Malve, Pierre S.

English

Archive of European Integration

~ -. -
.• E\lfopean cbm}liu~it'y 
,~~~ !!~~.~!~~~f~~m~·.Fto4i"··· 
T~l 0 : (212) 37J,~3ao4·. 
RELATIONS OF THE EUROPEAN COMMUNITY AND THE UNITED STATES 
IN THE AGRICULTURAL FIELD AND THE WORLDWIDE ECONOMIC 
CHALLENGE OF A NEW EMERGING INTERNATIONAL ECONOMIC QRDER 
Address by 
Mr. Pierre 3. Malve 
Director for International Agricultural Affairs 
at the Commission of the European Communities 
to the 
American Agricultural Editors Association 
in Chicago on December 4, 1974. 
1                                                 
expet"iel1ce! 
in the tvin9,y c:tty is really !l_ pleasure L 
-
But: Qeing in fi'oht of such An_ ~mpgrt.;_ant association as this 
. . . 
-an adventure! 
Let's take it. 
The search for international economic security is becoming for all 
_countries more and more important. The supply conditions for food have 
dramatically changed. One cannot consider the supply situation of a country 
in isolation anymore. Nowe.Jays, economics are simply too intertwined. 
The cooperation between developed, producing and exporting countries is a 
necessity, even more so at a time of shortages of basic agricultural 
products. Cooperation among developed countries is a must. But we have to 
go further than that; the European Community is in favor of a broad effort 
to improve the framework of international concertation among countries 
concerned by world food supply conditions. 
I. United States/European Community agricultural relations-are evolving 
in a changing world. 
1) The agricultural 8ector is deeply affected by the drastic modifications 
of international economic relatlons. The energy crisis has a tremendous 
impact on European. economics. To give an example, the EEC's trade 
defid.t with OPEC countries will go from 8 billion Dollars in 1973 to 
around 25 to 30 billion in 1974. Except for Germany, the rate of infla-
.. 
tion is getting very high - close to 15 per cent in France and more than 
. I. 
- 2-
20 per cent'in It~ly~··. In Et.1rope ~'-"l in the United States, the costs 
of agricultural production are skyrocketing. t.Jhile consumers in 
developed countries are.::cornplainingabout the increase in food prices, 
millions of people are starving in many developing cou11tries. We must 
recognize that a solution to these problems can only be fotind in a 
common effort. Developed producing and exporting countries must produce 
more in order to face the problem of hunger and malnutrition in the 
world and, at the same time, they have to help poor developing countries 
to increase their own production. tve have to bear in mind, that 
relationships between developed and developing countries are profoundly 
evolving. From now on the developing countries will, and rightly so, 
insist on obtaining fair prices for raw materials they produce. 
2. Within the European Community, the Common Agricultural Policy is an 
important stabilizh1g factor by maintaining prices at a determined 
acceptable level, and by ensuring security of supply to all Member States. 
In contrast to previous perlods, prices within the Community for important 
food product!:> are much lower than in the so-called world market. This 
is particularly true for cereals and sugar. The mechanisms and the 
functionning of the Common Agricultural Policy have contributed signifi-
cantly to price stability from which European consumers are now taking 
real benefits. Simultaneously, by ensuring European farmers a fair 
level of incomes, the Common Agricultural Policy reinforces the security 
of supply. Nevertheless, it is true that the Community also benefits 
greatly from natural advantages, most of all from climatic conditions 
which ensure a c.ertain amount of regularity in crop levels. 
./. 
3                                                 
'rhe searchfor·a 
of agriculture. 
- . } -- __;-
- --
cooparatibn in the £ield -
__ 1. In any case, the conditions of supply and the situation on the world_ 
market are presently such that an increased cooperation is needed. 
We have tori quickly overlooked the possibility of having to face, even 
in developed countries, severe shortages for important products. In 
these circumstances, it is essential not to try to solve current diffi-
culties within the confines of a national framework, in a selfish 
manner, transferring problems onto others. At the present time, there 
is a great risk to revert to protectionist tendencies. Despite the 
fact that the Community had, for cereals, a carry-over at a very low 
level, it accepted in the past months certain export operations to smoothen 
the functionning of the world market. Right now, following proposals 
made by Mr. Lardinois, who is in charge of agriculture within the 
Commission, the Community is discussing some measures to reduce its own 
import needs of grain in order to cooperate with the United States 
administration to improve the critical United States supply situation 
for these products. On this point, Secretary Butz declared and I quote: 
"The Community's action represents a sharing of the burden of world supply 
fluctuation and could be an important step forward in our world tra~c 
relations." 
2. The Community, like the United States, attaches great value to the coming 
GATT multilateral trade negotiations. The Community is anxious to see 
the Trade Bill passed by Congress and the United States negotiator pro-
vided with authority to negotiate. Sir Christopher Soames, who is in 
. I. 
4                                                 ~ ~ of externalr:elatiot1s within the-commission declared recently: 
- - - -
attempt to further :Ubera).tze trade w·ould be one of the most 
effective ways to prevent sliding back into protectionism. II Nevertheless' 
a lot has been changed since the official launching of the Multilateral 
Trade Negotiations in Tokyo in September 1973; it is now necessary to 
give consideration, for instance, to the question of regular access to 
raw materials and to measures related to export restrictions. In the 
field of grains, the European Community is in agreement with the United 
States in building-up stocks and to accept the international concertation 
of the various national stock policies. Nevertheless, like the United 
States, the Community refuses an "International reserve system" which is 
not compatible with the responsibilities of producing and exporting 
countries such as the United States and the Community. 
III. Nevertheless, the Community favors negotiation of a new type of commodity 
agreements which wculd provlde a framework for a dynamic and permanent 
cooperation. 
1. The European Community wants to go further in the search for a greater 
stability of the world agricultural markets. It is fundamental to go 
beyond the sterile confrontations between those who support the concept 
of 11 f:ree market" and the supporters of the concept of "markets organizations". 
The successive fluctuations from surpluses to deficits, the disturbing 
price speculations, clearly demonstrate the limitations of the concept 
of "free market". Let's consider, for a moment, the sugar case or the 
grave discontent of the cattle producers in Europe or in the United States 
to be even more convinced. On the other hand, it is difficult to enclose 
economic forces at play in a rigid set of rules as the stronge~supporters 
. I. 
5                                                 : -- --
of· "markets· organization~'' are sometimes tempted to do •. The European 
- - '=_ ~ - - -
. . 
Community does notbelieve that the building-up of stocks and the 
. 
concertation of the various national reserve policies at the international 
level will be sufficient in themselves to ensure the most needed stabili-
zation of the world agricultural markets, even if the above mentioned 
measures and policies already constitute positive components. Indepen-
dently of a cooperative approach related to stocks, the European Community 
is convinced of the necessity to deal with price levels and policies 
and to combine as many significant elements of agricultural policies 
as possible in the framework of commodity agreements. The specific needs 
of developing countr~es, importing o1· exporting, must constantly be borne 
in mind in this approach. 
2. The Commission has already made some proposals to the Council of 
Ministers of the EEC for a new type of commodity agreement for cereals. 
It is envisaged by the Commission to establish a "target price" to be 
negotiated as an "indicator" in order to appreciate the importance and 
the economic meaning of the Vdriations of the effective price transactions 
on the different markets for cereals. The magnitude of these variations 
compared to the "target I=rict:: indicator" ~.J"ould, in certain cases, trigger 
a mechanism for th~building-up or reduction of the levels of stocks 
created at the national level, or at the community level in the case of 
the EEC. The Community wil- nave to determine its definite position in 
accordance with the eta.tE •reparation of its partners for the forth-
coming negotiations. Concerning eAport restri~tions, it has already been 
advocated in some circles that a "code of good conduct" would be.useful . 
. I. 
.••cioaeof good .condut:t1i 'Will certainly be easier to devise 
into force in the framework of a couunodity agreement. The 
of the tasks require a full participation of 
the international conununity as a whole. It is no longer possible for 
a· country, and a fortiori for a po'tverful country, like the USSR for 
instance, not to take its fair share of obligations and responsibilities. 
In conclusion, 
In a world more and more interdependent, there is no longer room 
for exclusive national solutions. 
The European Community and the United States are facing together, 
politically and economically, a new emerging international economic order. 
It is a challenge for both! But it can also be transformed into an 
opportunity for a closer and far-reaching cooperation. 
After all, agriculture, in the United States as in the European 
Community, is of great political, economic and social value! 


Relations of the European Community and the United States in the agricultural field and the worldwide economic challenge of a new emerging international economic order. Address by Mr. Pierre S. Malve, Director for International Agricultural Affairs of the Commission of the European Communities, to the American Agricultural Editors Association. Chicago, 4 December 1974

~  -.  -.• E\lfopean  cbm}liu~it'y ,~~~  !!~~.~!~~~f~~m~·.Fto4i"··· T~l 0 :  (212)  37J,~3ao4·. RELATIONS  OF  THE  EUROPEAN  COMMUNITY  AND  THE  UNITED  STATES IN  THE  AGRICULTURAL  FIELD  AND  THE  WORLDWIDE  ECONOMIC CHALLENGE  OF  A NEW  EMERGING  INTERNATIONAL  ECONOMIC  QRDER Address  by Mr.  Pierre 3.  Malve Director for  International Agricultural Affairs at the Commission  of  the European Communities to  the American Agricultural Editors Association in Chicago  on December  4,  1974. 1                                                 expet"iel1ce! in the  tvin9,y c:tty is really !l_ pleasure L -But:  Qeing in fi'oht of such An_  ~mpgrt.;_ant association as this .  .  . -an  adventure! Let's take it. The  search for  international economic  security is becoming  for all _countries more  and more  important.  The  supply  conditions for  food  have dramatically changed.  One  cannot  consider  the  supply situation of  a  country in isolation anymore.  Nowe.Jays,  economics  are simply  too  intertwined. The  cooperation between developed,  producing  and  exporting countries is a necessity,  even more  so at a  time  of  shortages of basic agricultural products.  Cooperation  among  developed  countries is a  must.  But  we  have  to go  further  than that;  the  European  Community  is in favor  of a  broad effort to  improve  the  framework  of  international concertation among  countries concerned  by world  food  supply  conditions. I.  United  States/European Community  agricultural relations-are evolving in a  changing world. 1)  The  agricultural 8ector is deeply affected by  the drastic modifications of  international economic  relatlons.  The  energy crisis has  a  tremendous impact  on  European.  economics.  To  give  an  example,  the  EEC's  trade defid.t with  OPEC  countries will go  from  8  billion Dollars  in 1973  to around  25  to  30  billion in 1974.  Except  for  Germany,  the rate of infla- .. tion is getting very  high  - close  to  15  per  cent  in France  and  more  than . I. - 2-20 per cent'in  It~ly~··.  In Et.1rope  ~'-"l  in the United  States,  the costs of  agricultural production are skyrocketing.  t.Jhile  consumers  in developed countries  are.::cornplainingabout  the  increase in food  prices, millions of people are starving in  many  developing  cou11tries.  We  must recognize  that a  solution  to  these  problems  can only  be  fotind  in a common  effort.  Developed  producing  and  exporting countries must  produce more in order  to face  the problem of  hunger  and  malnutrition in the world  and,  at the  same  time,  they  have  to  help  poor  developing  countries to  increase their own  production.  tve  have  to  bear  in mind,  that relationships  between developed  and  developing  countries are profoundly evolving.  From  now  on  the developing countries will,  and  rightly so, insist on  obtaining fair prices for  raw materials  they produce. 2.  Within  the European Community,  the  Common  Agricultural Policy is an important stabilizh1g factor  by maintaining prices at a  determined acceptable level,  and  by  ensuring security of  supply  to all Member  States. In contrast  to  previous  perlods,  prices within  the Community  for  important food  product!:>  are much  lower  than  in  the so-called world market.  This is particularly true for  cereals  and  sugar.  The  mechanisms  and  the functionning of  the  Common  Agricultural Policy have  contributed signifi-cantly to  price stability from  which  European  consumers  are now  taking real benefits.  Simultaneously,  by  ensuring  European  farmers  a  fair level of  incomes,  the  Common  Agricultural Policy reinforces  the security of  supply.  Nevertheless,  it is true  that  the  Community  also benefits greatly  from  natural advantages,  most  of all from  climatic conditions which  ensure  a  c.ertain amount  of  regularity in crop  levels. ./. 3                                                  'rhe searchfor·a  of  agriculture. - .  .} -- __;-- --cooparatibn in the £ield -__  1.  In any case,  the conditions of  supply  and  the situation on  the world_ market  are presently such  that an  increased cooperation is needed. We  have  tori  quickly overlooked  the possibility of  having  to  face,  even in developed  countries,  severe shortages  for  important  products.  In these circumstances,  it is essential not  to  try  to solve current diffi-culties within  the  confines of  a  national framework,  in a  selfish manner,  transferring problems  onto others.  At  the present  time,  there is a  great risk to  revert  to protectionist  tendencies.  Despite  the fact  that  the Community  had,  for  cereals,  a  carry-over at a  very  low level, it accepted  in the past months  certain export operations  to  smoothen the  functionning  of  the world  market.  Right  now,  following proposals made  by  Mr.  Lardinois,  who  is in charge of  agriculture within the Commission,  the  Community  is discussing  some  measures  to  reduce its own import needs  of  grain in order  to  cooperate with  the United  States administration to  improve  the critical United  States supply situation for  these products.  On  this point,  Secretary  Butz  declared  and  I  quote: "The  Community's  action represents  a  sharing of  the burden  of world  supply fluctuation and  could be  an  important  step  forward  in our world  tra~c relations." 2.  The  Community,  like the United  States,  attaches great value  to  the  coming GATT  multilateral  trade negotiations.  The  Community  is anxious  to  see the  Trade  Bill passed  by  Congress  and  the  United  States negotiator pro-vided with authority  to negotiate.  Sir Christopher  Soames,  who  is in . I. 4                                                 ~  ~ of externalr:elatiot1s within the-commission declared recently: - - - -attempt  to  further  :Ubera).tze trade w·ould  be  one of the most effective ways  to prevent sliding back into protectionism.  II  Nevertheless' a  lot has  been changed  since  the official launching  of  the Multilateral Trade Negotiations  in Tokyo  in September  1973;  it is now  necessary  to give consideration,  for  instance,  to  the question of  regular access  to raw materials and  to measures  related to export restrictions.  In  the field of grains,  the  European Community  is in agreement with  the United States in building-up stocks  and  to accept  the international concertation of  the various national stock policies.  Nevertheless,  like the United States,  the Community  refuses  an  "International reserve system" which is not  compatible with  the responsibilities of  producing  and  exporting countries  such  as  the United States  and  the Community. III.  Nevertheless,  the  Community  favors  negotiation of  a  new  type of  commodity agreements which wculd  provlde a  framework  for  a  dynamic  and  permanent cooperation. 1.  The  European  Community  wants  to  go  further  in the search for  a  greater stability of  the world  agricultural markets.  It is fundamental  to  go beyond  the sterile confrontations  between  those who  support  the  concept of 11f:ree  market"  and  the supporters of  the  concept  of  "markets organizations". The  successive fluctuations  from  surpluses  to deficits,  the disturbing price speculations,  clearly demonstrate  the  limitations of  the  concept of  "free market".  Let's consider,  for  a  moment,  the sugar  case or  the grave discontent  of  the cattle producers  in Europe  or in the United States to  be  even more  convinced.  On  the other hand,  it is difficult to enclose economic  forces  at  play  in a  rigid set of  rules as  the  stronge~supporters . I. 5                                                 :  -- --of· "markets·  organization~'' are  sometimes  tempted  to  do •.  The  European - - '=_  ~  - - - .  . Community  does  notbelieve that  the  building-up  of  stocks  and  the . concertation of  the various national  reserve policies at  the international level will be sufficient in  themselves  to  ensure  the most  needed stabili-zation of  the world  agricultural markets,  even if the above mentioned measures  and  policies already constitute positive components.  Indepen-dently of  a  cooperative approach related  to stocks,  the  European Community is convinced of  the necessity  to deal with price levels and  policies and  to  combine  as  many  significant elements  of agricultural policies as  possible in the  framework  of  commodity  agreements.  The  specific needs of developing  countr~es,  importing  o1·  exporting,  must  constantly be borne in mind  in this approach. 2.  The  Commission  has  already made  some  proposals  to  the Council of Ministers of  the  EEC  for  a  new  type of  commodity  agreement  for  cereals. It is envisaged  by  the  Commission  to  establish a  "target price"  to be negotiated as  an  "indicator" in order  to appreciate  the  importance  and the economic  meaning  of  the Vdriations  of  the effective price transactions on the different markets  for  cereals.  The  magnitude  of  these variations compared  to  the "target I=rict::  indicator"  ~.J"ould,  in certain cases,  trigger a  mechanism  for  th~building-up or  reduction of  the levels of  stocks created at  the national level,  or at  the  community  level in  the  case  of the  EEC.  The  Community  wil- nave  to determine its definite position in accordance  with  the  eta.tE  •reparation of  its partners for  the  forth-coming  negotiations.  Concerning  eAport  restri~tions, it has  already been advocated  in some  circles  that  a  "code  of  good  conduct"  would  be.useful  . . I. .••cioaeof  good  .condut:t1i  'Will certainly be easier to devise into force in the  framework  of  a  couunodity  agreement.  The of  the  tasks  require a  full participation of the international conununity  as  a  whole.  It is no  longer possible for a· country,  and  a  fortiori for  a  po'tverful  country,  like  the  USSR  for instance,  not  to  take its fair share of  obligations and  responsibilities. In conclusion, In a  world more  and  more  interdependent,  there is no  longer  room for exclusive national solutions. The  European Community  and  the United  States are facing  together, politically and  economically,  a  new  emerging  international economic  order. It is a  challenge for both!  But  it can  also be  transformed  into an opportunity for  a  closer and  far-reaching  cooperation. After all,  agriculture,  in the United States as  in the European Community,  is of  great political,  economic  and  social value! 

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