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The five main objectives of the EU’s Common Agricultural
Policy are increased agricultural productivity; a fair standard
of living for the farming community; stable markets; guaranteed
security of supplies; and an assurance of reasonable prices to consumers.
Annex II goods - The products covered
by the CAP are described in Article 38 of the Treaty of Rome as "products
of the soil, of stock farming and of fisheries and products of first
stage processing directly related to these products". These
are called the basic products and they are specified in Annex II
of the Treaty as extended by EEC Regulation 827/68.
Non-Annex II goods - A system of trade
has been established for specified goods derived from certain of
these basic products. They are generally called non-Annex II goods.
Examples are: sugar confectionery; chocolate; malt extract, preparations
of flour; macaroni, spaghetti and similar products; tapioca and
sago; prepared foods, obtained by the swelling or roasting of cereals
or cereal products; bread; communion wafers; pastry, biscuits, cakes;
sauces; mixed condiments and seasonings; soups and broths; yeast;
lemonade and other non-alcoholic beverages, not including fruit
and vegetable juices; pharmaceutical products; artificial resins
and plastic materials; and certain paper and paper board.
CAP Law - The working of the CAP is governed
by EU Regulations made by the Council of Ministers or by the Commission,
acting under powers derived from that Council. The regulations are
legally binding on EU Member States and are directly applicable
in the same way as national laws. They have legal validity in the
UK by virtue of the European Communities Act 1972. In each market
sector, e.g. cereals, there is a basic regulation which establishes
a common market organisation. Subsidiary regulations lay down the
rules for each element of the market organisation, such as the fixing
of the rates of levies or refunds.
Adjustments to take account of world
prices - The CAP provides for a system of common prices within the
EU with market support to secure supplies. Its purpose is to ensure
that the EU is protected from world price fluctuations and that
the level of prices for agricultural products within the EU provides
a reasonable return for EU producers. When world market prices are
lower than those of the EU, a charge called a "levy" brings
the price of imported produce from non-EU prices up to the level
of EU prices. This is to prevent low-priced imports undercutting
EU produce. Other charges, such as countervailing charges, variable
charges may also be imposed. Export refunds may be paid to EU-based
exporters of agricultural products to enable them to reduce prices
and maintain their competitive position on the world market. However,
when world prices are significantly higher than those of the EU,
or when EU supplies of a particular product are inadequate, export
levies may be imposed to deter the flow of such products out of
the EU.
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