CER: the EU budget – a way forward

Britain should offer to cut the rebate further to secure wide-ranging CAP reform, including the scrapping of farm export subsidies and farm import tariffs, says John Peet in a policy brief for the think tank the Centre for European Reform.

The June summit has shown that reaching agreement on the budget for 2007 to 2013 will be extremely hard with the respective French and British positions entrenched and the EU finding it much harder to reach unanimous agreement at 25 than at 15, says Peet.

Although many participants pinned the blame for failure on Blair, he points out that four other countries also voted firmly against the presidency compromise: the Netherlands, Sweden, Finland and Spain.

But the logic of France’s defence of full EU finance of the CAP is now little different from Britain’s protection of the rebate. In effect, the CAP
can be seen as the French rebate – with two differences: it is bigger (France received S10 billion of CAP receipts in 2003, compared with the S4.5 billion Britain gets back through the rebate), and it
damages third parties, notably consumers and the developing world.

Peet goes on to argue that Blair is right to insist that the case for a British rebate remains strong; and he is right too that the main source of the UK’s problem with the EU budget is the CAP. Budget negotiations should thus logically start with the CAP; and only after a satisfactory agreement move onto the rebate.

According to Peet, the way forward for CAP reform would be:

1) to keep up the momentum of the present reforms, so that after support has shifted from production towards direct payments to farmers, a start can be made on reducing the size of the budget.

2) to make a general move to national cofinancing

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