Basic data on the EU agricultural supports from 1995/96 to 2007/08?

The first table recaps the EU agricultural supports and notifications from 1995/96 with the EU budgetary provisional appropriations up to 2007-08. Some comments:

EU amber, blue and green box notifications and forecasts from 1995 to 2007 (EU-25 from 2004/05)

Sources: EU notifications to the WTO; EAGGF annual reports; EAGGF-Gar: EAGGF Guarantee; EAGGF-Gui: EAGGF-Guidance; + from 2004/05 on, the figures are for the EU-25;  * including refunds on minor products (rice, tobacco, olive oil…); ° EU budget forecasts; ¤ Canada' simulations; (1) direct aids include blue and amber payments (for olive oil, tobacco, fruits & vegetables (of which bananas); (2) agricultural market interventions include export refunds, storage costs and other interventions (for fruits & vegetables, wine, cotton, dry fodder, sugar); (3) The detailed refunds per product is given in the following table; (4) Rural development expenditures included in the EAGGF-Guarantee section; (5) Total rural development = (4) + EAGGF-Guidance section.

1. The EU amber box is highly misleading since 94% of its amounts in 2001/02 (last notified year, but the percentage has not varied much) is made of market price supports linked to intervention prices. These amounts, higher than the sum of the blue and green boxes, do not represent actual expenditures, contrary to the blue and green boxes subsidies.

2. So that when the media, DCs' Members, international institutions and even NGOs are repeating that OECD countries are supporting their farmers to the tune of $1 billion a day, they are mixing up subsidies and fake market price supports, which is highly detrimental to a clear understanding of the whole agricultural trade negotiations.

3. The best way to understand it is to see that the total EU agricultural budget ("Total EAGGF" in the last section of the table) is more or less reached and sometimes exceeded by the addition of the blue box and green boxes alone. It is sometimes exceeded because the notified traditional green box contains some of the green expenditures financed by the EU-15 Member States, although most national agricultural expenditures are not notified by the EU to the WTO as they should be.

4. For the amber box the table shows also that the applied total AMS is the same as the sum of product-specific (PS) AMSs since the applied non-product-specific (NPS) AMS is much below its allowed level so that it is not counted in the applied total AMS. This shows why capping the PS AMSs will create another bound total AMS which will eliminate the present Final Total Bound AMS of €67.159 billion. 

5. The applied AMS simulated by Canada for 2002 to 2004 seems largely overstated but we have put it before computing alternative amounts.

6. The blue box does not encompass all direct payments because some are linked to the price level and are consequently in the amber box (PS AMS), such as for tobacco, cotton, olive oil… But these products and milk have received blue payments for 2-3 years before being shifted to the alleged green box: alleged because the single farm payment (SFP) does not comply with the AoA criteria.

7. The traditional green box notified did not contain decoupled income supports which have only appeared in 2004/05 for the new EU-10 Members (single area payment), and in 2005/06 for the EU-15, and the blue box has decreased accordingly. Therefore the same average amount of about €20 billion would likely continue to be notified from 2002-03 on. So that the total green box, inflated by the single area payment and the single farm payment would reach at least €50 billion in 2007/08 and even more afterwards, a 150% increase in supposedly non trade-distorting subsidies!

8. The export refunds have decreased mainly in 3 steps: in 1996/97 (because of high world prices), in 2001/02 (as a consequence of the 1999 CAP reform having reduced the intervention prices) and they will drop rapidly in 2006 and 2007 for sugar and dairy after the EU condemnation at the WTO for sugar and the CAP reform of 2003 which has reduced the milk price. So that the refunds should be reduced by 52.4% in 2007/08 in relation to the last notified refunds of €3.128 billion for 2002/03 (this amount is not the same as the one in the preceding table which comes from the EU budget, computed on a financial year basis, from 15 October to 14 October). And the reduction will continue after as a result of the on going CAP reform, but the EU dumping will go on since it would rest essentially on domestic subsidies going to exported products (see J. Berthelot, Comments on the revised consolidated reference paper on export competition, 19-06-06).            

EU export refunds from 1995/96 to 2007/08 according to EAGGF

Source: EAGGF annual reports  * including refunds on some products (rice, tobacco, olive oil…) ° EU Budgetary forecasts

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