June 26th 1999

Minister Walsh says direct payments are
compatible with WTO

Whatever agreement is eventually reached in the forthcoming WTO negotiations must respect the principles which underpin the recent reform of the Common Agricultural Policy, the Minister for Agriculture Joe Walsh told the 12 World Meat Congress this week.

He said that some of our competitors on the world market has expressed concern about the growing significance of direct payments in the income formation of farmers in the European Union.

However he believed that these direct payments met the main WTO tests relating to production neutrality in that they were designed to avoid increasing production and they did not act as a disincentive to consumption.

He said that the AGENDA 2000 reform generally and the direct payments in particular were specifically designed to increase the consumption and reduce the production of beef in the union. In addition payments would be subject to environmental conditions which would lead to a degree of decoupling from production.

"I believe therefore that the direct payments are compatible with the WTO. Indeed I would go further and say that the direct payments are essential for the continued survival of European agriculture as it exists at present," he said.

"The reality is that European agriculture has its own specific nature and is increasingly required to serve a multiplicity of functions. European agriculture is required to be versatile, sustainable, competitive, preserve the countyside and the environment and make a key contribution to the vitality of rural life. It is also required to respond to the increasingly demanding consumer demands regarding food quality and safety, environmental protection and safeguard animal welfare.

"All of these demands impose a considerable financial burden on European producers and this has to be recognised in the context of international trade policy," the Minister said.

"In addition, the scale of European agriculture has to be reconised in our policies for international trade. By and large agriculture in the European Union, particularly in the beef and sheepmeat sectors is dominated by family farms which are extremely small by omparison with those in our competitor countries.

Also the costs of production in the untion are typically far greater than those of their competitors on the world market. I believe that all of these factors have to be taken into account in our policies on international trade. As far as the forthcoming WTO negotiations are concerned, I can say that Ireland will attach considerable importance to the extent to which these issues are taken into account."

The Minister said that while the process of reform of internal national trad rules would continue, such reform must be accompanied in a manner which avoided negative impacts on farm income and which did not damage the fabric of rural society. It must remain a matter for each country or region to develop appropriate agricultural policies which recognised the diversity of agriculture and farming systems.