Edited by Joseph A. McMahon and Michael N. Cardwell
Chapter 19: Mind the gap: ‘Greening’ direct payments and the World Trade Organization
A crucial element of the post-2013 Common Agricultural Policy (CAP) reform is the ‘greening’ payment. ‘Greening’ is a compulsory part of the new direct payment scheme, accounting for 30 per cent of national ceilings. To qualify, farmers must undertake compulsory agricultural practices that are ‘beneficial for the climate and the environment’, comprising crop diversification, maintenance of existing permanent grassland and establishing an ecological focus area or putting in place ‘equivalent measures’. The payment had a controversial legislative passage, with several environmental groups questioning its pro-environmental effects and alleging that it was merely a clever way of disguising product support to European Union (EU) farmers, even before several of the provisions were watered down by the European Parliament. Despite these difficulties, throughout the process all parties assumed the ‘greening’ payment was compatible with the Green Box exemption in the Agreement on Agriculture (AoA) of the World Trade Organization (WTO), so that it would be exempt from the EU’s domestic support reduction commitments in that Agreement. Specifically, it was understood that the payment would be decoupled income support under paragraph 6 of Annex 2 to the AoA and as such the payment had ‘no, or at most minimal trade-distorting effects or effects on production’ under paragraph 1 of the same Annex (the so-called ‘fundamental requirement’).
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