External shocks, policy spillovers, and veto players: (post)exceptionalist common agricultural policy and the case of the 2023-2027 reform

ABSTRACT

External shocks and policy spillovers have facilitated a gradual shift away from the exceptionalism (exclusive role of agricultural interests) in the EU Common Agricultural Policy (CAP). This article argues that post-Lisbon decision-making rules and procedures, against some of the expectations, slowed this process. First, the parallel veto-based negotiations on the bloc’s finances gave status quo actors the opportunity to influence the CAP indirectly (by blocking the redistribution of CAP funds) and directly (through package deals). Second, the co-decision procedure allowed the ministers of agriculture and the European Parliament’s Committee of agriculture to change the proposals of the more reform-minded Commission more easily. The argument is supported by the case of the CAP 2023–2027 reform, which resulted in limited changes given the Brexit-related cut in CAP funding (external shock) and the inclusion of environmental targets as part of the European Green Deal (policy spillover effects).

KEYWORDS:

• CAP
• post-exceptionalism
• decision-making rules and procedures
• multiannual financing framework
• co-decision
• external shock
• policy spillover

Introduction: why the reform of the common agricultural policy has slowed down after Lisbon

The European Union’s (EU) Common Agricultural Policy (CAP) is one of its oldest and most controversial policies. The CAP has long been characterised by its ‘exceptional’ status (Skogstad 1998), due to the exclusive role that agricultural interests play in shaping this policy. Since the late 1980s, a series of external shocks and policy spillover effects that affected ideas, actors (preferences) and institutions (likelihood of policy change) have led the CAP to gradually move away from its special status (Daugbjerg and Swinbank 2016; Garzon 2006). Since the 2010s, however, reform has slowed (Daugbjerg and Feindt 2017), leading to growing pressure and societal expectations of non-agricultural stakeholders to introduce more radical reform (Alons 2017; Greer 2017; Pe’er et al. 2019).

This article makes the argument that the decision-making rules and procedures introduced by the Lisbon Treaty have a status quo bias and obstruct radical CAP reform. First, the parallel negotiation of the Multiannual Financial Framework (MFF) allows status quo actors in the European Council to use their veto to influence the CAP both indirectly, by blocking changes in the distribution of CAP funds, and directly, through package deals that include the design of CAP instruments. Second, the co-decision procedure under the Lisbon Treaty allows the Agriculture and Fisheries (AGRIFISH) Council and the European Parliament to amend proposals by a more reform-minded Commission more easily (Crombez, Knops, and Swinnen 2012).

This argument is at odds with expectations that the Lisbon Treaty, by strengthening the role of the European Parliament, would challenge the ‘juste retour’ culture of the distributional negotiations in the European Council and the agricultural interests in the AGRIFISH Council that have hindered CAP reforms in the past. Existing literature on the post-Lisbon CAP 2014–2020 has acknowledged the status quo bias of parallel MFF negotiations (Matthews 2015) and the influence of the Parliament’s Committee on Agriculture (COMAGRI), which represents farmers’ interests (Roederer-Rynning 2015). However, these impacts were seen as a matter of specific context (Matthews 2015) and quality of agents (Roederer-Rynning 2015) that could/would change over the course of subsequent reforms. In contrast, this article argues that post-Lisbon rules and procedures give strong leverage to conservative actors.

The case of the CAP 2023–2027 reform is apt to test this argument, as it can again be considered only a modest reform despite certain factors favouring more radical change. First, the UK’s exit from the EU was an external shock that reduced the availability of CAP funding (Matthews 2018a) and weakened the position of status quo actors. Second, the European Green Deal (EGD) agenda facilitated policy spillover from the environmental agenda to agriculture (European Commission 2020c2020b 2020a; Matthews 2020), which included additional funding from the Next Generation Fund (NGEU) for post-Covid 19 recovery. In addition, for the first time, COMAGRI shared some of its competences on environmental issues relevant to the CAP with the Committee on Environment (COMENVI). Despite these factors, the reform (Regulation EU 2021), while introducing some elements that could improve the focus on environmental and social objectives advanced by non-agricultural interest groups, cannot be considered a radical reform (Dahm 2021; FRS 2021; Greenpeace 2021). This, we argue, is due to the preponderating effects of the above-mentioned elements of the post-Lisbon institutional environment.

The following section takes a closer look at the role of external factors, such as shocks and spillover effects, that affected actors’ preferences and positions in ways that should have made radical reform toward post-exceptionalism more likely (which ultimately did not happen). A particular focus is on the (constraining) role of decision-making rules and procedures before and after the Lisbon Treaty. In the next section, we describe the application of our framework to the CAP 2023–2027 reform and the set of data triangulated from sources such as legislative documents, reports, and interviews with negotiators. We then present the results, focusing on how (1) external shocks (the impact of the UK’s exit from the EU on the bloc’s finances) and (2) policy spillover effects (the EGD and NGEU) affected actors’ preferences and positions, and how (3) decision rules and procedures (parallel negotiations on the MFF and CAP and co-decision on the CAP) affected the final outcomes. The article concludes with a discussion of the implications of the results for the literature on post-exceptionalism.

Theoretical framework: contexts, actors, institutions, and (post-)exceptionalism

The redistribution of resources from consumers and taxpayers to individual producers has long been the focus of agricultural policy research. Collective action theory explains the phenomenon in terms of concentrated profits for farmers as opposed to distributed costs for other social groups (Swinnen and Gorter 1993). The introduction of the CAP in the 1960s as part of an agreement between France and Germany on the European Economic Community (EEC) further dispersed costs while making change difficult because of Member states’ veto power in the legislative procedure (Moravcsik 1998). It has been argued (Persson, Roland, and Tabellini 2007) that consent based decision making on fiscal matters leads to a tragedy of the commons, described as the ‘restaurant table effect,’ in which agricultural ministers maximise the profits of agricultural producers at the expense of EEC consumers and taxpayers, who bear the absolute costs (Pokrivcak, de Goiter, and Swinnen 2001). In the context of the CAP, this was particularly evident in the late 1970s and early 1980s (Swinbank 1989).

After a series of CAP crises and policy spillovers since the 1980s, this policy has faced more extensive reforms over the past 30 years. Policy change can generally be explained by (1) changes in context that affect the preferences of relevant actors, and/or (2) changes in the institutions of representation and decision-making that affect the likelihood of policy change (Garzon 2006). Changes in context and institutions may be directly related to the CAP (e.g. the increase of CAP costs) or represent a spillover from another policy area (e.g. new issues). Below, we explain how CAP reforms were shaped by changes in context (international trade, EU finances, new societal objectives) and institutions (decision rules and procedures, policy networks, path dependence, and agency quality) that affected the preferences and positions of different actors (by challenging the exclusive role of vested interests).

Changes in contexts and actors due to external shocks and policy spillover effects

In the 1980s, the market price and production support of the early CAP led to overproduction and rising budgetary costs necessary to maintain support levels. The use of export subsidies led to conflicts with other food-exporting countries. Proposals to reduce price support created tensions between large and small producers and between individual countries in relation to their production structures and budgetary status (net recipient/contributor), leading to deadlocks in budgetary decision-making that threatened to spill over into other policies and the integration process in general (Koester 1977). Negative environmental impacts of market-based intensive production also became an issue.

The Uruguay (1986–1993) and Doha (2001-) rounds of international trade negotiations, which broadened the field of actors, interests, and decision-making frameworks by including non-agricultural considerations and groups, were important in curbing market protectionism in agriculture and shifting from price support to ‘compensatory payments’ in the 1990s (Coleman and Tangermann 1999; Coleman, Skogstad, and Atkinson 1996; Swinbank 1999) and to ‘decoupled direct payments’ in the 2000s (Daugbjerg and Swinbank 2009, 2011). Even after Doha faltered in the late 2000s, international trade continued to play a role, as no trade distorting market interventions were reintroduced apart from a slight reversal of the decoupling process (Daugbjerg 2017; Daugbjerg and Feindt 2017).

MFFs were introduced in the late 1980s to prevent disagreements over the CAP from delaying the implementation of annual budgets. The introduction of the MFF required that spending be predictable, which supported the replacement of market support with direct support. Increasing budget regularity in funding the CAP increased the transparency of CAP costs and competition with other spending items, which helped contain the growth in CAP spending.

The role of trade, budgets, and the emergence of new societal expectations regarding environmental and social issues have initiated a gradual ‘paradigm shift’ (shift in goals, principles, and instruments, see Hall 1993) since the 1990s (Coleman 1998; Skogstad 1998). As part of this shift, the ‘exceptionalist’ view of agriculture as a sector to be protected by the state, also associated with protectionism (embodied in the principles of common market protection and community financing), has gradually morphed into post-exceptionalist views: the neoliberal view of agriculture as ‘just another’ sector in which all distortive and distributive measures must be eliminated, and the multifunctional view, according to which agriculture fulfils various environmental and social functions that cannot be separated from it and should therefore be supported (through non-distortive measures specifically aimed at providing public goods) (Garzon 2006, 62–63).¹

The neoliberal perspective has been associated with the elimination of price and production support and the reduction of the budget (growth). Concrete examples of the multifunctional paradigm include (1) the merging of structural measures directly targeting environmental and social objectives into a new nationally co-financed rural development pillar II during the Agenda 2000 reform, (2) the introduction of cross-compliance (rules for maintaining land in good agricultural and environmental condition – GAEC and statutory management requirements – SMR) during the 2003 reform, (3) the tying of 30% of area-based payments to larger farms to environmental requirements (maintenance of permanent pasture, crop diversification, and introduction of ecological focus areas, also known as CAP ‘greening’) during the CAP 2014–2020 reform, (4) modulation (transfer) of a portion of larger payments to individual beneficiaries to the II. pillar, and (5) capping of the largest payments in the 2000s and later (see Table 1).

Table 1. CAP reforms and reform factors.

	MacSharry reform (1992)	Agenda 2000 reform (1999)	Fischler reform (2003)	Health Check reform (2008)	CAP 2014–2020 reform (2013)
CAP instrument change
Market support (Pillar I)	Reduction in main commodity groups	Reduction in main commodity groups to world price level	Phasing-out	Removal of most of the remaining supports	Safety net
Direct support (Pillar I)	Compensatory payments	Increase of compensatory payments	Decoupled direct payments, different schemes, cross-compliance		Area payments, convergence, green requirements on 30%, partial recoupling
Structural support co-funded by the EU (‘rural development’ Pillar II)		Rural development policy introduction (Pillar II)	Modulation (5% for payments above €5000) to Pillar II	Further modulation (10%) and degressive capping (4% for payments above €300,000)	Flexibility to switch 15% of funds between the two pillars
Reform factors (external shock and policy spillover)
Trade	Uruguay round (+)		Doha round (+)
Budget		MFF 2000–2006 (-)		MFF 2007–2013 (-)	MFF 2014–2020(-)
Paradigm shift			Liberal (no more distorting measures) and multifunctional (specific targeting of joint public goods) (+)
Institutions of representation and decision-making	Agency quality (+)	Change in the policy network (+), path dependency (+)	QMV and agency quality (+)	Path dependency (+)	Co-decision procedure (-)

Legend: (+) pro-reform; (-) anti-reform drivers.

However, in the context of the 2014–2020 reform, the post-exceptionalism literature argues that changes in objectives and mechanisms were not matched by changes in actual impacts, such as distributional effects, which remained largely unchanged (Daugbjerg and Feindt 2017). Direct payments (some of which were still linked to production) provided incentives for production practices with negative environmental impacts and were concentrated on large beneficiaries, including landowners, making it difficult for young farmers to enter the sector (Pe’er et al. 2019). The role of conditionalities and the II. pillar was too weak to change this and even contributed to some of the negative impacts (Pe’er et al. 2019). Individual authors characterised the CAP 2014–2020 reform as ‘greenwashing’ and ‘repackaging’ the old policy (Alons and Zwaan 2016; Erjavec and Erjavec 2015). As a result, the transition to post-exceptionalism was often seen as ‘partial’ (Greer 2017) or ‘incomplete’ (Alons 2017).

Changes in institutions of representation and decision-making that define veto players

While some changes in the institutions of representation and decision making relevant to the CAP have been triggered by a changing CAP environment, others have arisen for more general reasons independent of the CAP and/or have affected the CAP in ways not originally anticipated.

The introduction of qualified majority voting (QMV) to the CAP with the Single European Act (SEA) in the 1980s and changes in Commission appointment procedures since then have strengthened the Commission’s role: they have made it easier for its legislative proposals to be adopted and the greater difficulty for individual member states to influence the selection of individual Commissioners has increased its independence (Pokrivcak, Crombez, and Swinnen 2006). Combined with the Commission’s role in setting the agenda and its exclusive right to propose legislation, this has proved to be an important source of power, since formally only a unanimous Council could amend the Commission’s proposal (if the Commission insisted).² This was especially true in the ‘reformist’ context of the 1990s, when the CAP had to be changed because of the damaging budgetary and trade implications of the status quo.

Parallel to the changes in context, agenda setting, and rules and procedures of decision making, there have been ongoing changes in the policy network (Daugbjerg 1999; Garzon 2006, 90, 96), which has ceased to be dominated exclusively by agricultural groups (agricultural lobbies, ministers of agriculture) in several member states. Moreover, in addition to some division within farmers themselves (e.g. between large and small farmers), new actors such as trade and finance ministers and environmental organisations have emerged.

Reforms have also been explained in terms of path dependence (Kay 2003), in the sense of a cumulative effect and a feedback loop of past policy decisions leading to a more substantial change in policy course related to trade negotiations, budget-financed measures, and reorientation to new challenges. An example of this is the follow-up to the 1992 and 2003 reforms in 1999 and 2008, which occurred against a backdrop of actual trade negotiation failure in the late 1990s (Seattle failure) and 2000s (Doha failure) (see Table 1).

Finally, agency quality is also important. Several long-term strategic processes, such as trade and budget negotiations and changes in voting rules, have given the Commission more room to manoeuvre. The quality (e.g. long-term involvement in the process) of individual Commissioners allowed this potential to be realised – this was the case with the 1992 and 2003 ‘MacSharry’ and ‘Fischler’ reforms, named after Agriculture Commissioners Ray MacSharry and Franz Fischler (Cunha and Swinbank 2011).

However, not all changes in the institutional framework have supported reforms. Initially, consent-based decision-making on the MFF helped reform-oriented actors (net contributors) to push through reforms in return for increased budgetary spending. Later, veto rules allowed conservatives (net recipients) to block changes in budget reallocation and to influence substantive issues in package deals on the MFF and CAP (since in the absence of agreement, the old budget would be extended, veto-based procedures gave leverage to status quo players) (Swinbank 1999). This was the case with the Agenda 2000 reform and the decision on CAP funds after the Eastern EU enlargement. Germany and France agreed to limit the overall increase in spending and redistribution of funds while keeping the existing CAP support mechanisms unchanged, an agreement that was later supported by the rest of the EU (Daugbjerg and Swinbank 2004). As a result, direct aid was introduced in the new member states only gradually and at lower levels. Increased diversity among members and more restrictive decision-making processes have gradually led to greater policy differentiation among member states, for example, through different payment levels and schemes.

Many believed that the 2009 Lisbon Treaty would support further CAP reforms by granting the EU’s directly elected body the power to veto the MFF and giving it co-decision rights regarding the CAP. Members of the European Parliament participate in transnational political groups and are, compared to the European Council, less likely to defend the national net budgetary status, which has hindered reforms in the past CAP. Similarly, greater transparency of debates in Parliament was expected to constrain the role of agricultural lobby groups (as opposed to the relatively closed framework of the AGRIFISH Council).

However, not only have these expectations not been fulfilled, but the results have also been quite the opposite: the Lisbon Treaty has given conservative actors even more leverage. First, since the adoption of the Treaty, decisions on the MFF and CAP have regularly been made in parallel. As the research on the MFF and CAP reform negotiations presented above shows, the parallelization of the two processes increases the ability of status quo actors to influence the CAP not only indirectly (through the MFF negotiations) but also directly (through package deals on the MFF and CAP) because of the importance of CAP spending and veto-based decision-making on the MFF in the Council. Matthews (2015, 169–173), in his study of the CAP 2014–2020 negotiations, argues that the parallel process supported agenda-setting that prioritized financial issues, which affected the importance of status-quo-based distributional discussions and even allowed the European Council to make direct decisions on the CAP. However, Matthews’ empirical research suggests that such a development was a matter of specific sequence (see Matthews 2015, 187–189). In contrast, this article argues that the parallel process leads to a structural bias in favour of the status quo, as the literature on reform of CAP (as presented above) shows that individual players (being rational actors) have consistently exploited institutional opportunities for influence.

Surprisingly, the granting of co-decision powers on CAP and of veto rights on the MFF to the European Parliament is the second anti-reform development brought by the Lisbon Treaty, because the only way to substantially affect the reform is to align with the Council. Some authors argued early on that granting the Parliament veto rights on the MFF would not have a significant impact on the CAP (Crombez, Knops, and Swinnen 2012) because the outcomes of MFF negotiations would be largely determined by most status-quo-oriented member states, while the Parliament, which would have no amending powers in the process, would be in a ‘take it or leave it’ position with regard to the MFF. The Parliament could potentially play a more important role in co-decision-making on the CAP. However, since the AGRIFISH Council would still be able to block any reform proposals (a fortiori because of the parallel negotiations on the MFF and CAP making a conservative scenario more likely, see Scheme 1), the potential for the Parliament to influence reform was, paradoxically, to use its ability to work with the conservative AGRIFISH Council to more easily amend Commission proposals (before the Lisbon Treaty, the Council could only amend the Commission proposal unanimously) (Crombez, Knops, and Swinnen 2012; Greer and Hind 2012). Thus, if Parliament wanted to exercise its role as an influential actor under the co-decision procedure, it could only do so by serving (at least to some extent) as a tool for conservative interests seeking to thwart the Commission’s reform proposals.

Scheme 1: Most influential player (grey colour) in co-decision procedure under conservative and reformist scenario.

Empirical studies of the CAP 2014–2020 reform, the first under the Lisbon rules, have shown that the Parliament was more conservative than the Commission and therefore weakened the reform (Lovec and Erjavec 2015, 52–3; Roederer-Rynning 2015). The authors attributed this to the strong role of COMAGRI, which acted as the voice of agricultural interests during the past consultation process, which was to change over time as the role of other committees and political groups was strengthened (Roederer-Rynning 2015, 332; 353–5). In contrast, this article argues that the status quo leverage of the Lisbon Treaty gave the conservative COMAGRI an important role in future negotiations as it allowed COMAGRI to assert itself as one of the influential voices of agricultural interests, sometimes even representing more conservative positions than the Council.

Methodology and the case of the 2023–2027 CAP reform

The argument we wish to examine is that the post-Lisbon institutional environment – the parallel MFF negotiations and the co-decision process – has hindered CAP reform by giving significant leverage to conservative status quo actors. As argued in the introduction, the decision-making process on the CAP for the period 2023–2027 is a particularly apt case because the contexts relevant to the observed institutional factors have shifted in a reform-oriented manner: The withdrawal of the UK, the largest net contributor to the CAP budget, was expected to weaken the position of the conservative status quo actors,³ and the EGD enabled the integration of the environmental agenda into different policy areas, while the NGEU provided additional resources for this purpose. In addition, COMAGRI and COMENVI shared responsibility for the environmental aspects of the CAP for the first time during the 2023–2027 reform.

The analysis of decision making on the 2023–2027 CAP divides the reform into three phases to assess the effects of (1) external shocks, (2) policy spillover, and (3) veto players on the preferences and positions of actors and the outcomes of the process. The focus of the first phase (May 2017-November 2018) was the proposal for a new MFF and CAP by the Juncker Commission in the context of Brexit. The second phase (May 2019-June 2020) centred around the spillover effects of the EGD and the changes to the MFF proposed by the Von der Leyen Commission, which was to be topped up by the NGEU. The third phase (July 2020-June 2021) was about negotiations, in which the veto players in the European Council, the AGRIFISH Council and the Parliament defined the MFF and CAP reform.

The research focuses on the preferences and positions of key actors with formal powers: the European Commission, European Council, AGRIFISH Council, and European Parliament. Where appropriate, the positions of sub-units are highlighted (positions of different Commissioners, positions of net recipient and net contributing and of conservative and reform-oriented Member States, positions of political groups in the European Parliament). Since decision makers are not neutral players and can adapt their proposals to the likely outcome, the positions of key stakeholders are also considered, such as those of agricultural interest groups COPA-COGECA and CEJA and environmental NGOs such as EEB, BirdLife and Greenpeace.

The research is based on documents (legislative proposals, official positions of the three institutions involved in legislative procedure), technical reports (Agra Facts and Agra Focus), position papers of interest groups, media reports and academic sources. The most important documents – official proposals and positions of decision makers – are listed in Table 2.

Table 2. Key formal documents outlining the proposals and positions of co-decision-makers.

Stage/Institution	European Commission	European Council/Council of the EU	European Parliament
(1) Proposed new MFF and CAP related to Brexit (May 2017-November 2018)	- Commission Strategic Communications on MFF (2017b) and CAP (2017a) - Commission Proposal for New Regulations on CAP of June (2018b) and MFF of May (2018a)	- Council conclusions on the Commission’s strategy on CAP and MFF, March (Council of the EU 2018b) - Results of the June Council meeting on the proposed CAP regulations (Council of the EU 2018a)	- November resolution on the MFF and CAP (European Parliament 2018)
(2) Spillover of the environmental agenda with EGD, new MFF proposal and NGEU (May 2019-June 2020)	- Commission’s December EGD Strategic Communication (2019) and May strategies relevant to CAP: F2F (2020c) and Biodiversity Strategy (2020a) - The Commission’s new proposal for the MFF and NGEU (2020b)
(3) Veto players in intra- and inter-institutional agreements (July 2020-June 2021)		- EUCO special meeting conclusions of July (European Council, 2020) - Council Conclusions of October (Council of the EU 2020)	- October amendments to the proposed CAP regulations (European Parliament 2020)
	- Final agreement (Regulation EU 2021/2115)

Because the trialogues, unlike the intra-institutional negotiations, were poorly recorded in the documents and secondary sources, as an additional, more direct method of confirming the influence of the institutional mechanisms on the outcome of the negotiations, interviews were conducted with two representatives of a country with median interests who participated in the trialogues as external observers to ensure a smooth transition of the process, which was to be completed during the initial phase of that country’s presidency.

Results: reformist contexts, veto players, and symbolic wins

Impact of brexit on the initial proposals and positions

The first phase, when the Commission presented its proposal for the new MFF and CAP took place between May 2017 and November 2018. The Commission used the hole in the budget left by Brexit to broker a reform of EU-funded programmes, reducing CAP financing for the benefit of more progressive programmes (where net contributors also tend to have a better balance). The Juncker Commission’s May 2018 proposal for the 2020–2027 MFF (European Commission 2018a) suggested to increase the overall MFF above the EU-27 contribution level (1% of EU GNI), while cutting CAP funding by 5% in nominal terms. The cut in CAP spending was roughly in line with the gap in EU finances created by Brexit (for more detail, see Matthews 2018a), which, combined with the fact that this was the first time the Commission proposed a nominal cut in CAP funding, suggests a reform-stimulating effect of Brexit.

The Commission’s proposed financial framework also touched the CAP in a more direct way. To compensate for the reduction in overall funding that could lead to sacrificing more progressive measures such as those in CAP Pillar II in later negotiations, the Commission proposed increasing the flexibility to transfer up to 30% of Pillar I to Pillar II and increasing the national co-financing rate of Pillar II, which could increase spending on these items (at least in countries with sufficient motivation and resources).

The Commission’s financial proposal indicated certain limits to what would survive the veto process. Originally, the Commission had also considered co-financing CAP Pillar I (European Commission 2017b), which would allow EU spending on CAP to be further reduced while improving accountability. However, the conservative camp, led by France, strongly opposed what they saw as a ‘renationalization’ of the CAP that would ‘jeopardise the Community market’ (Agra Focus, 2017–2021 2018/3; 2018/4).

Brexit also influenced the Commission proposal for a new CAP beyond finance. The Commission’s Directorate General for Agriculture and Rural Development’s (DG AGRI’s) (at the time, Commissioner of agriculture was Phil Hogan) policy paper on the future of the CAP (European Commission 2017a) highlighted the need to make the CAP ‘more flexible’ to ‘better meet specific needs’ (in the context of tight finances). The strategic communication built on the experience of the 2014–2020 reform, which introduced greening measures that were criticized both by the agricultural sector (for ‘Brussels bureaucracy’) and by environmental groups (for ‘weak environmental protection’) (Ecorys 2017; for a more general critique of the design of the instruments, see also ECA 2017). Accordingly, the new CAP regulations proposed by the Commission (European Commission 2018b) offered more flexibility to Member States to define measures at the implementation level, but also required them to explain how they would contribute to the achievement of the targets in the context of national strategic plans and on the basis of common objectives and indicators, and to set quantitative targets for the implementation of the measures to be approved and monitored by the Commission. The second major innovation was the new ‘green architecture’. The Commission proposed to allocate a total of 40% of CAP funds to the environment and to replace greening measures with more flexible ‘eco-schemes’ that would be mandatory for member states and voluntary for farmers, as well as to improve certain GAECs.

As with the proposed funding framework, there were certain limits to the Commission’s reform proposal that pointed to likely constraints in the decision-making process. The so-called new ‘performance-based’ implementation model (as opposed to the old ‘compliance-based’ model) was little more than an extension of existing Pillar II programming to Pillar I, along with its shortcomings such as a focus on effective implementation rather than actual impact (ECA 2018; Lovec, Šumrada, and Erjavec 2020). While the new green architecture could bring some important improvements for environmental protection, the existing measures, many of which were considered negative, would largely be maintained (Pe’er et al. 2019). In terms of socioeconomic aspects, such as convergence of payments between member states, increased payments to young farmers, and capping (the Commission proposed a cap on payments of €100,000 plus total labour costs), the proposal was generally more conservative than some of the agreements during past reforms (Matthews 2018b), suggesting expected deadlocks in redistribution. However, the proposed changes would still have implications for individual countries (convergence implications for the Baltic countries) and groups of farmers (capping implications in countries with a high share of very large beneficiaries, such as Germany, the Netherlands, and the Czech Republic) (Matthews 2018b).

Initial reactions from member states and the European Parliament revealed red lines from individual veto players consistent with the limitations of the Commission’s proposal. Conservative and net beneficiary Member States (especially southern and eastern Member States) were particularly concerned about budget cuts in the first pillar, which is reflected in the importance given to this in the EU Council conclusions (Council of the EU 2018b; 2018a). Capping was opposed by a broad coalition of countries (Agra Focus, 2017–2021 2018/4). On the other hand, the new implementation model, green architecture and flexibility in redistribution of funds were also welcomed by some conservative countries such as France and Spain, which was in line with the interests of some specific agricultural groups such as organic farmers who did not receive specific support in the Commission’s proposal and hoped for additional funding from the II. pillar (the relative shares of the II. pillar in the national allocations of these countries were relatively small) (Agra Focus, 2017–2021 2018/8). The new member states were the most disappointed (Agra Focus, 2017–2021 2018/6), as the proposal was weak in terms of convergence and they would not benefit from the proposed CAP changes, such as the flexibility to shift funds to the Pillar II, due to the high relative shares of structural development funds in national envelopes, and even understood some of the proposed changes, such as the new implementation model, as additional administrative burdens. However, their distributional claims were overruled by the veto of the net contributors in the MFF negotiations, while they did not have a blocking minority in the AGRIFISH Council either.

The European Parliament, which has no amending powers in the MFF decision-making process, cautioned against substantive issues being raised in the funding negotiations, referring in particular to the cap on the highest individual payments, which was politically important to it (European Parliament 2018), confirming the expectation that individual member states would use the veto-based MFF negotiations as a bargaining chip.

Agricultural interest groups were mostly concerned about the reduction of direct payments and the new environmental architecture (Farm Europe 2018; Agra Focus; 2017–2021 2018/8), confirming the focus of conservative actors on redistribution. Environmental NGOs, on the other hand, sharply criticised the Commission’s proposal for leaving ‘problematic’ CAP measures that account for the bulk of CAP spending, such as direct payments, largely unchanged (Agra Focus, 2017–2021 2018/8).

In 2018, MFF negotiations stalled due to delays in the Brexit negotiations. As a result, member states and the Parliament refused to start negotiations on the CAP (FRS 2021). In light of the upcoming European Parliament elections, the current CAP 2014–2020 was extended until 2023 and the implementation of the new CAP was postponed accordingly.

Changes in the political arena after the EGD and the pandemic

The second phase of the reform process, characterized by a further reformist change in context, took place between December 2019 and July 2020.

In the 2019 European Parliament elections, EPP and S&D lost their majority, and the new coalition included ALDE-Renew, which in the past had cast more reformist votes on the CAP. The Greens also strengthened their position (Graham-Harrison 2019). The new Von der Leyen Commission included climate and the environment as key issues in its programme, which is reflected in the EGD (European Commission 2019). Frans Timmermans (S&D), as Vice-President of the Commission, was tasked with coordinating and overseeing the implementation of the EGD. In 2020, two EGD-related strategies, particularly relevant to agriculture and prepared by DG SANTE, were published, namely the Farm to Fork (F2F) Strategy (European Commission 2020c) and the Biodiversity Strategy (European Commission 2020a). They proposed reducing the use of fertilisers, pesticides, and the risk of antibiotic resistance, increasing organic production, and taking some land out of production.

The European Commission tried to use the post-COVID NGEU Fund to increase the ambition of reform-oriented measures in line with EGD strategies. Moreover, in the new MFF proposal, the Commission reduced Pillar I relatively more compared to Pillar II and increased Pillar II from the NGEU (European Commission 2020b). However, the Commission faced opposition from two veto groups: the conservative camp strongly opposed cutting the first pillar, while the ‘frugal four’ (the Netherlands, Sweden, Denmark, and Austria) opposed increasing the MFF above the current EU-27 level (1% of GNI of EU-27). As a result, European Council President Charles Michel proposed to keep the overall MFF ceiling and increasing CAP Pillar I, while sacrificing more of CAP Pillar II (Agra Focus, 2017–2021 2020/5). Michel’s proposal reflected what was acceptable to the status quo veto players in the European Council (in contrast to the Commission’s more reform-oriented proposal).

The change in the governing coalition in the European Parliament did not bring about a dramatic change in its preferences. During the early public discussions on the F2F and biodiversity strategies, members of the influential COMAGRI were wary of several elements because of the alleged negative impacts on production, prices, and farmers’ incomes, and criticized the lack of parliamentary involvement in the drafting of the two strategies, echoing the criticism of COPA-COGECA, while the proposed strategies were warmly welcomed by environmental NGOs as ‘a step in the right direction’ (IUCN 2020).

Intra- and inter-institutional agreements

The third phase consisted of intra-institutional negotiations in the period between July and December 2020 and inter-institutional negotiations (trilogues) that took place in the first half of 2021, with an informal political agreement reached in June 2021.

State leaders reached agreement on the MFF and NGEU at the four-day European Council in July 2020. The agreement demonstrated the status quo-bias of the veto-based process, as the Commission’s attempt to use the financial gap created by Brexit to impose a more reform-oriented MFF that would increase spending on progressive programmes while sacrificing some of the CAP funding was rejected (European Council 2020). Moreover, the agreement kept Pillar I unchanged in nominal terms, while leaving the MFF as a whole at 1% of EU-27 GNI, in line with Michel’s proposal. In addition, the agreement gave conservative members greater flexibility to shift funds between the two policy pillars in either direction, thus also allowing for more Pillar I increases at the expense of Pillar II. Finally, the European Council intervened directly in the CAP by deciding to make the cap on the highest payments voluntary for member states. In contrast, the changed context with the EGD and NGEU played only a minor role, as the final agreement on the NGEU only provided for an increase in Pillar II to safeguard the existing Pillar II spending level.

In contrast to the veto-based MFF procedure, the qualified majority procedure in the Council of the EU offered more opportunities for reform. Nevertheless, the position on the CAP regulations adopted by the AGRIFISH Council in November (German Presidency 2020) was in most respects more conservative than that of the Commission. Among other things, the AGRIFISH Council (Council of the EU 2020) rejected the introduction of EGD (F2F and biodiversity strategy)-related targets in national strategic plans (they argued that any requirements should be based on texts adopted through a legislative process) and relaxed several elements of conditionality. On the other hand, ministers agreed to earmark 20% of the first pillar for eco-schemes payments. This last point illustrates the role of qualified majority voting, as ringfencing was achieved without the support of several eastern new member countries, which voted against it because they were dissatisfied with the agreement on the MFF.⁴

Since the European Parliament had no amending powers on the MFF and was under pressure to either accept or reject the European Council’s position on the MFF and NGEU, it decided to accept it to avoid delays in the process. However, the Parliament rejected the European Council’s attempt to predefine the CAP in the MFF negotiations and insisted that some kind of mandatory redistribution be included in the final agreement on the CAP (European Parliament 2020; FRS 2021). On other elements of CAP, in the position it reached just after the AGRIFISH Council reached its position, the Parliament took a less reform-oriented stance than the Commission, but a more reform-oriented view than the AGRIFISH Council. For example, Parliament supported the inclusion of EGD targets in national strategic plans, but not as a formal evaluation criterion, and a higher earmarking of eco-schemes (30%), while proposing new elements considered eligible to reach this level (European Parliament 2020). The Parliament’s position was shaped by COMAGRI. After the 2019 European Parliament elections, tensions increased between COMAGRI and COMENVI over amendments to the environmental dimension of the CAP, after which COMENVI abandoned the joint role (Moore 2020). However, COMAGRI remained under pressure to introduce elements acceptable to the plenary. The final position was supported by a majority of MEPs from all three major political groups and all major countries (FRS 2021).

The status quo agreement on the MFF and the more reform-oriented but still quite status quo position of the AGRIFISH Council and the Parliament on the reform of CAP provided the negotiating framework for the final agreement, which looked to fall short of ambitions in the EGD context, which was politically important for the new Commission. As a result, Commission Vice-president Timmermans pushed to consider some of the reform-oriented proposals and even threatened to withdraw the proposal if they were not taken into account, thus blocking the process (Dahm 2021). In the meantime, German Agriculture Minister Julia Klöckner, who chaired the AGRIFISH Council at the time, and representatives of the European Parliament maintained the negotiating framework (Dahm 2021). Agricultural lobbies, represented by COPA-COGECA, were satisfied with the negotiating framework. In contrast, environmental NGOs (Dupeux, 2020) were very critical, as the final agreement would ‘keep Pillar I largely unchanged’, along with its ‘negative impacts on the environment’ and the ‘concentration of payments in the hands of large landowners’.

During the interinstitutional trilogues, elements mandated by the European Council agreement on the MFF were adopted, such as convergence and flexibility in reallocating funds between the two pillars, confirming the leverage of the MFF negotiations. A partial exception was capping, where the Parliament obtained a small but politically important concession in the form of a compulsory redistribution in favour of medium and small farms comparable to capping (interviews 1, 2, see Table 3).

Table 3. Positions of the decision-making institutions on key issues in the negotiations on the CAP 2023–2027.

	Proposal of the European Commission from June 2018 (European Commission 2018a)	Position of the AGRIFISH Council from October 2020 (Council of the EU 2020)	Position of the European Parliament from October 2020 (European Parliament 2020)	Final agreement (Regulation EU 2021/2115)
Financial and distributional matters	- Flexibility to switch up to 30% of CAP Pillar I to CAP Pillar II funds - Capping	- Flexibility to switch up to 30% of CAP in both directions - Voluntary capping	- Reduced flexibility to switch funds - Capping with some enhanced elements	- Council’s position on flexibility to switch funds - Concession to Parliament on capping (some obligatory form of redistribution required at member state level)
New delivery model (CAP strategic plans) and EGD targets	- Inclusion of EGD related target in assessment	- Rejection of EGD related targets, phasing-in period	- ‘Political inclusion’ of EGD related targets (not subject to assessment)	- Parliament’s position on the EGD, Council’s position on the phasing-in period
Green architecture	- 40% of total CAP dedicated to environment - Better targeted GAEC – environmental conditionality (EC)	- 20% of Pillar I earmarked for eco-schemes - Relaxed EC	- 30% of CAP Pillar I earmarked for eco-schemes, while adding new eligibility items to the list	- Compromise between the position of Council and Parliament
Production support	- Phasing-out of part of payments coupled to production	- Rejection of further decoupling	- Further decoupling and new conditionalities	- Mostly Council’s position

The trilogue negotiations showed stronger opportunities for reform on other issues. While the AGRIFISH Council and the Parliament were generally less reform-oriented than the Commission, the Parliament took relatively reform-oriented positions on some issues and was thus able to play a pivotal role. According to our interviewees, the third party had to make concessions when positions of two institutions were closer (Interviews 1, 2 2021). For example, in line with the Parliament’s position, EGD indicators were retained in the strategic plans but were not subject to any formal evaluation by the Commission and were thus only politically binding. Eco-schemes were earmarked at 25%, which represented a middle ground between the Council’s and Parliament’s positions. The changes to the GAEC were also a compromise between the two positions. On the other hand, decoupling was weakened compared to the proposal, probably due to the stalemate in international trade negotiations. In addition, Parliament introduced some additional reform elements, such as further increase in support for young farmers and, for the first time, conditioning payments on labour and occupational safety laws, as well as a gender impact assessment of the CAP. While the reformist elements were important for individual political groups in the Parliament, many were symbolic or represented small solutions to problems often created by existing CAP measures. The final agreement was therefore heavily criticised by environmental NGOs (Greenpeace 2021).

Discussion and conclusion: from veto players to repackaging of old policy

The starting point of this article was the slowdown in the CAP’s transition to post-exceptionalism since the early 2010s, which has led to growing tensions between agricultural and non-agricultural interests. The article proposes to explain this in terms of the rules and procedures of post-Lisbon decision-making that has, against some of the expectations, hindered reforms of the CAP. First, the parallel negotiations on the MFF and CAP allowed status quo actors in the European Council to influence the CAP indirectly, by blocking the reallocation of funds, and directly, through package deals on the MFF and CAP. Second, the co-decision procedure allowed the AGRIFISH Council and Parliament to amend the proposals of the more reform-minded European Commission more easily.

While previous research focusing on post-Lisbon CAP 2024–2020 reform has highlighted the constraining role of parallel MFF negotiations and the role of COMAGRI in the co-decision process, this has been seen as a matter of specific context rather than a general rule (Matthews 2015; Roederer-Rynning 2015). The case of the 2023–2027 reform is interesting not only because it is another post-Lisbon reform. First, Brexit was an external shock that created a gap in the finances while the impact of the EGD and NGEU enabled for a new reform-oriented bargain. Second, COMAGRI had to share some of the powers with COMENVI.

The results of the CAP 2023–2027 reform inquiry showed that the Commission used the reformist context of the Brexit-related budget gap to propose increased funding for progressive programmes while making cuts to CAP’s redistributive instruments. However, under the veto procedure in the European Council, individual conservative actors blocked a cut in the first pillar, while a group of net contributors blocked an increase in the MFF, resulting in a lowest common denominator agreement that saved most conservative measures and the existing MFF ceiling of 1% of EU’s GNI in the face of the Brexit-related financial cut. The EGD and NGEU changed this only to prevent a cut in the more progressive Pillar II. In addition, the agreement on the MFF included substantive issues not strictly limited to the distribution of funds among member states, such as the flexibility to reallocate funds between the two pillars and the capping of payments. The outcome, which was in line with the impact of parallel negotiations on MFF on the 2014–2020 CAP reform (as well as on some of the past reforms, as discussed in the literature section), underpins the argument on the systematic role of the veto-based MFF procedure as a lever to influence the CAP both indirectly (by blocking redistribution) and directly (package agreements on the MFF and CAP).

On the other hand, the results of the research on the role of the co-decision procedure are less straightforward. Qualified majority voting in the Council allowed more opportunities for reform, as demonstrated by the adoption of the proposal to allocate 20% of the first pillar to eco-schemes in the face of opposition from some new member states. The new members failed to assert their interests both in the financial negotiations, where status quo actors blocked redistribution, and in the Council, where they lacked a blocking minority. During the trilogues, the AGRIFISH Council and the European Parliament generally took less reform-oriented positions than the Commission, as evidenced by their rejection and relaxation of certain elements of strategic planning, the green architecture, and decoupling. Compared to the Council, however, the European Parliament took a reform-oriented position on some issues in which it eventually played a decisive role. One such issue was capping. Although it was agreed as part of the MFF deal, where the Parliament had no amending powers, the Parliament managed to secure a concession in the form of a kind of mandatory redistribution from large to small and medium-sized holdings. Other elements in which Parliament played a central role included the ring-fencing of the eco-schemes and the inclusion of EGD targets in strategic plans. In addition, Parliament was able to include some completely novel elements in the final agreement that were important for individual political groups in the Parliament.

While the results confirm the constraining role of the co-decision process, they also show that Parliament – to some extent, since many of the reformist elements were symbolic or represented small solutions to problems, many of which were caused by prevailing CAP measures – was able to exercise power without necessarily being conservative actor, and secondly, that the role of the political groups in the Parliament gained traction. This is somewhat at odds with institutional models (Crombez, Knops, and Swinnen 2012) and consistent with the argument of the evolving role of parliament (Roederer-Rynning 2015).

The findings are relevant to the post-exceptionalism literature, which highlights the gap between changing goals and instruments and actual distributional effects (Alons 2017; Daugbjerg and Feindt 2017; Greer 2017). In the 2014–2020 reform, the Commission sought to advance the liberal agenda by further eliminating trade-distorting measures and the multifunctional agenda by greening Pillar I. During the decision-making process, several proposals were watered down, leading to criticism of ‘greenwashing’, and repackaging the policy to make it more acceptable (Alons and Zwaan 2016; Erjavec and Erjavec 2015). In the current reform, the Commission has pushed the liberal agenda through a more flexible and performance-based CAP and the multifunctional agenda through a new green architecture. Environmental groups have been very vocal in this process, and conservative groups have mostly been in a defensive position. In the end, it was very important for all institutions to agree on at least some reform-oriented elements, as evidenced by the AGRIFISH Council’s agreement on earmarking the first pillar for eco-schemes and many elements introduced by the Parliament, indicating the growing need to meet societal expectations to maintain legitimacy despite institutional constraints.

Further research is needed to examine the effects of decision rules and procedures on preferences. While the positions of individual actors were determined by the likely outcome, as evidenced by the Commission’s modest initial proposal or the positions of the European Parliament initially made in response to the Council’s positions, it was important for individual actors to present themselves as independent and influential players pushing a particular agenda, as evidenced by the concessions each received. More interviews would be needed to explore this further.

The preferences of individual institutions were shaped also by lower-level processes that were outside the scope of our study. In the past, proposals have been driven by dynamics within the College of Commissioners (Matthews 2015). During the negotiations on the CAP 2023–2027 reform, Agriculture Commissioner Hogan was replaced by Janusz Wojciechowski of Poland’s PiS (European Conservatives and Reformists), who was overshadowed by Commissioner Timmermans as vice president in the von der Leyen Commission. The F2F and biodiversity strategy were prepared by DG SANTE. Several conservative member states accepted strategic planning and environmental architecture because of growing national interest in greater flexibility, climate, and environment. Anecdotal evidence from our interviewees suggests that the Parliament was much better prepared and played an important role in the process compared to the CAP 2014–2020 reform. Further research is needed on the role of the European Parliament’s rapporteurs, political groups, and advisory support.

From a more general perspective, there is a need for more interdisciplinary research in the post-exceptionalism literature to integrate specialised research on changing contexts and actors (social and environmental sciences), institutions (political science), and impacts (agricultural economics, environmental science). As this study has attempted to show, while the focus on institutions can help explain the gap between changes in contexts and outcomes, it cannot explain changing contexts or actual policy impacts, which is where the different strands of research (agricultural economics and environmental science) are increasingly drifting apart (compare Pe’er et al. 2019 to Wesseler 2022).

Finally, this research shows that sufficient attention should be paid to decision-making rules and procedures as an independent element, along with contexts, actors, and interests. Examination of past CAP reform processes provides examples of the impact of decoupling negotiations on the content of the CAP and the MFF (e.g. during the 2003 reform). The upcoming legislative processes related to spillover from EGD to agriculture will put to a test the ‘ghetto logic’ of the AGRIFISH Council and COMAGRI, which are allegedly mainly concerned with distribution and farmers’ interests. From a member state perspective, the new implementation model provides an opportunity to test the role of increased flexibility and broadening the debate at the national level. Regarding the role of the European Parliament as a pivotal player, more attention should be paid to the role of committees, rapporteurs, political group coordinators and political advisors, as well as to lobbying, transparency and public perception of debates.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. A more recent line of research has focused on how changes in ideas-as-context over longer time periods such as between reforms lay the groundwork for a changed role of actors, institutional and policy change (Daugbjerg and Swinbank 2009; Lynggaard 2007; Lynggaard and Nedergaard 2009). From a more socially critical perspective, ideas as structures or means of power legitimize certain actor’s interests as well the as corresponding institutional settings and policies (van Dijk 1993). Under the CAP, this has included the decline of the protectionist discourse that promotes the continuation of exceptionalism (the initial discourse substantiating the CAP) and producer support, which is associated with producer lobbies and traditional actors, and the rise of the neoliberal discourse (associated with financial and trade-related interests and interest groups) and the multifunctional discourse (associated with new societal expectations, actors and interests regarding environmental and social issues) (Erjavec and Erjavec 2009; Potter and Tilzey 2005).

2. Throughout the 1990s, decisions on the CAP in the AGRIFISH Council were typically still unanimous and it was not before the 2003 that a reform was agreed against the interest of an influential member state (France); still, authors believe that changes in the voting rules did also play (an indirect) role before 2003 (Pokrivcak, Crombez, and Swinnen 2006).

3. According to Matthews (2018a), Brexit would also impact CAP through performance of the UK’s new agricultural policy. Paradoxically, despite being one of the CAP’s strongest critics, due to constrained institutional environment, the UK did more to reform the CAP by leaving than it could have done by staying.

4. Lithuania voted against the agreement and Latvia, Bulgaria and Romania abstained (Agra Focus, 2017–2021 2020/11).