In Britain’s popular culture the marketing restrictions on bendy bananas and curly cucumbers have always been associated with the Bureaucrats of Brussels. Nothing so well underpinned a public perception of meddling officials in a foreign country imposing their will on a hapless populace by setting fruit and veg dimensions by millimetre and by degree. The story was always guaranteed to provoke a curious mixture of exasperation and delight.

The Commission has now announced a relaxation of the EU rules. As from July 2009 the EU standards for 26 fruit and vegetable categories will be abandoned altogether and for the 10 most widely purchased, such as apples, strawberries and tomatoes, national governments will be free to permit the public sale of non-classified produce as long as it is labelled as for jam-making or similar.

I suspect that in many cases it is national governments which displayed the real passion for regulating. It’s worth recalling that a year ago Commissioner Verheugen dismissed the idea that the use of imperial measures (pounds and ounces for instance) was illegal under EU law, but this didn’t stop the criminal prosecution of some market traders in Britain for using the old measures.

Certainly past experience suggests that the supermarkets will continue to demand uniformity and quality when negotiating with their suppliers. But at least there should be no more martyrs such as those shopkeepers who did not abide by the rules and were prosecuted in consequence.

The Agriculture Commissioner Mariann Fischer Boel takes credit for the latest moves, but this decision is very much in tune with the campaign for Better Regulation which the Barroso Commission has been pursuing. Its main front-man Commissioner Verheugen is still pushing hard, as you can see from his recent speech. All strength to his elbow!

The surge in world food prices, oil prices at well over $110 a barrel and measures to boost the use of biofuels in the US and Europe are putting policy-makers into crisis mode.
 
It is extraordinary how this situation has taken fire in just a few months and how intertwined the different factors are. A perfect storm, indeed. International organisations warn that the rising cost of food will threaten the stability of nations, especially developing countries. Even for a country like China food inflation is a major threat to the government.  A “silent tsunami” is how the head of the World Food Programme has described the global situation.
 
The European Commission has responded with an increase in emergency food aid, just as it should, but we are witnessing more than a short-term crisis. Commissioner Louis Michel pulled no punches when he spoke to the European Parliament recently. While announcing an increase in EU food aid spending to nearly €300m so far this year, he also warned just how dangerous the international situation was becoming.

The current food price situation focuses attention on the future of the common agricultural policy. You might think that high market prices for cereals (somewhat mitigated by the strength of the euro) would reduce the need to spend European taxpayers’ money on expensive support arrangements for EU agriculture, but that’s not how French farm minister Michel Barnier sees it.
 
For him the present situation proves the need for an expensive protectionist policy. He even urges other countries to follow suit and build their own c.a.p., so everyone would aim for autarkic self-sufficiency. His German counterpart Horst Seehofer is walking in the same direction. On the other hand this particular view was swiftly rebutted by Agriculture Commissioner Mariann Fischer Boel who took a pro-trade stance, just one month before her proposed overhaul of the CAP.
 
Of course agricultural ministers always resist change, but these interventions suggest that longer term moves to review the future of the c.a.p. will run into stiff opposition. We can probably kiss goodbye to any hope of completing the Doha Round before the US elections. Interestingly, Brazil is making tariffs on biofuels a key aspect of its position on Doha.
 
Pressure on the EU biofuels commitment continues to build. Commission President Barroso has asked for an assessment of the impact of biofuel production on food prices and on development. The Commission press room is thick with rumours of division in the college. Some officials are briefing that the 10 per cent commitment for biofuels in transport fuel by 2020 has been sidelined, while others dismiss any such talk.
 
Among member states the British appear to be reconsidering their biofuels commitment after a national 2.5 per cent obligation came into effect. Prime Minister Gordon Brown is concerned that some biofuels do not meet the necessary sustainability criteria and may call for changes in the EU targets.

The fact is that European and American subsidies for biofuels, which were designed to prime the pump until the industry could become viable in its own right, have produced a host of unpredictable and positively absurd consequences.
 
For instance, it seems that a big chunk of Europe’s biofuel industry has been put out of action because of the imports of “splash and dash” biodiesel from the US. All you need is a tanker load of biodiesel, maybe exported from the EU or South America, add 1 per cent of mineral oil, collect a subsidy of €200 per tonne from the US administration and then ship it back to Europe where you collect further subsidy. The EU companies have now lodged a formal anti-subsidy and anti-dumping complaint.
 
The debate over GMOs is going to hot up as well. It takes on a new urgency as world food prices continue to soar and is bound to provoke some intense debate in Commission, Council and in the member states. No doubt there are risks to be analysed and assessed, but I wonder how the arguments against the use of genetically modified crops could stand up in the face of a major world food crisis and massive malnutrition in developing countries.

It seems so different from the old days, when the Franco–German alliance was the central core of European integration. With new leaders come new perspectives. President Sarkozy used his March visit to London to woo the British, with a speech to the British Parliament where he paid unheard-of tributes to Britain’s qualities and set out a detailed agenda for Anglo-French co-operation.

The elegance of Mme Carla Sarkozy gave extra media colour to what was a highly successful state visit. If he wooed, she certainly wowed. The Entente Cordiale, signed in 1904 between Britain and France, has a new lease of life.
 
The President’s message was, to coin a phrase once much loved of some British politicians, that the UK should be at the heart of Europe, even implying that an Anglo-French partnership could be the new driver for the EU. One practical initiative is that ministers from the two countries will meet on a quarterly basis – presumably matching the bilateral sessions between Paris and Berlin. Thirteen French ministers accompanied the President to London.

Almost everything in the President’s agenda involved bilateral initiatives, but mostly set in an EU context. On the other hand there was little rhetoric from Gordon Brown which indicated any new enthusiasm for Europe.
 
Still, it’s a reflection of how EU priorities are changing, that even the most sceptical journalists were hard put to identify subjects of disagreement. Not even the common agricultural policy was much of a bone of contention (after all, we must learn to love the CAP in the face of soaring world prices!). Whether or not to boycott the Beijing Olympics opening ceremony seems about the only discordant item. No indication that energy liberalisation was discussed.
 
Especially interesting would be to know what was said behind the scenes about defence. Sarkozy has already indicated that France may wish to rejoin the integrated command structure of NATO, abandoned by De Gaulle in 1966, and will provide additional forces for Afghanistan, but nothing was said publicly about strengthening the European Security and Defence Policy and France’s wish for a stronger ESDP planning capability.
 
A stronger European identity in NATO may be France’s price for rejoining the alliance. This remains highly contentious for the US and probably for the British too.

On the other hand there was agreement on an Anglo-French maintenance contract for the A400M transport aircraft when this comes into service, leaving the Germans to their own devices, and reinforced arrangements for joint procurement and for pooling of helicopters, aircraft carriers and maritime aircraft in joint missions under EU or NATO auspices.
 
Certainly Sarkozy feels temperamentally closer to the UK than to Germany. There is no evidence of a close personal rapport with Angela Merkel of the sort which he seems to have with Gordon Brown and there have been specific problems, notably over vehicle emissions, over the independence of the ECB and over his idea for a Mediterranean Union (resolved in advance of the March EU summit – see Annex 1). Nor is Germany a natural partner on defence issues as Berlin faces politically painful challenges in putting German troops into combat zones.
     
In the end, though, the demands of realpolitik will determine alliances. The Franco-German understanding in not dead.

Talking of which, I note that Angela Merkel said that her CDU party agreed with Sarkozy’s UMP that Turkey should have a privileged partnership rather than full EU membership. This promises interesting enlargement negotiations when France takes over the EU presidency in July and certainly marks a fundamental difference with British policy. Another issue which failed to feature in the public pronouncements in London!

France and the UK both have relatively new leaders who could change Europe, but so do others. In Cyprus, for instance, there are signs of movement following the election of President Christofias, including demolishing barriers in Nicosia’s main shopping street. A symbol of hope, even though there’s a long way to go to unification.

I see that the new Polish Prime Minister Donald Tusk is threatening a referendum on the Lisbon Treaty unless President Kaczynski’s party supports ratification in Parliament. The party withdrew its support, demanding the same opt-out from the Charter of Fundamental Rights as secured by the UK.

It seems that June 12 has been set as the date for the Lisbon referendum in Ireland, the only country to hold such a vote (unless Tusk has to make good his threat). The Irish vote will not be a walkover  Sinn Fein will campaign for a no vote; Jean-Marie Le Pen has announced that he will also participate. It promises a fascinating contest where turnout will be crucial. A no vote would of course block ratification of the Treaty: back to the drawing board.

For many of Britain’s Tory MEPs June 11 2009 is a date which rushes upon them all too fast: it’s when Britain votes in the next European elections.  So where will the Conservative Party stand on Europe? Will the Conservative group in the European Parliament be forced out of the EPP and into a strange alliance with some Czech MEPs? And will Tory leader David Cameron make “renegotiation” an election pledge, assuming that by then the Lisbon Treaty will have been ratified and implemented?

MEP Caroline Jackson has decided to go public with her concerns in the Financial Times, in the hope of triggering a more thoughtful debate in her party. She warns of “a very nasty patch of poisonous fungus” among the green leaves of the party’s symbolic tree. She wants David Cameron to have the courage to admit he was wrong and to take Europe seriously.

The Conservative leader is certainly a pragmatist, working to find traction in the slippery middle ground of British politics. See Nick Robinson’s blog profile which asks just ‘What does Cameron think?’.

Cameron’s attitude to Europe seems to be among his more cynical ploys, designed to keep at bay the challenge from the UK Independence Party, to provide some red meat for the right wing of his own party yet to send a message to the British electorate that Europe is of no significance. He barely recognises the existence of the Conservative EP group and runs the risk that some MEPs will leave the party altogether and make common cause with the Lib Dems.

The big prize for Cameron would of course be victory in the British general election, which could also be in 2009 (how about June 11 2009?). It will take a landslide to give the Conservatives an overall majority and the Lib Dems could well be the king makers in a hung parliament at Westminster. They also have the chance to mount a big challenge in the European elections.
 
The open question is whether Cameron will change his strategy as elections come closer and the prospect of government becomes reality. These are indeed tense times for the pro-European MEPs in the Tory group.

What relief among EU competition officials when, on September 17, the European Court of First Instance upheld the Commission’s decisions on the Microsoft case!

I know the case could still be appealed to the full European Court, but I’m sure that for Commissioner Neelie Kroes it was a major boost just when she needed it – on the eve of proposals for liberalising Europe’s energy market.

The Microsoft judgment was crucial for the European Commission as a whole. Defeat at the hands of the CFI on such a major case would have undermined the Commission’s overall credibility, because competition policy has become the main driver of European internal market policy.  As the number of new proposals from the European Commission falls to an all-time low in the service of “better regulation”, so a bigger burden falls on the instruments of implementation and enforcement, especially competition policy.

The fundamentals of the case take us back to the 1984 IBM affair, when a European competition ruling required the firm to provide interoperability information to rivals on product attachments, computer memory and software and the personal computer revolution was launched. Commissioner Kroes anticipates equally dramatic results from this latest ruling. We’ll see.

That’s certainly not how US Assistant Attorney General Thomas Barnett sees it. He said the judgment could “chill innovation and discourage competition” – a rather extraordinary intervention, not so much for what he said, as that he said anything at all, given the close relationship between EU and US competition authorities.

I was glad to see that Neelie Kroes responded to his remarks in her customary forthright manner.

The energy package, with its proposals for separating ownership of gas and electricity networks from generation and supply, was adopted two days after the CFI judgment. It was the outcome of a long process of consultation and political arm-wrestling. The battle lines had long been drawn, with Germany and France particularly resistant to the sort of changes which the Commission wanted.

I suppose much of the package was as expected, with the Commission’s favoured option of ownership unbundling side by side with the less-favoured accountant’s solution of independent system operator (ISO), where vertically integrated companies would survive, allowing the regulator and not the market to ensure the separation of their various activities. The response of the market players was much as expected as well – see the FH analysis.

A bigger surprise to me was the proposed Agency for the Co-operation of National Energy Regulators “with binding decision powers” –  ACER. This body would be a reborn version of the EU networks of national regulators which have become increasingly important as the Union has expanded.  These networks have a special role where the Commission seeks to ensure consistent implementation of European rules across 27 member countries in sectors such as competition policy, financial services, telecoms and energy.

From the Commission’s point of view the key to the success of each network is that the 27 member bodies in effect switch their loyalties. They should no longer act at the behest of their national political masters; their task becomes the objective implementation of European law. This of course is no easy task.

The EU networks of regulators for gas and electricity markets have not always distinguished themselves by their independence of national governments (the Spanish electricity regulator springs to mind), so the Commission is seeking a half-way house which sets up a body with regulatory powers without trying to subsume national regulators into a single European regulator.

It seems that Commissioner Viviane Reding is facing a similar challenge with her draft telecoms package. According to the FT she is facing fierce opposition from Commissioners Kroes and Verheugen for advocating an EU telecoms regulator and “functional separation” for dominant telecoms operators which looks much like the ISO energy model.

My guess is that this formula is seen to threaten the role of competition policy in the European telecoms market. I recall the current Competition Director General telling a Brussels conference that maybe regulation was the enemy of competition.

Let’s not write off Commissioner Reding’s political capabilities. It was she who proposed the Eurotariff for mobile roaming and has pushed through new EU tariff structures in the face of fierce lobbying from the mobile phone industry and opposition from other Commissioners.

As for the new energy package, it’s interesting that the impact assessment is the biggest document – 107 pages. Its analysis concludes that the proposals put forward by the Commission are the best options. You could paraphrase Mandy Rice-Davies, “well it would, wouldn’t it”, because there is criticism that EC impact assessments are not sufficiently independent of the Commission, but if the Commission is doing its job properly surely its own internal analysis should reflect the same conclusions as the published assessment.

Talking of better regulation, it seems that the Barroso Commission is finding it just as difficult to withdraw proposals or to modify them in a de-regulatory direction as it ever was to introduce the legislation in the first place.

For instance a proposal to reduce record-keeping on hygiene practices for small bakers, butchers and grocery shops ran into opposition from the big operators. Although it would not affect the level of sanitary protection, they thought it would undermine competition.

The affair of the Chinese toys was a bit different. In this case the Commission proposal would reduce checks on imports of industrial products but not of consumer goods. The Council of Ministers went one further, going for the light touch on consumer products as well. Commissioner Meglena Kuneva has been fighting a rearguard action in the Parliament to reverse this, with the scandal of Chinese toy imports still running strong. It is a reminder that consumer protection was always a major driver of new legislation.

A brief digression to the UK: I see that the Dutch cabinet has decided not to hold a referendum on the EU Treaty. This is a blow to David Cameron’s campaign for a vote on the Treaty in the UK. It always looked as if the Tory leader was using his policy on Europe – including the order for the Conservative Group to sail off to a desert island – as a lightning conductor to divert right-wing disaffection within the party away from new-look domestic policies.

The Conservatives’ policy on Europe should spike UKIP’s guns if there is an early general election in Britain. But what if an EU Treaty is adopted and ratified by the end of 2008: what home then for the Tory disaffected?