-ternet WebSite. Your decision to award me the Honorary Doctorate bestows membership of this academic community upon me. It makes me proud. As a trained agricultural economist, who started out as a lecturer at the University of Agricultural Sciences in Vienna, and worked his way up to a political job in the EU, I feel truly at home in this academic environment of economic research and teaching.
Let me also thank you wholeheartedly, dear Rector Borisov, for your “laudatio” and the tribute that you paid to my contribution to developing and deepening the relations between Bulgaria and the European Union. I most gratefully accept your acknowledgements as a Member of the European Commission. For more than a decade the Commission has resolutely worked for paving Bulgaria's way to getting closer and closer to membership in the European Union - not least in the area of agriculture. Bulgaria's efforts to that effect have been truly remark-able.
The SAPARD programme is probably the most prominent example in this re-spect. To the surprise of many observers Bulgaria managed already in May 2001 to be the first eligible candidate country fulfilling all institutional and adminis-trative requirements for operating the system. Within the European Union, this success strengthened the confidence in Bulgaria's ability to eventually take over and implement the acquis. In the meantime SAPARD has become a widely ac-cepted financial instrument in Bulgaria, which effectively contributes to reshape Bulgarian agriculture and regenerate its food processing sector.
Regarding our trade relations, thanks to the so-called "double zero" and "double profit" agreements, our relationship is based on solid ground. Liberalising agri-cultural trade was and is as you know an indispensable element of the pre-accession process. Otherwise accession could turn out to become a sort of shock therapy accompanied by undesirable market disruptions. Bulgaria with its long-standing positive agricultural trade balance vis a vis the EU has benefited from the liberalisation process. To maintain these benefits we need to avoid an ero-sion of our trade relationship as a result of the accession of many of Bulgaria's neighbours and trading partners to the EU. Having said this, I am confident that it will be possible in the negotiations that have just started to adapt the existing agreements in such a way as to make further progress.
There are many other examples of good cooperation such as the preparation and organisation of the DG AGRI agricultural conference being held now in Sofia. I am particularly pleased, however, that the agricultural accession negotiations are being prepared in a spirit of close and fruitful collaboration between the Bulgar-ian authorities and the Commission services – which by the way reflect the ex-cellent working relations between Minister Dikme and myself.
This nurtures our hopes that it will be possible to comply with the negotiation schedule established by the Brussels European Council, not least in the agricultural chapter.
Although the target date for Bulgaria's accession lies beyond the end of my mandate as a European Commissioner I have done my best to do my part towards our com-mon goal.
Closing the negotiations is obviously only one part of the exercise. The other part is about taking over the "acquis" and establishing the necessary administra-tive capacity to apply it in practice. This is a real challenge, in particular in the agricultural sector with its complex rules and administrative requirements, such as the creation of a functioning Control System. There are quite a number of mechanisms that need to be in place upon accession. As stated in the 2003 Regular Report, there is still a lot to do. I can therefore only invite you to fully use the time between now and the date of accession to complete all the prepara-tions that are required.
Ladies and Gentlemen,
The accession of 10 new Member States in one go and the perspective of further countries - such as Bulgaria - joining the EU shortly afterwards is anything but “business as usual”. On the contrary, these changes are unprecedented. They reflect a fundamental political reorganisation of our continent: the peaceful uni-fication of Europe after more than four decades of cold war and ideological an-tagonism. Against this background the accession process confronts both the ac-ceding States and the European Union with enormous challenges. Although this assessment seems to be shared by many, I am not always sure whether the scope and magnitude of this process is always sufficiently recognized, but I am pretty confident that potential deficiencies can be kept under control and eventually solved.
There are 4 basic conditions for successful accession, which relate to values, interests, solutions and joint decision-making :
• Firstly, those participating in the integration process must be convinced that they share common basic values and vital interests and act accordingly,
• Secondly, they must be ready to pursue these interests jointly in the frame-work of the European Union, and to pool sovereignty rights at European level to achieve this,
• Thirdly, they must be convinced that joint action according to Community rules and procedures generally leads to relatively better solutions to common problems and
• Fourthly and finally, all actors must be certain that they will be treated fairly in the decision making process, that they will have their voice heard in the debate and can contribute to the decisions reached.
What are the main effects EU enlargement will have? Enlargement will eventu-ally almost double the number of Member States, significantly expand the EU’s geographical area and considerably enrich its cultural diversity. The economic gap between the richer and poorer parts of the Union will widen, and thereby trigger conflicting expectations on how to use the available resources. In addi-tion, most of the new Member States and, in particular those from Central and Eastern Europe will come with a geopolitical background and political biogra-phies differing substantially from those prevailing in the EU-15.
There is no doubt that in the long run such a scenario cannot be handled on the basis of arrangements developed for a Community of six Member States. This would be a recipe for gridlock. Effective decision making can be preserved only via institutional reform. A Union of 25 and soon 27 cannot function without a streamlined institutional structure and effective decision making procedures.
There is another important question that is usually raised in the debate on the future of European integration: How to strengthen the European Union's role and action in foreign and security policy matters and make it more visible? De-veloping a European identity in this area and defining the mechanisms to make it operational, is in the long run an indispensable prerequisite to secure Europe's role on the international scene. Nobody can deny that rifts between Member States or groups of Member States such as those that appeared in the context of the Iraq conflict can seriously damage the integration process. Mutual confi-dence is in fact indivisible. Member States, old, new and prospective, must in-deed develop a European reflex in external affairs before we can talk of a com-mon foreign policy consonant with EU economic clout.
Against this background, I firmly support the draft of a European Constitution as elaborated and adopted by the European Convention. Without approving each and every detail of the draft I have no difficulty to support the text as it stands. Let us hope that the Irish Presidency can steer the European Council towards a compromise acceptable to all members. If so, we will need the assent of the European Parliament, ratification by all Member States, in certain cases by referendum. The ratification process is not only a precondition for the entering into force of the constitution, but also an opportunity to explain to our citizens the role and advantages of the European Union, and to mobilise their support for the ever growing union of states and peoples of Europe.
There should be no misunderstanding: Concentrating on "high-policy" issues such as foreign and security policy should not obscure the crucial importance of the classical EU-acquis. After enlargement, the EU will depend more than ever on properly accomplishing its classical tasks within its own borders.
In particular:
• on the one hand the internal market, which is essential to a dynamic and prosperous economic space. This includes the four freedoms, the competi-tion rules and the regulatory convergence and harmonisation. To this, one should add the Lisbon strategy as it is primarily targeted to improve competitiveness.
• On the other hand, the Community policies which frame the functioning of the internal market and pursuing legitimate public and societal interests such as environment, internal security and so on.
The Common Agricultural Policy cuts across both aspects. In fact, the first European common policy (together with competition and trade), the CAP was the legal and economic underpinning of the European common market, because without, internal border controls could not have been eliminated. The CAP con-tributed to make the agricultural economy more productive and competitive and achieve food self-sufficiency. At that same time it helped to soften the social effects of restructuring and to preserve rural areas and landscapes.
This does not mean, that I try to hide the flaws that have characterised the CAP in particular during the 1970ies and 1980ies: a rigid production-oriented subsidy policy, trade distorting market measures, misallocation of public funds, to men-tion only the most obvious flaws.
But despite its original flaws, the Common Agricultural Policy has proved capable of reform and had indeed been step by step updated in line with changing European and international requirements.
Reform has moved the CAP away from support of overproduction, towards a market oriented, environmentally-friendly policy geared to performance. First came the McSharry reform, than the so-called Agenda 2000 and finally the last reform, which has no name; some call it the Fischler Reform.
Agricultural support is now no longer coupled with output volumes but largely paid out as direct support to farmers' incomes. It is completed by support for the public services farmers perform for society, making more money available for the environment, animal welfare, organic farming and high-quality production. These elements deserve support because the market mechanism does not allow to cover the relevant costs.
The CAP reforms prove the European Union's ability to carry out even radical changes. I am quite aware that these changes, and the altered framework demand a great deal of flexibility in the farm sector. But one should never lose sight of the fact that these reforms were not introduced for their own sake. They are ab-solutely essential in order to make the CAP “future proof” with regard to public opinion, the ongoing discussions in the WTO, as well as to allow it to operate successfully in an enlarged EU. In the last analysis, reform was necessary to en-sure further decent incomes to European farmers.
Ladies and Gentlemen, it is obvious that the Common Agricultural Policy will in future play an even more important role than it does now, because the new Member States are much more “agricultural” and “rural” than the EU-15. The share of agriculture in the overall economy is in many of the acceding States significantly bigger than in most of the current Member States. This relates both to the agricultural output and the agricultural workforce. At the same time there is a huge need for restructuring and modernisation both at farm level and at the level of food processing. Bulgaria is a good example in this respect.
Despite the long agricultural tradition of Bulgaria and the indisputable know-how of all the actors in the food chain, the Bulgarian agricultural sector needs to be more competitive. The adverse factors are well known : fragmentation of land, the extent of subsistence economy, outdated producing structures, lack of capital, low productivity are major cause for concern. Nevertheless, there are also positive signs which demonstrate that Bulgaria is acting in order to invert the situation.
I strongly believe that the CAP has the necessary instruments and is well de-signed to meet these challenges. On the one hand, with the CAP reform we have a skilful tool to handle the integration process. On the other hand, the agricul-tural accession negotiations have completed the CAP's tool box by introducing a number of tailor made measures specifically targeted to the needs of the new Member States. Without going into greater detail let me just refer to the Single Area Payment Scheme which will allow direct income support to be granted in a considerably simplified way.
Apart from some reform left-overs (olive oil, tobacco, cotton, hops and sugar) there remain two financing issues which are of special interest, notably to
Bulgaria.
The first is whether the EU-25 expenditure ceiling should from 2007 also cover the agricultural costs resulting from Bulgaria's and Romania's accession or, as proposed by the Commission, should rather be increased accordingly.
The second financing issue relates to defining the size of the 2007-2013 expen-diture for rural development. Here we are entering the complex discussion on the next Financial Perspective that has just started. I am confident that the New Financial Perspectives will do justice to the requirements of the CAP, including rural development in the context of the last and next enlargements.
As you know, there are a number of Member States and presumably even a lar-ger number of finance ministers in Member Countries who want to keep the size of the EU budget to 1% of EU GNI, although, well before the last wave of ac-cessions the limit had been set at 1.24% of GNI.
It is obvious that, where they to win the day, this would lead to a large cut in structural and rural development funding, and prevent the necessary increase in expenditure such as R&D, transportation and internal security which is required by past Council commitments.
This would indicate that Member States are better at making statements than putting the money where their mouth is. It would also mean that they want to achieve enlargement to 10 more Member States on the cheap, although the ac-ceding countries need far more support, relatively speaking, than the EU-15, while having a much lower capacity to contribute to EU own resources. There are even those who, for the sake of a smaller EU budget, want to scrap the CAP or slash agricultural expenditure, despite the European Council commitment to confirm it up to 2013.
Let me reiterate what I recently said at the Grune Woche in Berlin: “To de-nounce spending half the EU budget on agriculture in times like these misses the point completely - because agricultural policy is the only EU policy that is funded almost exclusively out of the EU budget and not the Member States' budgets.” Agricultural expenditure actually represents barely 1% of total public expenditure of the EU and its Member States.
But to those who want to reduce the size of the European Budget, we must say that EU budget expenditure is cheaper than the national expenditure which would often replace it, and that the belief in a dynamic Europe with the know face of solidarity is an empty word without an appropriate budget.
Rector Borisov, Ladies and Gentlemen,
Let me go back to square one of my allocation. Today you award me a great academic honour. Let me once again express my gratitude for this gesture of respect and acknowledgement. You too will in a few years be citizens of the European Union. As a new Member State Bulgaria will then bring fresh blood to the European body and enrich the character of the Union, as did all new Member States in the past - at least a bit. For a University this perspective must be over-whelming. You, dear Rector Borisov, and your colleagues have the chance to train the people Bulgaria will send to Europe and its institutions. As part of the European educational programmes, you will actually more and more train citi-zens from other EU Member States. If you can produce as skilful people as your country's agricultural attache in Brussels, an alumni of your school. The mar-riage between Bulgaria and the EU should be considered successfully, not to say with mutual pleasure.
Thank you very much for your attention.
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