Contact: Mr Raymond O’Rourke
Introduction
The outcome of the Agenda 2000 Common Agricultural Policy (CAP) reform negotiations in March 1999 was hailed as a great victory for the Irish Government in the negotiations with their European Union (EU) partners. In preparation for a new round of WTO talks on agriculture, it was incumbent on the European Union to reform the Common Agricultural Policy so that the EU would be in a stronger negotiating position. The reform was also necessitated by the prospective enlargement of the EU to include a number of predominantly agricultural countries in Central and Eastern Europe. Whether the CAP reforms will allay the criticisms of the US, Canada, Australia, New Zealand and Argentina in the WTO talks that will begin towards the end of the year is still an open question. On the other hand, the regulatory changes to food law both at EU and international level in the coming years, combined with these WTO talks will radically alter the business environment for Irish agriculture and food products in the new millennium. Unless the Irish Government prepares now for these future changes, the gains made for Irish agriculture in the Agenda 2000 CAP negotiations will be dissipated.
EU Regulatory Regime for Foodstuffs
The BSE crisis undermined the existing food regulatory regime in Europe. In its wake the entire EU regulatory regime for foodstuffs is undergoing radical change. The pre-BSE approach to food law was articulated in the famous Cassis de Dijon court case, which enshrined the ‘mutual recognition’ principle in relation to the free movement of foodstuffs throughout the Internal Market. In future, the EU has decided that enhancing food safety and consumer protection, rather than the free movement of foodstuffs are to be the cornerstones of a new EU regulatory regime for foodstuffs.
In April 1997 responding to the BSE crisis, the EU published a Green Paper on Food Law as a means of launching a public debate on the likely changes envisaged for the future EU regulatory regime for foodstuffs. The Green Paper discussed issues such as food labelling, food hygiene, food quality as well as the EU’s important international obligations in the area of food law. Already a number of legislative proposals discussed in the document have been adopted into EU law. In a follow-up to the Green Paper, the European Commission this year will publish a Communication setting out a list of future legislative proposals for new food laws and for changes to existing laws. It will be a very specific document and will include deadlines by which these legislative proposals should be adopted into national and EU law. In the same vein as the Delors/Cockfield White Paper to establish the Single Internal Market by 1992, this Communication combined with the ensuing legislative proposals will radically alter the nature of food law in Ireland.
In March 1998, the European Parliament in a Resolution on the Green Paper on Food Law called on the European Commission to submit a proposal on a framework food law. European Food Law has developed piece-meal over a long period of time and there is no central unifying text setting out its fundamental principles and defining the obligations of those working in the European Food industry. The European Parliament hopes to rectify this situation through the adoption of a framework law on food. The Commission has an obligation to fulfil this request and has been preparing a draft legislative text which it will be presenting to the Parliament in the coming months.
Since the publication of the Green Paper, a number of EU food laws have already been introduced that will have a profound effect on Irish agriculture and the Irish food industry. One of the major examples is the Product Liability Directive, which has now been extended to include primary agricultural products via EP and Council Directive 99/34/EC. Ireland will have until 4 December 2000 to transpose this into national law, in the form of an amendment to the 1991 Liability for Defective Products Act. This new legislation is likely to have an enormous impact on the Irish agricultural sector. There is the possibility of a large increase in legal proceedings against farmers/agricultural producers by consumers seeking redress, resulting in increased insurance premiums for such producers. Should for example a farmer allow defective or contaminated milk into the food chain, he would be held liable, but there would be a domino effect with liability implications also for the co-op supplied with the milk. This new legislation is the direct outcome of the BSE crisis, where the EU decided that in future it would to legislate for the entire food chain, from the ‘stable to the table’, in order to protect consumer health.
In relation to food labelling the introduction of QUID (quantitative ingredients declarations) as provided for in EP and Council Directive 97/4/EC which must be implemented into national law by 14 January 2000 will have a major impact on the food industry. It is a very complex piece of legislation and the Irish Government has still to introduce the Directive via a Statutory Instrument. Member States must have allowed trade complying with the Directive as of 1 February 1999 and prohibit trade of non-complying products by 1 February 2000. The EU is also planning to introduce a number of specific pieces of legislation on food allergies and the labelling of alcoholic beverages.
The Rapid Alert System for Food Emergencies, which is established via Article 8 of the General Product Directive (92/59/EC), has been streamlined. Despite Belgium’s slow provision of information in the recent dioxin scandal, the system was shown to work effectively when put into operation by the European Commission. Under this system Member States must notify the Commission if a foodstuff poses a ‘serious risk’ to public health outside the territory of the offending Member State. The EU has established a Food & Veterinary Office in Dublin, whose task is to monitor the enforcement of EU food hygiene, veterinary and plant laws.
The European Union is also investigating the possibility of introducing a general obligation of food safety into EU law. Such an obligation would require that food businesses only sell to the consumer food which is safe, wholesome and fit for human consumption. Any entity marketing food not following these criteria would commit an offence under the national law concerned and would be liable to criminal or administrative penalties. This obligation will be totally separate from the question of liability covered by the Product Liability Directive. A number of Member States at present include such an obligation within their national law and the EU intends to harmonise the situation by introducing the obligation at EU level.
In Ireland, the Food Safety Authority of Ireland has been established whose principal function is to take all reasonable steps to ensure that food produced, distributed or marketed in Ireland meets the highest standards of food safety and hygiene. At the same time one of the proposed North-South bodies being established in the context of the Belfast Agreement would deal with food safety issues, which surprised many commentators. In actual fact this development it is not very surprising. National governments have found in recent years that food safety issues have a great propensity to undermine the confidence consumers have in the ability of politicians to deal with food emergencies. The BSE crisis is a classic case, but more recently the cases of dioxin contamination in Belgium, fears over Coca-Cola products and questions about the safety of genetically modified foods in Britain demonstrate that food safety issues have the ability to rock the foundations of even the strongest Governments. It is unsurprising therefore that the idea of establishing a European Food Agency, on the lines of the US Food and Drug Administration has re-emerged in European political circles. The new European Commission President Romano Prodi, advocated the establishment of such an Agency in a speech to the European Parliament on 21 July 1999. There is little doubt that a European Food Agency will be established in the coming years with sufficient powers to impact directly on the Irish food industry.
The Irish agricultural and food industries must therefore wakeup to the fact that in future there will be ever more regulation and oversight of their industry from Brussels. The BSE crisis has been the catalyst for major changes in the EU regulatory regime for foodstuffs. As is the case in relation to the environment, issues involving food safety do not recognise borders as the recent dioxin contamination in Belgium graphically showed. Politicians now agree that it is only through regulating the food industry at EU level that consumers can be assured the food they eat is safe. European Food Law therefore has certainly come of age and is likely to be ever more important in the new Millennium. The Irish agriculture and food industries would be foolish to neglect these developments.
WTO/International Developments
A major event in 1999 will be the start of the next round of WTO talks on agriculture. Article 20 of the Uruguay Round ‘Agreement on Agriculture’ not only set down a legal obligation to resume discussions on agriculture by 2000, but also indicated the aim of these negotiations. They are to continue on the reform process that was started by the Uruguay Round in order to achieve a substantial decrease in agricultural supports. The ‘Agreement on Agriculture’ states that the direction of these talks should be to further liberalise trade in agricultural products and reduce trade-distortive agricultural support schemes. The Uruguay Round provided for detailed commitments in three specific areas: domestic support, market access and export subsidies. It will be interesting to see whether the Agenda 2000 CAP reforms are sufficient to allay the fears of other WTO members that the EU’s agricultural sector is overly protectionist. In a new more competitive world market for agricultural products, it must be remembered that the EU will no longer be able to increase the levels of export refunds as a means of maintaining the competitiveness of EU agricultural products, since that will no longer be acceptable in the WTO context.
These Agenda 2000 CAP reforms will be coming into effect at the same time as the EU intends to begin negotiations for EU membership with six countries (Poland, Czech Republic, Hungary, Slovenia, Estonia and Cyprus) which have substantial agricultural sectors. This will provide further competitive pressures on the present EU agricultural industry. The EU will need to secure approval of the arrangement for the inclusion of new Member States in the EU customs union under the WTO rules, and will have to ensure that the combined commitments in agriculture of the EU and acceding countries can be met by the enlarged EU. This is a very important issue and will be of great significance to the agricultural/food industries in Ireland.
The WTO round of negotiations will discuss issues other than agriculture that will have important implications for the Irish food industry. These issues include standards for health and safety, animal welfare, biotechnology, labelling and consumer information and the relationship between trade and the environment. Consumer groups in particular have been unhappy with the thrust of the existing WTO rules, which they perceive as being in many cases obstructive to consumers interests. Equally, farmers are concerned by the effect of strict European environmental, health or animal welfare standards on their competitiveness, and argue strongly in favour of the imposition of equivalent standards on imported products.
In relation to consumer health and safety, the WTO Sanitary and Phytosanitary Agreement (SPS Agreement) already requires WTO members to base their food and hygiene legislation on existing scientific advice and to align it as much as possible with internationally harmonised standards, such as those of the Codex Alimentarius. On 17 May 1999, the European Commission decided to defy a WTO ruling (March 1998) that it must lift a decade-old ban on hormone-treated US beef by 13 May 1999. The Commission made this decision on the basis of a report on hormone-treated beef by the Scientific Committee on Veterinary Measures related to Public Health. The report of the Scientific Committee, in the opinion of the Commission, provides substantial evidence that the use of these hormones in beef production is a threat to human health. The US Administration is pressing ahead with trade sanctions amounting to $116 million on EU agricultural exports to the US. The EU is trying to negotiate US acceptance of trade concessions in other areas, as a form of compensation for refusing market access to US hormone-treated beef. This is the second example of retaliation by the US because of EU agricultural trade policies. In 1998, the WTO found that the as EU could not legally give concessions to banana imports from poor African, Caribbean and Pacific countries, they would have to give the same terms to bananas produced by American companies in Central and South America.
A possible trade war is also looming between the US and the European Union on the whole question of genetically modified foods. The US is opposed to labelling GM foods, as this is not required for the domestic American market. The US may argue in the WTO that the EU’s demand for labels for GM foods is merely an elaborate form of protectionism. That is far too simplistic an argument – the debate over the labelling of GM foods between the US and the EU is routed in a far more fundamental argument over the role of science in relation to food law. Whereas the US continues to base its food legislation on ‘sound science’, the EU now bases its legislation on ‘sound science’ in conjunction with the ‘precautionary principle’, whereby if there is scientific uncertainty over the safety of authorising a particular food product, the EU believes that it is better for the protection of consumer health to deny authorisation until there is more scientific certainty. The Commission has recently prepared Guidelines on the Application of the Precautionary Principle, which it proposes to introduce to the Codex Alimentarius for adoption. This debate will have an important bearing on the question of the establishment of an international food standard for genetically modified foods, where the EU is likely once again to be in conflict with the US.
In the new millennium, the WTO and the Codex Alimentarius are certain to play an increasingly important role in the regulation of the agricultural and food industries in the global economy. While the EU is preparing to strengthen the consumer health and food safety aspects of its regulatory regime for foodstuffs, this will be taking place at the same time as when the WTO is encouraging increased liberalisation of agricultural markets. How these two concepts interact will have a profound effect on the Irish agricultural and food industries in the future.
Conclusions
The Agri-Food 2010 Committee has been established with a remit of proposing a strategy for the development of the Irish agricultural and food industries in the new Millennium. Following the negotiations on the Agenda 2000 CAP reforms, there may be a tendency in Irish agricultural circles to believe that the future of the industry has been protected. The Agenda 2000 CAP reforms finally adopted were certainly less severe than the original proposals, but in relation to long term economic planning that is likely to be a small consolation.
I have highlighted in my submission the regulatory changes for foodstuffs taking place at EU level. As EU Food Law is now to be far more ‘consumer-driven’ concerning itself more and more with public health issues, the Irish agricultural and food industries will need to be able to do business in that new environment. It means being prepared to participate in traceability quality assurance schemes as well as taking responsibility in the farmyard for producing safe food. As the dioxin contamination food scare in Belgium shows, a number of unscrupulous producers can destroy an industry. With modern communications and the increasing tendency of the European Commission to become involved in food emergencies post-BSE, unscrupulous producers have the potential to destroy the good name of Irish food in markets world-wide, which could take years to win back. The Product Liability Directive extension and the possibility of the introduction of a general obligation on food producers and businesses to produce safe food are an effort by the EU to ensure that food producers at each link in the food chain would fulfil their individual responsibilities.
Developments at international level, especially in the WTO will also have an important bearing on the regulatory environment within which the Irish agricultural and food industries will be marketing their produce in the new millennium. The increasing liberalisation of world agricultural markets will add a new competitive edge to the agriculture and food industries. Greater competition in world markets will not be allowed to encourage lower food safety standards since the Irish food industry will be operating in a new, tougher, consumer health-orientated EU regulatory environment.
In future, I suggest that an Irish food producer should be prepared to establish the following initiatives rather than relying on trade associations or government departments to alert them of important regulatory developments pertinent to their business. In that way, the food producer will be acting in a ‘pro-active’ rather than a ‘reactive’ fashion, which offers the opportunity to have some input into the type of food legislation adopted at EU level.
In the new millennium, the Irish agriculture and food industries will have new regulatory pressures both at EU and international level. More competition in world agricultural markets, enhanced food safety standards, liability for all producers in the food chain - these are the developments which the Irish food industry must prepare for in the coming years. As ever the Irish food industry will be trying to ensure their produce is successfully sold in various EU and world markets. On the other hand, Irish food products will not even be permitted to enter those markets unless they fulfil the criteria established by the increasing number of new food laws and regulations at EU and international level. If the food industry neglects these developments, it does so at its peril.