As agricultural advisor to Jacques Delors for ten years in Paris and Brussels, and Director General of Agriculture at the European Commission until 2010, I understand the distress and exasperation of French farmers, faced for twenty-five years to the deficiencies of the French part of the Common Agricultural Policy (CAP). These deficiencies are now well documented: overtransposition of European standards, bureaucratic application of them through often Kafkaesque texts, installation on farms that are too small, prohibitive delays in authorizations for new agricultural infrastructures – livestock buildings, methanization, etc. -, insufficient research and innovation. Added to this are errors in economic policy, such as the 35-hour week which has contributed to putting into difficulty agricultural activities that are highly labor-intensive, such as fruit and vegetables or slaughtering.
Contrary to what is commonly heard in France, the CAP has nothing to do with these problems, at least until 2022. The Common Agricultural Policy was fundamentally reformed in 1992 then in 2003 with the establishment of a system of income support decoupled from production for an annual amount of 40 billion euros. This aid is intended to compensate for the higher production costs of European farmers, and to remunerate compliance with good agricultural and environmental practices. Since 1992, the average real income of French farmers, who receive 7 billion euros annually in income aid from the CAP, has almost doubled, at the cost of a significant, although still insufficient, increase in the average size farms. This system encourages farmers to produce what the market demands.
Demonization of pesticides, sanctification of organic
On the other hand, the CAP applicable from 2023 within the framework of the “Green Deal” and the “Farm to Fork” approach is highly questionable. It subjects farmers to new constraints which have only a distant connection with the fight against climate change: compulsory fallow, crop rotation, 50% reduction in pesticides – fortunately rejected by the European Parliament in November 2023 -, objective of 25% organic production. These constraints will lead to a reduction in European agricultural production and agricultural income, jeopardizing our security of supply. Furthermore, their unilateral nature will have no effect on the climate, with the rest of the world doing next to nothing. The demonization of authorized pesticides and the sacralization of organic products are ideological and not based on any serious analysis.
In this context, free trade agreements (FTAs) have become the scapegoat for the errors of French agricultural policy. Director General of Foreign Trade at the European Commission from 2011 to 2019, and responsible for the negotiation of the main criticized FTAs, I can testify that, in these agreements which have been concluded for fifteen years, agriculture has never been sacrificed for obtain concessions in industry and services, quite the contrary. Thus, designations of origin, introduced into Union legislation in 1992 on the French model, are protected in all our FTAs, even in the backyard of the United States, much to their displeasure. Over the past fifteen years, the EU’s agri-food trade balance has gained an additional 60 billion euros in surplus, to exceed 70 billion euros in 2023.
The competitiveness of French agriculture in question
At the same time, France’s agri-food balance has stagnated around 7 billion euros, despite a flash in the pan of 9 billion in 2022. This means that French agriculture has a major competitiveness problem with its counterparts in the EU. The development of a significant French agri-food deficit with the EU, which has continued to worsen since 2015, bears witness to this. French agriculture has benefited from FTAs which have enabled it to compensate for the deterioration of its position in the Union. The 68% increase in its agri-food exports to Canada since the entry into force in 2017 of CETA, the bilateral agreement between this country and the EU, amply proves this. Imports of Canadian beef have been negligible. The only significant criticism that can be leveled at the EU is the reckless liberalization of imports from Ukraine which has seriously disrupted the markets for poultry, eggs, sugar and cereals, which it is currently in the process of fortunately to come back.
Let’s come to Mercosur, which has crystallized all the opposition in recent days. First of all, this South American region represents a strategic market. The EU’s overall trade surplus with Mercosur continues to shrink. In twenty years, the EU’s market share in Mercosur has been halved to the benefit of China, going from 35% to 18%. Conversely, FTAs with other Latin American countries have made it possible to maintain the EU’s market share there. In addition, Mercosur is one of the rare areas in the world where France has a significant trade surplus of 4.5 billion euros in goods and services.
Mercosur: butter and butter?
Mercosur poses a particular problem as it is the most competitive area in the world for beef, poultry and sugar, which are the most sensitive agricultural products in the EU, particularly in France. This is why special precautions have been taken with the setting of very low tariff quotas for these three products, of around 1% of EU consumption. These quotas are, de facto, a quantitative ceiling. Indeed, beyond these quantities, normal and dissuasive customs duties apply, with the addition of a specific safeguard clause. Furthermore, the EU’s gains on other products – wines and spirits, dairy products, processed products – are very significant. The negative effects of tariff quotas are negligible for sugar and poultry.
The case of beef is more difficult. With the implementation of this quota, European production would fall by 1% and prices by 2%. This has nothing to do with the catastrophe predicted by some, but it is not negligible for farmers whose incomes are among the lowest. It would be enough to take advantage of this to further support the production of extensive beef, in our magnificent permanent meadows, pride of our landscapes and carbon sinks. It would cost an annual envelope of 100 million euros in France, out of all proportion to the enormous overall gains of the agreement with Mercosur.
The famous mirror clauses, which have become a panacea in recent days, deserve special development. Firstly, all products entering the EU must meet EU sanitary and phytosanitary standards. Thus, a product containing residues of a pesticide banned in the EU for health reasons will be prohibited for import. Meats produced using growth hormones and antibiotics are strictly prohibited for importation. Meat exempt from these treatments must be covered by an official veterinary certificate from the exporting country. These standards can never be the subject of negotiation in a free trade agreement. This is probably one of the reasons why Canadian beef and pork do not enter the EU at the moment.
On the other hand, for production standards relating to the environment, animal welfare or other issues unrelated to health, mirror clauses are unjustified. It is not clear why third countries would accept such clauses, especially when they are subject to restrictive tariff quotas. Furthermore, EU farmers receive 40 billion euros in income support to compensate for the difference in production costs. That would be asking for butter and butter. Unless the hidden objective is to prevent any negotiation of an agreement. On the distant but certain day when agriculture enters the carbon market in the EU, mirror clauses on environmental standards linked to climate change will become justified, failing which the Carbon Border Adjustment Mechanism (CBAM) border will apply.
An ideological refusal of free trade agreements
There remain, however, serious problems to be resolved with Mercosur. The inclusion of the Paris climate agreement as an essential clause whose violation would result in the suspension of the agreement. The EU deforestation regulation bans the import of products resulting from deforestation. Or the MACF, the respective application of which is not negotiable. If these problems are resolved, which is far from being the case at the moment, pretending to oppose the Mercosur agreement in the name of agriculture would show an impressive lack of geostrategic vision in the new situation of world.
The Attal government seems to have taken stock of the errors in France’s agricultural policy. Perhaps also those of the European “Green Deal”, which his two predecessors approved in Brussels. However, the anti-FTA ideological approach, without any serious argument, is now set in stone, with Mercosur as its symbol. France’s voice will be weakened in Europe. It will not have enough allies to constitute a minority blocking trade agreements under the exclusive competence of the EU, for which a qualified majority in the Council and a simple majority in the European Parliament are sufficient, without a vote from national parliaments. This is not the best way to make your legitimate interests heard in these agreements.
* Jean-Luc Demarty is the former Director General of Agriculture (2005-2010) then Foreign Trade (2011-2019) at the European Commission.
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