Agricultural Policies

Paper

Bio-Energy and CAP Reform: The Gains to Europe and Africa

The Foreign Policy Centre, July (2006)

In December 2005 at world trade talks in Hong Kong, the EU agreed − along with the USA and Japan − to end farm trade subsidies by 2013. On the eve of the talks, the EU released a biomass action plan which provides another lever for ending subsidies in agriculture to support Europe’s energy security. Even modest new efforts to increase biomass energy use could reduce projected EU energy imports in 2010 by as much as 12 per cent. The moves would boost rural employment by creating up to 300,000 new jobs. The process for ending farm trade subsidies by 2013 is hostage to complex bargaining arrangements in two quite different spheres. The first, within the framework of the World Trade Organisation, links reductions in EU farm subsidies not only to cuts in US and Japanese farm subsidies but also to a liberalisation by developing countries of their barriers to trade in services and investment. The second, within the framework of the EU itself, links a phasing out of the subsidies not only to the interests of affected farmers and bigger commercial entities but also to larger issues of the entire EU budget process.

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