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On 26/10/2020, the World Trade Organization (WTO) formally authorised the EU to take countermeasures against the United States. The EU can now increase its duties on U.S. exports worth up to $4 billion as part of retaliatory measures in response to illegal subsidies granted to the US manufacturer Boeing. The European Commission is working to reach an agreement with the United States without having to impose tariffs. Further action will depend on the outcome of the US presidential election (03-04 / 11/2020), in which current President Donald Trump is running for US presidency, backing the imposition of tariffs on EU imports (including agri-food) in the Airbus v. Boeing dispute, and Democrat Joe Biden.
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The European Parliament adopted an opinion on the capping of direct payments and on the application of the definition of a real farmer.

Capping: Parliament supported the basic setting of capping according to the European Commission's 2018 proposal, i.e. the progressive degressivity of direct payments in tranches (25% reduction for amounts between €60,000 and €75,000, 50% reduction for amounts between €75,000 - €90,000, 75% for amounts ranging from €90,000 - €100,000, and full capping over €100,000). Unlike the Commission, Parliament only supported the voluntary deduction of actual labour costs from the capping, up to a maximum of 50%. According to the European Parliament, capping should not apply to eco-schemes and aid for young farmers but coupled support should be capped. Parliament also approved a proposal for the European Commission to collect information on all subsidies received from the first and second pillars of the CAP and to aggregate the total amount received by a natural person either directly through direct payments or indirectly as the beneficial owner of legal entities receiving CAP payments. Under this proposal, the Commission should monitor and suspend in real time payments more than a total of €500,000 in the first pillar for direct payments and €1,000,000 for investments under the second pillar.

Definition of a real farmer: Parliament supported the mandatory application of the definition of a real farmer, ensuring that only natural or legal persons or groups of natural or legal persons carrying out at least a minimum level of agricultural activity and providing public goods are in line with the objectives of the CAP Strategic Plan, farmers with other activities are not excluded from support. Those who operate airports, railway services, waterworks, real estate services, permanent sports and recreational grounds should be automatically excluded. In addition, Member States may voluntarily decide to exclude from this definition individuals or companies carrying out large-scale processing of agricultural products, except for groups of farmers involved in such processing. When setting the definition, Member States should apply, on the basis of objective and non-discriminatory criteria, one or more elements such as income tests, farm contributions, subject of business, minimum criteria for agricultural activity, relevant experience, training or skills or registration of their agricultural activity. national registers and should set an amount of direct payments not exceeding €5 000, in which case farmers who carry out at least a minimum level of agricultural activity and provide public goods shall in any case be considered as active farmers.

The opinion on the Strategic Plans for the CAP was adopted in the final vote of the EP plenary on 23/10/2020 by 425 votes to 212, with the EP now having a mandate to negotiate the CAP in trialogues. The trialogues will start in the week after 09/11/2020.

Last week, the European Parliament voted on the opinion on the CAP 2020+. In its opinion, Parliament supported, inter alia, the following elements of the new CAP:

Non-productive elements: Biodiversity loss in the EU needs to be reflected in cross-compliance and eco-schemes; in order to halt biodiversity loss, Member States should ensure in their CAP Strategic Plans that at least 10% of the area is set aside for biodiversity-friendly landscape features.

Good agricultural and environmental condition: Farmers engaged in organic farming are considered to comply with the rules of GAEC 8; for farmers participating in eco-schemes that comply with rules of GAEC 1, 8, 9, and 10, these farmers are also considered to comply with these GAEC.

Advisory services: Member States should set aside at least 30% of resources for advisory services on climate change mitigation advice, adaptation, sustainable energy, efficient management of natural resources, efficient management of biodiversity, and protection of biodiversity for strengthening ecosystem services. According to the compromise proposal, the advisory system was also to cover the technique of optimizing the economic results of production systems, improving competitiveness and market orientation.

Eco-schemes: Parliament has supported the extension of eco-schemes to include animal welfare rules. Parliament states that Member States will offer a wide range of eco-schemes to ensure the participation of farmers and to reward different levels of ambition. Member States will develop different schemes to provide co-benefits, promote synergies and emphasize an integrated approach. Member States shall establish scoring or evaluation systems to promote coherence and effective remuneration. Support for eco-schemes should take the form of an annual payment per eligible hectare or an agricultural holding and will be provided as an incentive payment in addition to compensation for additional costs incurred and income foregone, which may take the form of a lump sum. Agricultural practices must cover at least two of the areas on offer, such as climate change activities, including reducing greenhouse gas emissions from agriculture and maintaining or enhancing carbon sequestration; protecting and improving water quality in agricultural areas and reducing pressure on water resources; activities to reduce soil erosion; protection of biological diversity, conservation or restoration of habitats and species, protection of pollinators and care of landscape features; sustainable and less use of pesticides; allocation of areas for non-productive elements or areas free of pesticides and fertilizers; or strengthening animal welfare and tackling antimicrobial resistance. Member States, in cooperation with national, regional, and local stakeholders, shall establish national lists of procedures eligible for eco-schemes.

Financial allocation for the next CAP: 35% of the budget for the second pillar should be allocated to agri-environmental measures, with 40% of ANC payments being eligible. At least 60% of the first pillar budget may be allocated by Member States together to basic income support for sustainability, to VCS payments, to redistributive payments, and to certain sectoral measures. At least 6% of the budget for the first pillar should be allocated to redistributive payments. 30% of the budget for the first pillar should be allocated for eco-schemes, and up to 10 + 2% for VCS payments.

Monitoring climate developments: The Commission should develop a science-based and internationally recognized common methodology for more accurate monitoring of spending on climate and environmental objectives, including biodiversity, and evaluate the estimated benefits of different types of interventions. As part of the compromise, the original wording was removed, stating the allocation of expenditure targets differentiated according to whether the support contributes significantly or slightly to meeting the climate change objectives. Prior to the deletion, the weights were set as follows: 40% for expenditure on basic income support for sustainability and supplementary income support; 100% in the case of expenditure on eco-schemes; 100% in the case of ANC expenditure; 40% in the case of expenditure related to natural or other area-specific restrictions under Article 66 (ANC).

Transfers between pillars: Parliament proposes to allow transfers from the first to the second pillar up to 12%, and up to 5% from the second to the first pillar. Member States whose payments per hectare are below the EU average may move up to 12% from the second to the first pillar. Member States should communicate their decisions to the Commission by 31 December 2021.

Review of CAP Strategic Plans: Member States should review their strategic plans by 31/12/2025 to ensure that they comply with applicable Union climate and environmental legislation and submit requests to the Commission to amend their strategic plans accordingly.

Mid-term review:The Commission will review the CAP by 30/06/2025 and submit a report to the European Parliament and the Council to evaluate the functioning of the new implementation model by Member States, adjusting the coefficients for climate monitoring according to the new methodology.

Investments: In order for investment operations to be eligible for support from the EAFRD, according to the current EP opinion, they must be preceded by an expected environmental impact assessment in accordance with the law applicable to this type of investment, if the investment is likely to have negative environmental effects. Member States shall allocate at least 30% of the investment aid to investments for environmental and climate related purposes. Ineligible investments should now include the purchase of animals other than animals used instead of machinery to protect the landscape or to protect herds from predators; the purchase of annual plants and their planting for purposes other than the restoration of agricultural or forestry potential following natural disasters and catastrophic events; or investments in bioenergy production that do not comply with the sustainability criteria set out in the Renewable Energy Directive. The maximum level of support can be increased for investments in afforestation, introduction of agroforestry systems, protection of herds against predator attacks, or animal welfare investments.

Annexes - GAEC: within GAEC 4, Parliament proposed a condition for the establishment of buffer strips along watercourses with a minimum width of 3 m, where pesticides and fertilizers cannot be used; under GAEC 8, arable crop rotation, including legumes, other than crops grown in water; within GAEC 9, a minimum share of 5% of non-productive elements and areas on arable land where pesticides and fertilizers are not used; within GAEC 10, a ban on the conversion or plowing of permanent grassland in Natura 2000 sites.

The opinion on the Strategic Plans for the CAP was adopted in the final vote of the EP plenary on 23/10/2020 by 425 votes to 212, with the EP now having a mandate to negotiate the CAP in trialogues. The trialogues will start in the week after 09/11/2020.
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The European Parliament has adopted an opinion on Horizontal issues. Among the proposals adopted were proposals numbered 215 and 216, which provide for the collection of information by Member States on ownership structures and conflicts of interest (according to this proposal, beneficiaries should indicate the identity of their parent undertaking or undertakings if necessary); and enhancing transparency in the distribution of agricultural land in order to facilitate the monitoring of land take and concentration by public authorities and to ensure greater accountability and transparency with regard to EAFRD and EAGF support. Article 226 was also approved, which states that if shortcomings in a Member State are identified in the examination and handling of complaints, the Commission will set up a complaints mechanism whereby beneficiaries of unfair treatment can lodge a complaint directly with the Commission. The opinion on Horizontal issues was adopted in the final vote of the EP plenary on 23/10/2020 by 434 votes to 185, with the EP now having a mandate to negotiate the CAP in trialogues. The trialogues will start in the week after 09/11/2020.
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The European Parliament voted in plenary on 23/10/2020 on the EP opinion on the Common Market Organization (CMO), one part of the CAP reform package. In the vote on the CMO, MEPs rejected all amendments governing the labelling of plant-based alternatives to meat and meat products with the same names traditionally used for meat and meat products (steak, burger, sausage, etc.). This means that the EP in its opinion proposes that the labelling of plant-based alternatives to meat and meat products should not be addressed in the CMO Regulation, i.e. at EU level. However, in the case of milk and milk products, Parliament took a different view: according to the EP, plant-based alternatives to milk and milk products should not bear the same label as milk and milk products (yoghurt, cheese, milk), and the labelling of these products should be addressed CMO Regulation at EU level. The opinion on the CMO was adopted in the final vote of the EP plenary on 23/10/2020 by 463 votes to 133, with the EP now having a mandate to negotiate the CAP in trialogues. The trialogues will start in the week after 09/11/2020.
More information is available here and here.