European Union

Is This the End Of The EU’s Agricultural Protectionism?

The EU’s agricultural protectionism is one of the oldest and more resilient policies in the history of European integration. Dating back to the 1960s, the EU’s Common Agricultural Policy (CAP) either riles unwavering support or strident opposition, and has resisted the test of time to the present day.

Things, however, might be about to change. President von der Leyen has taken the unexpected decision to deprive the Directorate-General of Agriculture of one of its key units, Unit AGRI.I.2, which deals with State aid to farmers. This is the thorniest issue at the core of European agricultural policy, and so far under the purview of DG Agriculture. The move will also affect Unit MARE.E.4, formerly in Legal Affair, which also deals with State aids – to fisheries. The two units will be transferred over to the Directorate General for Competition, where they will come under the jurisdiction of liberal champion Margrethe Vestager.

Vestager has earnt a reputation as a giant-killer. During her stint as Commissioner for Competition under Jean-Claude Juncker, she took on Google, Apple, Amazon, Gazprom, and the EU’s two biggest Member States France and German. Those are just the cliff notes. In von der Leyen’s new Commission, Vestager will retain her responsibilities, plus taking on new ones on future industrial planning and digital development.

She will also have a role in the Commission’s overarching plan to transition to a carbon-neutral economy, as well as enforce competition rules in those economic sectors that have not yet modernised. The migration of agricultural and fisheries’ State aid into her bundle of portfolios is a surprise. It could spell the end of the easy complacency agriculture has enjoyed at a European level for many decades.

The Slow, Agonising Death Of European Agriculture

Trouble for European agriculture began far earlier than European integration – and so did policies of protectionism. The Second Industrial Revolution, notably, led to widespread urbanisation of society in the vast majority of the world. However, there is no doubt that European agriculture suffered more than most, primarily because of the great strides in commercial shipping during the 19th Century.

American grain suddenly glutted European markets, and was available at a lower price than domestic products, thanks to American economies of scale. Limited European industrial development compared to the United States also condemned European agriculture to lower productivity that could barely keep farmers above sustenance levels. As the cities attracted youth with better wages and less physically demanding work, European agriculture spiralled ever downward.

Agricultural methods during the Second Industrial Revolution

All European countries attempted to implement a variety of solutions to prevent this decline. From Soviet collectivisation to more traditional tariff barriers, up to the radical views of Nazi agronomists and the colonial policy of Lebensraum, every ideology to rule Europe in the 20th Century has grappled with the problem. And every one has failed to stem the decline. While mechanisation provided a temporary respite after the Second World War, there was never a broad-based recovery. The EU’s own CAP is no exception in this long list of failures.

A Grim Agricultural Outlook?

The woes remain to this day. Agriculture might be listed as one of the three traditional macro-sectors that make up economic activity, but its size today is surprisingly small. Even in the 1960s, when the Community came up with the CAP, farming usually employed between 5% and 15% of the population in any European country. The one exception was France, where low urbanisation made farmers a larger demographic category. The numbers look even smaller today. Moreover, farming is a work- and land-intensive activity, with a very meagre output.

This dark prospect contrasts sharply with the political clout wielded by farmers themselves. In part, the strategic role played by food production in the security of any country, even more so those involved in great power competition, makes States especially weary of rocking the boat. Beyond this, however, farmers have long closed ranks against their economic decline. They have clear preferences, an ability to mobilise resources far disproportionate to their demographic or economic weight, and a voice in every government.

The launching of the CAP in 1962 was a sharp demonstration of this clout. The policy was adopted in spite of opposition from the European Commission, the public opinion of European consumers and taxpayers, bureaucrats and technocrats in various government agencies, and external actors such as the United States. In France and Germany especially, farmers mobilised to such a degree that De Gaulle threatened to leave the European project entirely if the CAP was not approved.

To this day, the policy sucks up a disproportionate amount of the EU budget, and has remained a complete taboo for multiple governments, especially France’s. And yet, with climate change looming and the band-aid of tariffs unable to rescue agriculture, the farmers’ victory might prove less final than apparent.

Make Europe Green Again

Vestager’s mandate is clear: competition rules must be applied uniformly, digitalisation has to take root in every industry, and both policy areas have to support the wider European effort to go carbon-neutral. So far, there is no clear indication that she also plans to take on the CAP wholesale. The administrative transfer, however, is officially motivated by a desire to enforce competition rules “in all sectors”. Agriculture enjoys significant exemptions from these competition rules, so the transerf may well signal the end of its protected status.

A greener outlook for Europe?

More importantly, Vestager has repeatedly stated her support for the Commission’s plan to make State aids conditional on a green transition. What that means in practice is that farmers will qualify for State aid only if they adopt production and management practices that help reduce emissions and fight against climate change. Vestager sees climate policy as a matrix: it has to cross over with the entirety of European industry and wider EU policy. No one field has to become exempt from the “Green New Deal” advocated by Ursula von der Leyen.

What Next for Agricultural Protectionism?

The EU has many incentives to develop a cutting-edge agricultural sector. The Union is heavily urbanised, making it harder to achieve the agricultural economies of scale possible in the United States and elsewhere. This means European agricultural production should compete in quality where it cannot in quantity.

It also means that the most advanced technologies have to come into play to maximise output, allowing the EU to punch above its weight. In order to do this, the EU will need to existentially reconsider both its attitude towards GMOs and towards competition.

Feeding the continent – let alone the world – in an age of climate upheavals will not be possible without these steps. The administrative reorganisation in question is a far cry from this agricultural revolution, but it might be the first step to a change many thought would never come.

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Tullio Pontecorvo

Student of political science and international relations, co-founder of My Country? Europe. Aspiring sci-fi author. Believes shooting aliens in the face to be the ultimate form of gaming.

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