When these lines are graced with publication,the Europe of '25' will already have beenborn.

But first, some background. There were fearsexpressed during earlier enlargements, especiallythe very first one in 1973 when Denmark, Ireland and the UK joined, three countries which in 1957 had refused to sign the Treaty of Rome and whichwith other European countries had set up theEuropean Free Trade Association. It was thought the European Economic Community would turn intoa vast free trade area, and at the very worst becomediluted into an Atlantic commercial alliance. But thistransformation not only did not occur but Europe'sareas of responsibility increased as from the mid-eighties, with the arrival of Jacques Delors at thehead of the Commission.

R.G.

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E L O - E u r o p e a n L a n d o w n e r s ’ O r g a n i z a t i o n

May 2004

M O N T H LY■

E Nnr 67Will May 1, 2004 turn out to be a

fundamental stage in the enlargement of the European Union, or just one of thetwists in a winding path which still hasfar to go? Bulgaria, Romania, Croatia,

Macedonia and Turkey are also lining up.Does this risk diluting everything or is itpotentially enriching? Difficult to decide at this stage. The 25 member states have a heavy schedule ahead. Apart from the

need for the newcomers to catch upeconomically and with their legislation,

the Union is facing ambitious policyinnovations in agriculture and the

environment.

Rural businesses are likely to have tocope with ever-lessening Communitypreference, a slump in the budgets

allocated to farming, regionalization ofthe conditions of agricultural production

under the new CAP and growingenvironmental constraints.

It is vital for them to find alternativesources of income from hunting, bird-watching, fishing, rural tourism, thecreation of carbon credits, the use of

new, more efficient agriculturaltechniques and developing crop and

livestock practises better suited to theirland.

Will we succeed in preserving thecommunity spirit which inspired thefounders of the Union? The ELO isworking on it and is contributing to

facilitating enlargement by its initiativesdeveloped with Commission support, to

boost the spread of the acquiscommunautaire and the links these

initiatives create between country peopleacross the entire continent.

Our organization has the unique abilityon the European stage to being together all those living and working on the land:

farmers and foresters, quarry and saltmarsh owners, rural industries, huntersand anglers etc. Our common interests

are greater than our differences, asillustrated by the quality and size of ournetwork throughout the enlarged Union

and the candidate countries.

Thierry de l'ESCAILLE

Impressions ofan agriculturalEurope of '25' in the aftermath

ofenlargementBy Maître Michel-Jean Jacquot and Maître Katia Merten-Lentz

Editorial

© E

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ELO_67 engels 17-05-2004 13:34 Pagina 1

In 1981 Greece, then Spain andPortugal in 1986 and Austria,Finland and Sweden ten years laterjoined a Europe which has remainedvery much a community.

The change of acronym after theTreaty of Maastricht was signed on7 February 1992 - the EuropeanEconomic Community became theEuropean Union - was perhaps notthe best idea. We as lawyers instinc-tively want to append the adjectivefree to the word union, because thekeen Political Science students thatwe once were recall too readily theephemeral Union Française and thesordid Union of Soviet SocialistRepublics.

Will the European Union of '25'continue to exist as a community,even if it is simply the sum of manyparts, which perhaps would not besuch a bad thing after all, or will itbecome the other sort of union , 'thatsad object,' as Michelet wrote, 'forstrange though it may sound a union,once united, often loses its way.'

Such is the challenge of this newenlargement. Will the Europe of '25'remain ultimately a 'CommunityEurope', as it has been for forty-fouryears, or will it be transformed -sooner or later- into a hotchpotch ofdifferent countries, with no commongoals for the future and a minimumnumber of common policies?

What might the future of theCommon Agricultural Policy be, solong considered the cement of the

European edifice and at the sametime the exclusive stage for 'familysquabbles' or marathon soap-ope-ras lasting through the night, until aconsensus finally emerges?

The CAP has had a few more orless successful facelifts to hide itswrinkles which were rapidly beco-ming jowls and crevasses, but todayit has acquired a completely newface, the main traits of which wereoutlined in 1992 and endorsed atthe Berlin Summit in 1999.

Sicco Mansholt, the Father ofGreen Europe, would probably failto recognize his own baby in theCAP adopted by the Ministers ofAgriculture in June 2003 inLuxembourg.It is true some of the mechanismsset up in 1962 remain, like interven-tion or export refunds (although thedays of the latter are numbered too),but import levies died a death in theUruguay Round in 1994.

Even the three great principlesunderlying the CAP - financial soli-darity, common prices and Com-munity preference - have been ero-ded or curtailed. Co-funding and thecoming renationalization of agricul-tural spending have become thenew gospel. Common prices arenow just triggers for certain tools ofthe Common Market Organizations.The Community market has beensacrificed on the altar of the WTOand a victim of the frantic rush tosign up to association agreements,partnership agreements or tradeagreements (1). It has itself becomethe favourite outlet (because it payscash on the nail) for the farm andagri-food produce of the entireworld. Europe is the world's biggestimporter of agricultural products, far,far ahead of the USA, Japan, Chinaand India. And still the NorthAmerican press and the govern-ments of the 'New World' denounce'fortress Europe'.

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C O N T E N T S

Impressions of anagricultural Europe of '25' in the aftermath of enlargement 1

The Natura 2000 networkin Estonia: the fears of private landowners 4

Evolution and trends ofland prices in France(2004) : forests andresidential countryproperties 6

Comparative ForestryPolicy in the south ofEurope.Legal, fiscal andeconomic study :Portugal - Spain - France 8

Diary dates 8

CountrySideis a publication of ELO inEnglish, French, German,

Italian and Spanish.

Publisher :Thierry de l’ESCAILLE

Chief editor :Ronan GIRARD

Rue de Trèves, 67B - 1040 Bruxelles

Tel. : 00 32 (0)2 234 30 00Fax : 00 32 (0)2 234 30 09

countryside@elo.org

Internet Site :www.elo.org

5 Euros

EN

(1) And it is Europe which accuses the US of promoting bilateralism to the detriment of multi-latera-lism.

ELO_67 engels 17-05-2004 13:35 Pagina 2

New expressions and newly coi-ned words have emerged to describethe new mechanisms created withthe new CAP, such as single pay-ment per farm, or single area pay-ment (which used to be compensa-tory aid and then direct aid), modula-tion and eco-conditionality. TheCommission has also brought forthdecoupling, though the birth waspremature and the product of a loveaffair with the WTO which has not yetindicated if decoupled aid will beexempt from 'green box' reductions.It only needs to say the word anddecoupling might turn out to be ille-gitimate, something the member sta-tes have tried to achieve themselvesby considering it could be both 'glo-bal' and 'partial' and 'staggered' overtime as well as 'regionalized', accor-ding to circumstances or geographyand the mood of the decision-makers.

Basically the new CAP is agricul-tural policy à la carte.

What difficulties could the newmember states face in the future withthe 2003 CAP?

It probably won't be easy forPoland, Hungary and Slovakia forinstance to quickly get the hang of allthe tricks required to make the bestuse of all the mechanisms - old andnew - in each of the CMOs, and tofind outlets on this market of 455million European consumers. Lear-ning how to work the CAP takes timeand experience.

It will be especially hard for thenew member states because theenlargement negotiations were toughas regards fixing rights to produce(quotas, reference quantities, historicfarmland, headage numbers), leavinglittle room for manoeuvre to boostproductivity, and consequently in-crease production.

Add to this the demanding cons-traints in the area of the environment,hygiene, health, marketing, labelingand animal welfare standards.

The Eastern European countrieshave just been through the painfulexperience of adjusting to theserequirements, exactly fifteen daysbefore their entry into the EuropeanUnion, and last April 15 the StandingFood Chain Committee (representingthe experts of the '15' in Brussels)adopted the list of agri-food esta-blishments in the new member sta-tes which will benefit from transitio-nal periods of a maximum of 3 years,to complete their adjustment toCommunity standards. But in themeantime the products of 1006 busi-nesses will not be allowed onto theCommunity market (they will on localmarkets but only if they bear a spe-cial label).

A lot of EU money has been ear-marked for these new member statesfrom the structural funds and theEAGGF. But the discipline surroun-ding its use is extremely rigorous.The Commission will be forced bythe traditional members states, theEuropean Court of Auditors and theEuropean Parliament's budget con-trol committee (COCOCU) to step upthe number of inspections and torecover any spending made withoutrespecting the proper checks orrules. The recent example of theCommission's decisions on EAGGFaccount clearance, with severe sanc-tions imposed on historically expe-rienced countries like France andGermany, illustrates that such use ofCommunity funds will be closelymonitored in the new member states.

In our view farmers and the agri-industrial community in all the newmember states will slot easily into thedominant trend of the Community'sagricultural policy of the last tenyears - to produce healthy risk-freefood effectively, while respecting theenvironment.

They can and must seize this op-portunity.

■ Maître Michel-Jean JACQUOT Maître Katia MERTEN-LENTZ Cabinet Gide Loyrette Nouel

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Michel-Jean JACQUOT

Short biography

Michel-Jean Jacquothas a doctorate in law(Institut des Sciences

Politiques) and becamea civil servant workingfor the EU Directorate

General for Agriculture,following 10 yearsspent in the Frenchministry of finance.

He was in charge of theagricultural trade nego-

tiations in GATT, theOECD, FAO and the UN

conferences establis-hing international

agreements (cereals,milk, beef, sugar, cocoaand oil seeds). He was

the director of theEAGGF from the end of

1987 to the end of1997, and also worked

for J.Delors - thenPresident of the

Commission - on mat-ters such as agriculture,

the environment,transport, the budgetand the enlargement

negotiations for Spainand Portugal. Since the

end of 1997 he hasbeen a lawyer with GideLoyrette Nouel. His col-

league and brilliantlawyer Katia Merten-

Lentz joined him in 2003.

ELO_67 engels 17-05-2004 13:35 Pagina 3

In order to comply with theseEuropean measures, on accessionday Estonia submitted a list ofNatura 2000 zones including andextending the areas already protec-ted by the country's environmentalpolicy. Experts from the Estonianenvironment ministry began studiesin 2001 which led to some 400zones being proposed, making up16% of Estonian territory, comparedto 12% before.

The "Habitats" (92/43) and'Birds' (79/409) directives on whichthe Natura 2000 network is basedare intended to preserve the existingenvironmental heritage betweennow and 2010. This is a difficult goalto attain for certain acceding stateswho have only just reintroduced pri-vate ownership, and whose econo-mic performance needs boosting.Estonia is without doubt one of thenew members whose economy isone of the most efficient, with a well-trained population and good qualityinfrastructure. However the balanceis a fragile one, in particular in therural areas where it is vital to main-tain economic activity in order toavoid massive migration to the city.Introducing Natura 2000 must notpenalize existing activities, which arecurrently adjusting to the Union'sstandards, in particular agriculture.The network cannot afford to standin the way of new activities either

(rural tourism, hunting, fishing)based on private initiative and whichcontribute to keeping people on theland.

The environment Minister, VilluREILJAN, has undertaken to ensurethat the areas are designated on acase by case basis and that the rea-sons for designation are passedonto the private landowners. Whenan area is designated a Natura 2000zone, management constraints arisewhich can affect the profitability offorests and farms. These constraintsvary from one country to another,and sometimes jeopardize humanactivity and therefore the economicand social health of the regionsconcerned.For Volli SAI, owner of a dolomitequarry on the island of Saaremaa,the discovery of a species of endan-gered plant was a complete surpri-se. He told the weekly journal'Maaleht' that he had never spottedany biologists studying the flora onhis property and that he had neverallowed any study to be carried out.However, it turned out that the'endangered' species was in factvery common all over the island andin the end his property was notincluded in the Natura 2000 net-work.This type of procedure calls to mindthe disastrous designations inFrance and Belgium where, despite

the fact the Commission was infavour of informing the partiesconcerned, the administration em-barked upon the designation pro-cess without consulting the landow-ners. So although the aims of Natura2000 are laudable, the proceduresapplied by the national administra-tions are sometimes improper andthis does not help those who liveand work in the countryside tounderstand them.

Villu REILJAN highlights the factthat the restrictions imposed on pro-perty rights are based on the consti-tution - "It must be understood thatpublic interests sometimes prevailover private ones". However herecognizes the fact that the intro-duction of the Natura 2000 networkwas not without its difficulties in theother countries of the Union. The Estonian implementing bill forthe "Habitats' and 'Birds' directivesproposes an original solution - theexchange of a designated zone forone of equal value, lying outside theNatura 2000 network. 10% of the7000 Estonian landowners havecontacted the ministry for moreinformation.However, putting such a measureinto practise does seem rather diffi-cult. The idea of setting a value for apiece of land does not just involveeconomic arguments but also thedegree of attachment of the landowner

EN

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The Natura 2000 network in Estonia: the fears of private landowners

Last May 1st ten new members joined the European Union, including Estonia. Setting up the Natura2000 network created by DG Environment to protect fauna and flora is one of the measuresapplicable without a transitional period.

ELO_67 engels 17-05-2004 13:35 Pagina 4

to land only recently recovered andwhich belonged to the family beforeit was plundered by the commu-nists. Moreover, any zone designa-ted Natura 2000 could be conside-red devalued because of the cons-traints involved in environmentalprotection. What kind of value couldbe placed on the land? One cor-responding to the pre-designationlevel or the value once it is part ofthe network?

Who will ensure the conservationand maintenance of the zone remai-ning within the Natura 2000 net-work? The state? If so, this is to sug-gest that private landowners areincapable of sustainably managingthe land they are responsible for.This position is difficult to acceptwhen the Commission is trying to dothe opposite and bring all partiesconcerned into Natura 2000, in par-ticular the landowners who ownmost of European territory.What funds would pay for these'abandoned' areas? Taxpayers' mo-

ney? Or European Union money,which is indirectly taxpayers' moneytoo?

The Natura 2000 network willcertainly allow Estonia to boost itsimage as an environmentally friendlycountry which, according to VilluREILJAN, has not lost a single spe-cies from its ecosystem for half acentury while 60,000 species aredisappearing from the globe every

year. At the same time he plans toincrease spending allocated tomanaging protected zones by700,000 euros per year.Its environmental heritage is withoutdoubt a plus for Estonia. It must beseen as an opportunity - not an obs-tacle - to the development of thecountryside.

■ Ronan GIRARD

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ELO_67 engels 17-05-2004 13:35 Pagina 5

Coniferous woodThe national production of coni-

ferous wood is insufficient: it onlycovers 80% of sawmill consumptionand another 10 million cubic metresare needed to fill the gap.

Enormous concentrations can beobserved in the very dynamic coni-ferous wood-sawing industry, where theworld's leading player - American -could absorb the entire French produc-tion single-handed! The leading groupsare setting up in force in Central andEastern Europe, as well as in the tro-pics. By 2010, the rise in consumptionshould be around 0.9% per year.

The Douglas Fir is irregularlysought after. Large diameters fetchEuros 40 to Euros 55/m3: this is anacceptable price, but better hasbeen seen.

Spruce sold at fair prices: Euros20 to Euros 35/m3 for woodworkquality.

Although the Maritime Pineindustry is going through a difficultphase in Aquitaine, foresters aremanaging to sell for Euros 35/m3

(sold standing).

Deciduous woodGood-quality Oak is once again a

growth market at Euros 200/m3. Onthe specific merrain or shook (woodfor barrels) market, demand isdwindling but the scarcity of supplyis buoying up prices: the best bat-ches sell for Euros 240/m3.

Ash is picking up, at around Euros80/m3. Standard-quality Beech, on theother hand, has peaked at Euros44/m3, which is hardly outstanding.

Poplar is selling well and com-monly reaches Euros 40/m3, or evenEuros 56/m3 for well-pruned wood ofgood dimensions.

Exporters of American deciduouswood could upset the market. Theyhave effectively got their eyes onEurope, where potential now ex-ceeds that of Canada - their traditio-nal customer - and represents twicethat of China.

Forest land pricesAfter rising steadily since 1995,

the average price for forests tendedto mark time in 2002. Over the last 5years, the average price has in-creased by 37% in current valueterms (by 28% in constant euros)but this rise is attributable to forestland with real estate where the realestate accounts for a large part.

As regards forest land withoutreal estate, this remains at the verymoderate average price of Euros3600/ha.

This situation is changing as theopening up of the market becomesmore apparent; 100 000 hectares

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Evolution and trends of land prices in France(2004) :forests and residential country propertiesThe timber market is recovering well, after the disruption of the

December 1999 storms. Autumn sales, a traditional barometer in theprofession, improved by 20% compared to 2002. The building industry,

forestry's number one customer, generates demand mainly in renovation andmaintenance. In the furniture trade, strength is reflected by the doubling ofworldwide exports in 8 years and by a change in the leading manufacturer:China has supplanted Italy. Behind the two leaders, the most dynamicchallengers are Poland, Romania, Malaysia and Chile.

ELO_67 engels 17-05-2004 13:35 Pagina 6

changed hands in 2002 and largeforests sold for more than the ave-rage price: 1.2% of sales (120transactions) represented 18% ofthe total value (Euros 100 million)and 34% of the surface area sold(34 100 hectares). As an asset,forests offer stability and an excep-tional tax status, with regard toinheritance and wealth tax, andthus attract wealthy investors.

It should be borne in mind thatpurchases of forest land remainexempted from registration dutiesuntil the end of 2004. This tax gift -representing 4.89% of the purchaseprice - is both little known andattractive: precisely what forestersappreciate.

FarmlandThe rise in agricultural land pri-

ces continued to rise in 2002: +2%in constant euros to reach Euros 3 533/ha on average (crop-growingland: Euros 3860/ha; pastures:Euros 2750/ha).

It should be noted that an ever-growing non-professional demandis boosting prices near towns andcities, as well as in tourist and bor-der areas.

Residential country propertiesUnlike in 1990, this bubble is not

the result of professional specula-tion, but of much higher demand onthe part of individuals than can besatisfied by the supply.

Such demand has been favou-red by low interest rates, a mislea-ding effect on prices (due to buyersusing urban market prices as theirreference) and by a phenomenon ofcollective impulse, with each per-son anticipating an increase that heconsiders inevitable.

At the end of 2003, the solvabili-ty of purchasers seems to have rea-ched its ceiling: the rate of transac-tions has suddenly dipped.

Selectivity becomes more mar-ked on the best deals and demandpresents no surprises: the Ile-de-France, Provence and Mediter-ranean coastal regions remain themost sought after. Then come theprincipal river valleys, followed bycoastal and border regions. A beau-tiful country house fetches aroundEuros 1 million and a château bet-ween Euros 1.5 and Euros 2 million,whilst proximity to the coast mayboost the price.

Forest land with real estate, soldfor an average price of Euros14000/ha in 2002. Purchasers there-fore accept a high premium which,added to the total amount paid forland and houses, leave "traditional"foresters open-mouthed.

Hunting grounds, despite theirupkeep costs, still retain a limitedbut keen clientele, often of interna-tional origin. In Sologne, high pricesare slowing transactions. To givesome idea: one hectare of goodhunting ground - often of little agro-nomical value - can change handsfor around Euros 5 000 - Euros6 000, to which, of course, must beadded the cost of a desirable half-timbered residence with exposedwooden beams and lattice win-dows.

Whether in the wine-growing,forestry, agricultural or country resi-dence spheres, increasing mobilityin the economic environment, toge-ther with the clientele's internatio-nalization, are creating much morereactive and open markets thanbefore.

This must encourage investorsto call increasingly upon the servi-ces of trustworthy professionals toback up their investment: opportu-nities to be seized exist and willalways exist in all the sectors but,henceforth, choosing such oppor-tunities requires a much more refi-ned analysis in order to ensure theright choice is made.

■ Olivier de la SELLEAgri France

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Coordination: François de RADIGUÈStel: +352 021 190 345

ELO_67 engels 17-05-2004 13:36 Pagina 7

Encouraged by the Union ofForesters of the South of Europe(USSE) with the aid of the EuropeanCommission, economists, lawyersand engineers drew up commonguidelines for running forests in thethree countries.

One of the main obstacles to effi-cient management is the division ofland into administrative units. Toquote Professor MARTRES, "the aimof this study is less to highlight diffe-rences which are easily explained byhistory, than to seek the necessaryincentives to overcome them."

This compilation successivelydetails the economic challenges ofwoodland, forestry policies andlegislation, tax regimes and thepublic funding for which woodland iseligible. Although the introduction tothe comparative analysis and thehistorical background to forestrypolicy are chapters accessible to all,this is first and foremost a book forprofessionals and political decision-makers. It is dense, making use offigures (see annex 1, chapter 1

containing a series of statisticsdrawn up by the USSE) and drawsupon a solid knowledge of applica-ble legislation, in particular tax lawsince it includes a comparativestudy of tax regimes. Finally it looksahead at some avenues of thoughtfor the future.

There seems no doubt that theForesters of the South of Europewant to take their future into theirown hands - this book proves it.

■ Ronan GIRARD

Available on ssso@alienor.fr(postage payable on purchase)

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Comparative Forestry Policy in the south of Europe. Legal, fiscal and economic study : Portugal - Spain - FranceLed by Professor Jean-Louis MARTRES, Bordeaux University IV

As part of the process of building Europe and in order to be able to respond to the demands ofglobal competition, those involved in forestry and the forest industry in Spain, France andPortugal felt the need to contribute to rationalizing the management of woodland covering

some 10 million hectares.

Diary dates 200420-23 May, Cork, IrelandGeneral Assembly Friends of the Countryside

27-28 MayStansted - UKSeries of ELO lectures: TwinningUK - Malta - Czech Republic.Exchange and debate on theconcept of private property andinvesting in land.

7 June, LisbonSeries of ELO lectures: TwinningPortugal - Romania. Workingparty on development.

16 June, HelsinkiSeries of ELO lectures: Twinning Finland- Estonia.

18-19 June, CopenhagenSeries of ELO lectures: TwinningDenmark - Lithuania - Latvia.

25 June, BerlinSeries of ELO lectures: TwinningGermany - Slovenia - Lithuania.Lecture on "The agricultural and forestry situation in Sloveniaand Lithuania and investmentopportunities".

8 July, DublinSeries of ELO lectures: TwinningIreland - Lithuania. Meetings andworking groups focusing ondeveloping rural tourism.

14 SeptemberSeries of ELO lectures: TwinningSweden - Poland - Romania

To consult the 2004 diary on theseries of lectures organized byELO and its members with thehelp of the European Commission, visit the website www.elo.org/cs .

Syngenta International AGBrussels Office

Avenue Louise, 240B - 1050 Brussels

Tel : +32.2.642 2727Fax : +32.2.642 2720

ELO_67 engels 17-05-2004 13:36 Pagina 8