These challenges created an opportunity for Fischer to propose and advocate major reforms. They also informed the content of the proposed reforms. WTO pressures facilitated the consideration of policies that made the CAP less trade distorting. Enlargement allowed for deliberations over policies that would improve the financial sustainability of the CAP in the expanding Union. Concerns related to food safety and perceived public dissatisfaction allowed policies to be considered that increased environmental and animal welfare standards and that improved the equity of existing programs. Though these pressures were critical, the MTR was not launched in response to them. Rather, a provision requiring an MTR had been included in Agenda 2000 at Fischler’s insistence. Fischler had been frustrated by the tepid Agenda 2000 agreement and wanted another chance to enact meaningful reform. The MTR was a concession to Fischler in return for Chirac’s last minute revisions to Agenda 2000 at the 1999 Berlin Summit27. The purpose of the MTR was to assess the status of the implementation of Agenda 2000 and to offer improvements, if necessary . While Fischler hoped that the MTR would be his avenue for more far-reaching reform, he was careful to only refer to it as a review, and not a reform . Most member states assumed that the MTR would be merely a review and that no substantial changes would result. Still, pressure was building to overhaul the CAP, starting with the recently launched Doha Development Round. Fischler wanted to avoid a repeat of the Uruguay Round of GATT negotiations when stalemates in the agricultural sector had caused negotiations to drag out four years longer than planned. European manufacturing and services were angry at agriculture for the difficulties they faced in their negotiations because the structure of the CAP was a major obstacle to reaching a final agreement. Specifically, the EU,square plant containers with its trade-distorting price supports and production-based payments, was at the center of the controversy over how to structure the agricultural component of the GATT.

The European Commission and several member states concluded that entering the WTO negotiations with the CAP in violation of WTO rules once again would weaken the chances that EU representatives would be able to both defend the European Union’s vision for agricultural policy and also extract competitive agreements for services and manufacturing. In the run up to the Doha Round, European manufacturing and services sectors made it clear that they would not allow their bargaining position to be weakened or their interests threatened by European agriculture. These sectors signaled their intention to push aggressively for open markets “regardless of the price paid in terms of additional access to the EU agricultural market, which would presumably have to be borne by their fellow farmers” . In order to gain access to new markets, representatives for manufacturing and services stated their willingness to trade away core components of CAP policy. In addition, the European Commissioners for Trade, Competition, and Industry routinely challenged agriculture’s share of the EU budget and sought to diminish the prominence of the agriculture portfolio. Struggles and delays at the Doha Round caused by agriculture would provide additional ammunition to their efforts to siphon money from agriculture and into their own budgets. Given the clear signals sent by European manufacturing and services, Fischler wanted to enter the Doha Round with the ability to pursue and defend European agricultural interests without the sector being a stumbling block for progress towards Europe’s goals in other domains. The most important and fundamental way to position European agriculture for negotiation success was to ensure that CAP subsidies complied with existing WTO regulations. The WTO used a “subsidy stoplight28” system, containing green, amber, and blue boxes, to evaluate and classify member country subsidies. Permitted subsidies, meaning those that do not distort trade and do not include price supports, are in the green box. Examples of green box programs include decoupled subsidies and rural development supports. The amber box refers to all domestic subsidies that distort production and/or trade. Examples of amber box subsidies are production based subsidies and price supports. As subsidies in the amber box are considered trade and/or production distorting, they are subject to strict limitations, including an agreement to reduce them over time. In developed countries, only 5% of a country’s subsidies can fall into the amber box. Countries that exceed that limit must reduce their subsidies accordingly. The Uruguay Round agreement included a specific commitment by the 30 WTO members whose subsidies exceeded amber box limits to bring those subsidies in line with the 5% rule.

The last category is the blue box, which is also referred to as the “amber box with conditions”. It contains, “any support that would normally be in the amber box [which] also requires farmers to limit production” . It was developed as a way to help states move away from trade and production distorting amber box subsidies without causing too much hardship. Compliance in the agricultural sector was important because it meant that EU could press for market access for goods and services in emerging markets without being told that it first needed to get its agricultural policy in order. Keeping agriculture from hamstringing the pursuit of EU objectives for goods and services was also important for Fischler because it weakened the arguments often used by the EU Commissioners for Trade, Competition, and Industry to call for a reduction in the CAP budget. Speaking about his Doha Round strategy, Fischler noted, “we needed to change the conversation for the WTO. We couldn’t have a Uruguay Round repeat. We needed to be on the offensive. Decoupling was a good start because those types of subsidies [direct income support not linked to production] are already defined as in in the green box” . Fischler’s goal was to have the EU enter the round with its system of payments already in the “green box”. In order to do so, payments would have to be fully decoupled from production. Fischler felt that the EU would be better positioned in the negotiations if it came in with its agricultural subsidies already in compliance with WTO standards, rather than having to play catch up. Fischler was thus able to use the Doha Round to press the member states for more dramatic reform than they might have considered otherwise. Finally, Fischler knew that reform would be easier to pass if it occurred during an already scheduled CAP review, rather than in response to WTO negotiations . If reforms came during WTO negotiations, it would seem as though the CAP was caving into the demands of external actors. Fischler anticipated that the perception that non-EU actors were driving CAP reform would not play well with the public and would make reform even harder . Indeed, MacSharry’s approach to the 1992 reform was driven by this concern, as his reform overlapped with the GATT Uruguay Round. For this reason, MacSharry went to great lengths to present, explain, and justify his reform proposals as responses to internal EU needs and as improvements to CAP functionality rather than concessions to GATT officials, or, even worse, the United States.

Enlargement, like WTO negotiations, was placing pressure on the CAP. The accession of ten new member states,plastic pot manufacturers all poorer and less developed Central and East European countries, posed a serious threat to CAP spending. A CAP that remained coupled would be completely untenable under enlargement, when millions of new farmers would join the CAP. These new member states, where 26% of employment was in farming, were far more agrarian than the EU 15, which employed only 2-3% of the population in agriculture, and agriculture accounted for a much higher share of GDP . According to some estimates, the number of farmers in the EU would increase by 120% and the area of land under agricultural cultivation would increase by 42% after enlargement . The CAP would be responsible for providing income support to these farmers and rural development assistance for all agricultural land. Projections of the financial impact of enlargement suggested that, if the CAP remained unreformed, the budget would need to double. At the time of the MTR, the CAP was already the EU’s single largest program, consuming approximately 40% of the total EU budget. A doubling of CAP spending was political and financially unfeasible. At the time the member states agreed to the Agenda 2000 program, it was thought that the accession countries would not receive direct payments. The prevailing belief was that the new member states had no right to payments that were compensating current CAP farmers for price cuts they had been forced to accept in past reforms. The new member state farmers had not been part of the CAP at the time of these price cuts, and thus had no right to compensatory payments. In 2002, however, the Commission, anticipating that a two-tier CAP would be politically unsustainable, reversed course and decided that the accession states would be allowed to receive direct payments. The new member states would be allowed to access these payments gradually, not reaching payment levels commensurate to the existing EU-15 until 2013. Direct payments were to be phased in starting in 2004 from a base of 25% of the EU level upon accession and increasing by 5% per annum until 2007. Then, in 2008, the EU base payment would increase by 10% annually until 2013 at which point direct payments received by the new member states would be equal to the level of those received by the EU-15 . The graduated plan of access to the CAP bought EU reformers a small window of relief, but did not solve the fundamental problem of reconciling the existing CAP budget with the addition of ten new, largely agrarian, member states. Even though the new member states would not be integrated fully into the CAP payment system until 2013, Fischler needed to adopt change quickly because the new member states would be party to CAP negotiations upon formally joining the EU in 2004. Reform needed to happen before these new member states could enter and block changes that threatened to reduce the amount they received. The MTR was thus the last opportunity for reform before the new member states would be included in CAP negotiations. Enlargement’s threat to the budget gave Fischler a real, time-sensitive justification to push for massive and immediate changes in the operation of the CAP. These financial concerns allowed Fischler to construct a narrative that reform was not only desirable to improve the operation of the CAP, but necessary to save the CAP itself from total collapse. In addition, by arguing that decisions could be taken more easily now than after ten new member states joined the EU, he was able to make reform an immediate priority. Another problem facing the CAP was food safety. Consumer advocates were critical of the CAP in light of recent outbreaks of food-borne illnesses, and the apparent failure of the CAP to do anything to address or control them. Agenda 2000, the most recent CAP reform, did nothing to assuage these concerns, and on top of that inaction, new crises continued to emerge. In 1999, there was a dioxine crisis in Belgium and in 2001 an outbreak of foot and mouth disease in the UK . The UK’s second bovine spongiform encephalopathy crisis broke out in 1998 , concurrent with Agenda 2000 reform discussions. Logically, the BSE crisis in the UK should have compelled reformers to realize that existing environmental, animal welfare, and food safety standards were not sufficient. Making matters worse, new cases of BSE were detected in Belgium, France, Germany, Italy, and Spain. These crises also coincided with increasingly heated debates over the presence of GMOs in food for both human and livestock consumption .All of the member states with confirmed cases of BSE moved to quarantine areas near the infection and culled herds containing cows that tested positive. In France, officials also tripled funding for the study of BSE, ordered a review of slaughterhouse practices, banned the use of animal feed containing meat, and extended an import ban on British beef for a further three years beyond the EU-imposed ban.