I very much welcome this opportunity to address the House on the ongoing WTO negotiations. As a small open economy, Ireland has much to gain from the rule-based multilateral trading system provided by the World Trade Organisation and the current round of negotiations presents both challenges and opportunities for all of the major economic sectors in Ireland, in particular the services, agriculture and manufacturing sectors.
Negotiations on trade liberalisation have been with us for many years. Up until 1995, the rules were largely ineffective in controlling trade in agricultural products. However, the 1995 Uruguay Round changed all that 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 countries to specific reductions in each, was a significant first step in disciplining agriculture in a meaningful way. At the same time, the Uruguay Round struck a balance between agricultural trade liberalisation and member countries' desire to pursue legitimate agricultural policy goals.
Agriculture continues to make an important contribution, economically and socially, to Irish society and the outcome of negotiations on the new WTO agreement on agriculture will be a crucial for us. Indeed, agriculture will have a critical role in determining the final outcome of the round.
The outcome of the current negotiations will determine the maximum levels of protection and support which will apply to the agriculture sector in the future and given that the process of liberalisation will be significantly more advanced, the negotiations represent a real challenge to the future of EU and Irish agriculture.
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, reductions in, 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.
We in the European Union have prepared responsibly for these negotiations. Indeed, 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 price guarantees with compensation for farmers through direct payments. Further progress was made in the radical reform in the mid-term review of the Common Agricultural Policy which was agreed in June 2003.
The decision to decouple payments was a major 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 and it is most important that this should remain the case. The EU move away from coupled payments and the gradual reduction in the more conventional market support measures, such as intervention, have reduced very substantially our levels of trade-distorting supports, thereby enabling the EU to face into the negotiation from a position of strength.
I will review briefly the progress of the negotiation since the launch in Doha. In reality, little progress was made until the conclusion of a framework agreement in August 2004. Prior to that, the negotiations were marked by failure to achieve consensus as in, for example, the collapse of the WTO ministerial conference at Cancun. The framework agreement of August 2004, which set out the structure and content of the new agreement, represented a significant breakthrough.
The Hong Kong ministerial conference in December 2005 provided a further stepping stone towards the conclusion of the round, with agreement on a number of issues in particular key development matters. Since then, however, the negotiations have stumbled along, with a serious of missed deadlines and the full suspension of negotiations in the summer of 2006. Although negotiations fully resumed in early 2007, further efforts to conclude the round have, to date, failed.
It is no secret that since the Hong Kong ministerial conference 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 respect of agriculture. As already 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 which continue to put the EU under pressure on agriculture. In contrast, the efforts made by the EU as a whole in preparation for the negotiations clearly show 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 by 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. Essentially, the Council mandate aims to protect the European model of agriculture as an economic sector and as a basis for sustainable development based on the multi-functional nature of agriculture and the part it plays in the economy, the environment and society in general.
I wish to update the House on the latest developments in respect of the negotiations. The chairs of WTO agriculture and non-agricultural market access, NAMA, negotiating committees issued new draft texts of so-called modalities — essentially drafts of the detailed elements of an agreement — on 8 February. As already stated, I have not been happy with the direction of the negotiations and these latest draft texts have not done anything to allay my concerns.
I am deeply worried by the suggestion that the EU should provide further concessions on a range of agriculture issues, particularly the level of tariff reductions, the treatment of sensitive products and the related tariff quota expansion. At the same time, the text on market access for industrial goods does not provide the foreseen additional market opportunities for EU goods. This would create a greater imbalance in the negotiations, with a further disproportionate burden being borne by EU agriculture in order to achieve what I consider to be a bad deal. This is not acceptable. There would be a direct and serious threat to the continued viability of many elements of EU agriculture in the face of some aspects of the latest market access proposals.
As stated earlier, my view is that the CAP reforms which have already been implemented represent a very significant contribution to these negotiations——