§ Mr. BercowTo ask the Secretary of State for Environment, Food and Rural Affairs what cuts in trade distorting support and export subsidies will result from the reforms of the common agricultural policy agreed at the Agriculture Council of the EU in June 2003. [149108]
§ Alun MichaelThe CAP reform agreement will substantially reduce trade distorting support as a result of the decoupling of direct payments. There is a degree of national discretion over the extent of decoupling but we anticipate that EU Blue Box support (defined as subsidies deemed less trade-distorting because they are linked to production-limiting programmes such as set-aside, e.g. arable area and livestock headage payments) will fall by at least two-thirds. Amber box support (defined as subsidies which significantly distort trade, e.g. support prices) is estimated to fall by a modest amount due to reductions in support prices and declines in production as a result of decoupling. However, amber box subsidies have already been falling substantially due to the previous Agenda 2000 reforms.
Both decoupling and reductions in support prices will reduce export subsidies, but the precise impact will depend on future conditions on world markets and on the exchange rate.