PDF file: Annual Report 2002/2003 - Scottish Crop Research Institute

Director’s Report
US subsidies from legal challenges but was due to
expire at the end of 2003, leaving open the possibility
of disputes requiring resolution by the WTO panels.
Agenda 2000 is scheduled to increase the cost of the
CAP by a billion euros in the lead in up to integration
of the accession countries into the EU, eventually stabilising
by the end of 2006. Negotiations on the
Mid-Term Review of the CAP during 2002 and 2003
were directed towards further reducing the impact of
the CAP on market-unrelated production.
Continual transformation of the EU was predicated
by the signing of the Maastricht, Amsterdam, and
Nice Treaties, leading to a prolonged series of institutional,
social, and economic reforms. Economic and
monetary union (EMU) was set in train by the
Maastricht Treaty, as well as such matters as the
defence role of the Western European Union, cooperation
on home and justice affairs, increased powers
for the European Parliament, a common
citizenship, qualified majority voting in the Council
of Ministers in some areas, the principle of subsidiarity
(largely ignored), and extension of centralised competency
into consumer affairs, health, education,
training, as well as environmental and industrial policies.
By 2003, Belgium, France, Germany, and
Luxembourg had failed to implement more than 200
European Directives into national law. Besides
extending the scope of qualified majority voting, the
Amsterdam Treaty was noted for the formal commitment
to human rights. The Treaty of Nice also
extended the scope of qualified majority voting, but
was especially noted for its facilitation of the eventual
accommodation of up to 13 new members of the EU.
Interestingly, only the Republic of Ireland permitted
its population to vote in a referendum on the Treaty;
54% of voters rejected it. As 12 EU countries constituting
the euro-zone rapidly and smoothly accommodated
to the introduction of the common currency
introduced at the beginning of 2002, European integrationists
pressed ahead with modifying the EU institutions
and decision-making processes to ensure the
EU could function with a greatly enlarged membership.
Modelled on the 1787 Constitutional
Convention of the USA and arising from the Laeken
Summit in December 2001, the Convention on the
Future of Europe was launched at the end of February
2002 under the chairmanship of V. Giscard d’Estaing,
with the intention of reporting by the summer of
2003. In essence, the final report was optimistically
conceived as delivering a consensus view as on the relative
rôles of the European Commission, the
European Parliament, and the European Court of
Justice, with an intent to convert the EU into a
‘superpower’ with a federal military force, police, and
currency, in addition to the steady accretion of central
powers. Throughout the period of preparing the
report and subsequent governmental discussions, there
was a fundamental divide between the eurosceptics
who wished to sustain individualistic nation states,
and the integrationists that favour uniformity.
Economic frailty prevailed in the euro-zone, despite
the administratively successful introduction of a common
currency, and the political desire to create a common
European identity and transparent pricing
throughout the euro-zone countries. Failure to rectify
the economic structural deficiencies and differences
within the zone, reduced earnings of US affiliate companies,
and growing budget deficits in France,
Germany, Italy, and Portugal did not fully compensate
for the beneficial effects of favourable exchange
rates on export earnings. In 2003, France followed
Germany, Italy, and The Netherlands into recession.
The Stability and Growth Pact limiting budget
deficits to a maximum of 3% came under political reinterpretation
from France and a recession-hit
Germany. As a result of inflexible labour markets
with high social taxes, unemployment rose to 8.3% in
2002, with unemployment of the under-25s at
16.4%. Employment continued to decline in agriculture
and manufacturing industry but rose in the construction
industries.
UK Economic growth in the UK exceeded that of its
European G-7 partners, and was heading for a record
thirteenth consecutive year of economic growth.
Agricultural output was mixed as cheap imports competed
with home-grown products on the supermarket
shelves; a recovery in livestock was noted post the
foot-and-mouth disease crisis. Consumer confidence
was sustained despite the fall in equity valuations and
reduced earnings. A combination of particularly low
interest rates and extraordinary annual rises in house
prices mainly in the south-east of England,
Edinburgh, and Cardiff, led to unprecedented levels
of household debt. By mid-2003, household debt in
the UK reached £906 billion, secured lending £737
billion, credit-card debt totalled 7% of income, and
unsecured debt grew at 15% per annum. At the same
time, there were growing concerns about the viability
of a large proportion of private-sector pension plans,
low returns from savings, and the lack of confidence
in financial institutions. About 2.5 million new cars
were sold in 2002, raising the number of cars on UK
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