MARKETS Coal & Steel Agriculture The internal market : cement of the EU

The European Coal & Steel Community ECSC Creation: 1951 (Treaty of Paris) Members: France, Germany, Italy and the Benelux countries Aim: free movement of coal and steel; free access to sources of production Creation of a common High Authority to supervise the market, ensure respect for competition rules and price transparency

Robert Schuman Declaration of 9 May 1950 (discours de l’horloge) « Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity. The coming together of the nations of Europe requires the elimination of the age-old opposition of France and Germany. Any action taken must in the first place concern these two countries. With this aim in view, the French Government proposes that action be taken immediately on one limited but decisive point. It proposes that Franco-German production of coal and steel as a whole be placed under a common High Authority, within the framework of an organization open to the participation of the other countries of Europe. The pooling of coal and steel production should immediately provide for the setting up of common foundations for economic development as a first step in the federation of Europe, and will change the destinies of those regions which have long been devoted to the manufacture of munitions of war, of which they have been the most constant victims. The solidarity in production thus established will make it plain that any war between France and Germany becomes not merely unthinkable, but materially impossible. The setting up of this powerful productive unit, open to all countries willing to take part and bound ultimately to provide all the member countries with the basic elements of industrial production on the same terms, will lay a true foundation for their economic unification.

Robert Schuman Declaration of 9 May 1950: Objectives of the ECSC The task with which this common High Authority will be charged will be that of securing in the shortest possible time the modernization of production and the improvement of its quality; the supply of coal and steel on identical terms to the French and German markets, as well as to the markets of other member countries; the development in common of exports to other countries; the equalization and improvement of the living conditions of workers in these industries. To achieve these objectives, starting from the very different conditions in which the production of member countries is at present situated, it is proposed that certain transitional measures should be instituted, such as: - the application of a production and investment plan, - the establishment of compensating machinery for equating prices, - and the creation of a restructuring fund to facilitate the rationalization of production. The movement of coal and steel between member countries will immediately be freed from all customs duty, and will not be affected by differential transport rates. Conditions will gradually be created which will spontaneously provide for the more rational distribution of production at the highest level of productivity. In contrast to international cartels, which tend to impose restrictive practices on distribution and the exploitation of national markets, and to maintain high profits, the organization will ensure the fusion of markets and the expansion of production.

ECSC institutions The ECSC institutions are the ancestry of EU institutions: a High Authority, an Assembly, a Council of Ministers and a Court of Justice. The High Authority = independent collegiate executive ; supranational body with power of decision 9 members (of whom not more than two of any one nationality) appointed for six years. Assisted by a Consultative Committee (representatives of producers, workers, consumers and dealers) Mission: achieving the objectives laid down by the Treaty and acting in the general interest of the Community. The Assembly = 78 deputies, representatives of the national Parliaments. Supervisory power The Council = 6 representatives of the national governments. The Presidency held by each Member State in turn for a period of three months. Mission: supervising the activities of the High Authority and the general economic policy of the governments. Approval required for important decisions by the High Authority The Court of Justice = 7 judges nominated for 6 years (common agreement between the governments of the Member States) Mission: ensured that the law was observed in the interpretation and implementation of the Treaty.

ECSC and the common market Free movement of coal & steel productions within the Community = origin of the common market Public intervention in case of a crisis: free- market ideas are tempered with an important role granted to state regulation EX: Davignon Plan (1980) establishing quotas

ECSC achievements Overall positive: - Increased production of steel: production increased fourfold as compared to the 1950s (and steel became better, cheaper and cleaner) - Coal production declined, as did the number of people employed in the sector, but it reached a high level of technological development, safety and environmental quality. - In times of crises & necessary restructuring (since the 70’s): helped balanced development of the production and distribution of resources; facilitated redevelopment and workforce adjustments (early retirement, transitional allowances, mobility grants, training, etc.)

ECSC Expiry Fifty years after entering into force: 23 July 2002 Gradual transition (in the 1990’s) of coal & steel industries into the Treaty establishing the European Community. The rules of this Treaty apply to the coal and steel trade since 2002.

ECSC and EU energy policy Sectoral policy for coal (and nuclear energy) limits initiatives in other fields Limited powers of the EU until Lisbon => Free movement and anti-trust policy prevail Lisbon treaty: shared competence, ordinary procedure, action no longer limited to supporting MS’s policies + reference to « a spirit of solidarity » between states

Agriculture The Common Agricultural Policy Initial aim (1957): providing enough food for a Europe emerging from a decade of war-induced shortages through Common Market Organisations  Subsidising production on a large scale and buying up surpluses in the interests of food security Current objectives: EU policy aims to enable farmers to survive by themselves in EU and world markets.

Key principles Market unity Community preference Financial solidarity (a fund called European Agricultural Guidance & Guarantee fund, EAGGF/FEOGA)

Common Market Organisation Free trade in the EU/ barriers for the rest of the world Public interventions (guaranteed prices/intervention prices, storage and other market-support measures etc.) Quotas allocation Marketing standards and conditions for the production Measures concerning trade with third countries (duties, licences, quotas…)

Legislative reform 2008: 21 CMOs replaced by a Single Common Market Organisation for all agricultural products Goal: streamlining and simplifying the Common Agricultural Policy for the benefit of farmers, administrations and companies handling agricultural products

Evolution Success: the EU becomes self-sufficiency from the 1980s onwards. But: permanent surpluses (since the 70’s) of major farm commodities, some of which were exported (with the help of subsidies), others of which had to be stored or disposed of within the EU (=> quotas) High budgetary cost, distortion of world markets, CAP becomes unpopular with consumers and taxpayers

Reforms Started in the early 1990s: production limits to reduce surpluses (milk quotas in 1983) + emphasis on environmentally sound farming MacSharry reform of 1992: Farmers had to look more to the market place, while receiving direct income aid 1999 (the "Agenda 2000" reform): new element = a rural development policy encouraging rural initiatives & helping farmers to re-structure their farms, diversify and improve their product marketing. 2003: major reform / revolution ? Decoupling = severing the link between subsidies and production Farmers receive direct income payments to maintain income stability Condition («cross-compliance »): respect for the environment, food safety, phytosanitary and animal welfare standards EU farmers requested to be more market-orientated

Direct payments 2003 reform: the single payment scheme = aid is no longer linked to production (decoupling) To be eligible for the single payment, a farmer requires payment entitlements Entitlements are calculated on the basis of the payments received by the farmer during a reference period (historical model) or the surface of the land farmed during the first year of implementation of the scheme (regional model) Other conditions to be met: standards concerning public, animal and plant health, the environment and animal welfare + land must be in good agricultural and environmental condition

FARMERS’ REACTIONS TO REFORM The bigger producers lose money… Farmers do not want to be supported by welfare (see themselves more as entrepreneurs)

The CAP & World trade The EU = the world’s largest importer of food and the biggest market for foodstuffs from developing countries EU subsidies for exports of surplus production distort world markets Doha Round: the EU has proposed eliminating export subsidies altogether by 2013, even if the talks fail & a significant reduction in import duties on agricultural products

The cost of the CAP nearly 70% in the 1970s 34% over the period Reasons: expansion of the EU's other responsibilities, cost savings from reforms New focus on rural development, which will be allocated 11% of the budget over the same period

The common market: cement of the EU 1957: the major aim of the EEC is the common market 1986: Single European Act Chief objective = add new momentum to the process of the European construction so as to complete the internal market : Communication from the Commission: "Towards a Single Market Act – for a highly competitive social market economy” (oct. 2010) "Towards a Single Market Act – for a highly competitive social market economy Communication from the Commission: “Single Market Act – Twelve levers to boost growth and strengthen confidence” (Apr. 2011)Single Market Act – Twelve levers to boost growth and strengthen confidence