CAP Perspectives in the light of WTO Dirk Ahner Directorate General for Agriculture and Rural Development Prague, 26 May 2006 Visions of long-term agricultural and rural development in the EU

2 The Future of the CAP Three different angles  The financial perspective  The balance between pillar 1 and pillar 2 and the future of rural development policy  The development of CAP market and income support policies

3 The Financial Perspective  The Financial Perspective => Budget stabilisation and burden sharing => Decrease of expenditure for agriculture and rural development in real terms  The financial review of 2008/09 => « Reassessment of the financial framework », => including the CAP

4 The Financial Review 2008/09 → Possible subjects based on Agenda 2000 discussions –Cofinancing of direct payments –Progressive reduction of direct payments over time –Reduction thresholds applied to direct payments –Capping → Modulation

5 Modulation  AGENDA Optional Modulation (I)  CAP Reform 2003 – Compulsory Modulation  European Council 2005 – Optional Modulation (II)  Review 2008 – Common approach?

6 The Future of Rural Development Policy  Strengthening of pillar 2  Rural development policy  Tasks and challenges for the future

7 Reasons to strengthen 2 nd Pillar  Rural development measures allow targeted, proactive actions  Rural development policy works in a flexible and de-centralised way, in a framework of partnership  Rural development policy is perceived positively by the public  Rural development policy can be defended as “Green Box” compatible

8 Rural Development « LEADER Approach » Objective 1 Competi - tiveness Objective 2 Environment + Land Management Objective 3 Economic Diver. + Quality of Life National co-financing Rural Development Fund Overall Architecture

9 Rural Development Policy in the EU Challenges and questions for the future : n Analytical and conceptual questions n Policy content

10 Market Policy and Direct Payments (Pillar I) The international trade environment  WTO Doha Round  Bilateral agreements  Unilateral commitments

11 Market Policy and Direct Payments Perspectives  Direct payments – continuation of reform path  Market management instruments – reflection needed -for external reasons (phasing out of subsidised exports) -for internal reasons (growing regional imbalances in an enlarged internal market)

12 Market Opportunities  High quality/high value added production -geographical designations; traditional products -quality policy  Biomass for industry and energy => New opportunities - climate change and high oil prices - ambitious policy targets - significant impacts => But also uncertainties …

13 Thank you very much for your attention.