Rise of the European Industrial Deal

You know that feeling, when you reflect back on something after it has happened and you think, "Ohhhh... it was always going to go this way..."

But somehow as it was happening you didn't realize where it was headed.

On 22 February, the EC sent a "nonpaper" to the Belgian Presidency outlining the first possible actions to reduce the burden on farmers. ????

After I saw the list, I got that feeling. "So, this is how its going to go. The 2019 Green Deal was an over-correction. Now the EC and the EP are refocusing on competitiveness and industrial policy."

And yes, the list is pretty good. It also feels like it is not nearly enough to get us where we need to be. It also feels like a pretty good course correction given all that has changed in International Relations since 2018/2019.

Like Alice in the last scene chased by the Queen of Hearts and the Card Soldiers; EU leaders have, in recent months, been chased by lines of tractors and farmers spraying manure on public buildings. Under the shadow of a land war raging on European soil at the doorstep of NATO.

But finally, somehow, this time the farmers' message has pierced the protective bubble that surrounds Brussels. Producers in the EU can not produce more food, on less land, using less sophisticated tools, and all the while burdened by the most oppressive oversight regime. They need the policy support to be competitive. They do NOT need to be blamed by policymakers as the cause for climate change.

Focus on "Competitiveness" not "Green Policy"

The first ideas for improvement released in the non-paper focus on competitiveness and slightly less oppressive regulation.

Here are the proposed measures:

• Measure: Changing rules of the calculation of permanent grassland to cater for cases of structural changes in farming
• Impact: Farmers with reduced livestock will not have to reconvert arable areas to pasture
• Timeline: Delegated act to be adopted in March

• Measure: Reviewing possible agricultural practices to cover soils
• Impact: Farmers can have more flexibility in how they fulfill this conditionality
• Timeline: Clarification to be presented and discussed with Member States in March

• Measure: Revising the EU methodology to assess the quality of the Area Monitoring System
• Impact: Farmers will receive up to 50% fewer on-farm visits; this will also free up resources in national administrations
• Timeline: Finalization and presentation of the new methodology in March

• Measure: Clarifying the concept of force majeure
• Impact: Impacted farmers will have more certainty regarding the receipt of their CAP payments and national administrations will benefit from a clearer interpretation at EU level, preventing budgetary errors
• Timeline: Presentation of the clarification to Member States in March

• Measure: Facilitating exchanges of best practices and amendments to CAP Strategic Plans
• Impact: National administrations can identify with more ease areas of possible simplification and implement them faster to the benefit of farmers?
• Timeline: Ongoing process

• Measure: Online public consultation on the evaluation of the Nitrates Directive
• Impact: Rules governing nitrates have huge impacts for thousands of producers. To this point the process has not actively sought their input.
• Timeline: Open until 8 March 2024

• Measure: EU online survey for farmers
• Impact: If they do this the right way, it will be the beginning of a better process to build a stronger agricultural sector across the EU.
• Timeline: From March to May with results expected at the beginning of Summer 2024

• Measure: Detailed analysis of the complexity for farmers stemming from the EU regulatory framework and national rules
• Impact: I hope this is an honest assessment of the regulations that mire producers in needless red-tape.
• Timeline: Results expected in Autumn 2024

• Measure: Exempt farms under 10 hectares from controls related to conditionality requirements (GAECs).
• Impact: Small farmers are 65% of the number CAP beneficiaries but only account for 9.5% of land area.
• Timeline: Proposal to change the rule in the next year.

It's a pretty good list, also, it is just the start. Add to this the ability to have better access to new crop varieties developed with NGT's (New Genetic Techniques) . Ease the pathway for new crop management tools based on biologicals as they have done in Brazil . And build on green technology across the economy to improve competitiveness and industrial policy.

New Industrial Policy?

The current president of the European Commission, Ursula von der Leyen, is seeking reelection. I will not get into the details of the Spitzenkandidaten (Lead Candidate) Election System. Suffice to say that Von Der Leyen is the lead candidate for the center-right European People's Party (EPP) in the upcoming elections.

February 19th she announced she was running for a second term in office. On February 20th she was in Antwerp working as a key signatory of The Antwerp Declaration supporting the European Industrial Deal. Contrast this with 2019/20 when Von Der Leyen attached her EC presidency to the economic orientation known as the Green Deal. She attached her policies to a net zero carbon EU by 2050.

This newest EU industrial policy re-think came out of the huge summit which included NGOs, Think Tanks, National Governments, State Governments and lots and lots of companies. This declaration has now been signed by 590 organizations from 20 sectors. It stresses “an urgent need for clarity, predictability, and confidence in Europe and its industrial policy.” The detail of the declaration lays out ten-steps to deliver on its goals:

1. Putting the Industrial Deal at the core of the new European Strategic Agenda for 2024-2029
2. Including a strong public funding chapter with a Clean Tech Deployment Fund
3. Making Europe a globally competitive provider of energy
4. Focusing on the infrastructure Europe needs
5. Increasing the EU’s raw materials security
6. Boosting demand for net zero, low carbon and circular products
7. Leveraging, enforcing, reviving and improving the Single Market
8. Making the innovation framework smarter
9. A new spirit of law-making
10. Ensuring the structure allows to achieve results

While there are some whispers of the February 2023 Green Industrial Plan , (especially the bit about cutting red tape and improving access to technology), make no mistake, this is clearly a post-Ukraine war plan.

This is an industrial policy for a group of nations who are staring down the real possibility they will need to produce and deploy more arms than Russia. And they may need to do it very soon. This threat has brought clarity and urgency.

In a world where the EU needs to think about access to cobalt, manganese, and rare earth minerals, apart from accessing them in either China or Russia. The trade-off of granting MERCOSUR farmers access to EU markets, in exchange for South American minerals, does not seem so bad. Neither does the prospect of allowing plant breeders to use modern genetic techniques to improve crop yields. The prospect of paying EU farmers to leave land fallow may soon go away too. In a dangerous world food independence is a blessing, not a liability.

Not the death of the Green Deal... but it's close

The Green Deal is not dead. The EU continues to work towards carbon neutrality. However, the hard right turn on industrial policy means that more of the responsibility for decarbonization will be borne across all sectors. And EU farmers should find themselves less burdened in the years to come. The change was pushed more by Putin's bombs than it was by farmers protesting in the streets. As the EU Parliament takes shape in June, we will learn much more about the shape of the developing military and industrial policy.