Original publication: July 2016
Authors: Alan SWINBANK – School of Agriculture, Policy and Development, University of Reading, UK
Short link to this post: http://bit.ly/2DwBUVz

The CAP of the mid-2010s is clearly rather different from its initial construct of the 1960s. Documenting changes to a policy is a relatively easy task. Identifying the causal factors that prompted change is, on the other hand, rather more difficult. Nonetheless the remit of this In-depth Analysis was to identify how the EU’s External Actions —its trade policies and other international obligations, its aid for neighbouring states and developing countries, etc.— have influenced the evolution of the CAP, and to suggest how such influences might impact on the post-2020 CAP. The focus of the report is on the EU’s support for agriculture and rural areas as expressed in Pillars I and II of the CAP.

 

Section 2 focuses in particular on two key reforms that fundamentally changed the way the EU supports its farmers and rural areas: the MacSharry reform of 1992, and the Fischler reform of 2003. Whilst the CAP of the 1960s and 1970s was almost exclusively concerned with market-price support, using intervention buying, export subsidies, etc., today’s CAP is more pluralistic. Farm income support is still a major preoccupation (arguably the major preoccupation), but payments are largely decoupled from production. Environmental objectives are built into both Pillars of the CAP, as is support for the rural economy.

Section 3, dealing with first GATT and then the WTO, is perhaps the core of the report. Prior to the Uruguay Round the CAP was more influenced by GATT obligations than is commonly recognised. GATT tariff Bindings on the starch- and protein-rich ingredients that were used to formulate ‘cereal substitutes’ for example did mean that the EU was inhibited from ‘rebalancing’ the CAP by applying to these imports trade measures comparable to those for cereals. Nonetheless the Uruguay Round was a pivotal development. To further its wider trade interests, the EU did accept that it had to make changes to the CAP (in the MacSharry reform), and thereafter accept WTO disciplines, and adhere to adverse rulings from the new WTO Dispute Settlement system, on the future design of policy. This influence, together the push for a new settlement in the Doha Round, continued to act as a driver of CAP reform through to 2008. However, with no end to the Doha Round in sight, WTO rules had very little leverage on the CAP’s 2013 recalibration. WTO constraints are also woven into the discussions of Sections 4, 5, 6 and 7.

The various Enlargements of the EU, discussed in Section 4, have probably had more  influence on the CAP that is usually recognised. They helped shaped the regionalization of policy, and strengthen its environmental and rural development dimensions for example.

The EU is proud of its support for developing countries (Section 5), and its Neighbourhood policies with countries around the Mediterranean Basin and on its Eastern flank (Section 6). Providing privileged access for agricultural products from these origins has, however, always been somewhat problematic for the EU’s producers of competing goods: a tension that continues. One development that clearly fed into the debate over the 2005/6 sugar reform was the decision to offer to the Least-developed Countries, duty and quota free access for virtually all products: the Everything but Arms initiative.

The EU always had a complex web of preferential trade agreements, as outlined in Sections 5 and 6 but, with the lack of progress in the Doha Round, developed and the moredeveloped developing countries around the world began to explore ways of to further liberalise trade on a bilateral basis (Section 7). Thus the EU is now embarked on negotiations of a number of Deep and Comprehensive Free Trade Area (DCFTA) agreements, some of which can open up markets for EU agri-food exports (e.g. South Korea, Japan) whilst others (Canada, USA, Mercosur) imply increased imports of beef, sugar, etc., into the EU. If implemented, this new generation of DCFTAs would probably have a more immediate impact on EU market prices than the steep tariff reductions that would eventually follow a settlement of the Doha Round.

Section 8 discusses the EU’s long-standing leadership of international efforts to combat global warning, and the commitments it entered into at the Paris Climate Conference. The CAP for a brief period directly supported the production of biomass for biofuel production, but it would be wrong to suggest that its biofuel policy is a surrogate for the CAP. The 2013 recalibration of the CAP, with its greening component, was premised inter alia on the need to reduce agriculture’s greenhouse gas (GHG) emissions, but critics suggest that much of this was rhetoric. More will certainly need to be done in the post-2020 CAP.

Section 9 asks what external pressures will influence debate over the post-2020 CAP. It reiterates the need to strengthen the CAP’s greening provisions, suggests that WTO constraints will probably not be a major factor, but warns that volatile geopolitical developments on the EU’s Southern or Eastern flanks could trigger demands for improved access for agri-food products from these origins. The report ends with a warning that the UK electorate’s vote to leave the EU (‘Brexit’), possibly as early as 2018, also has implications for the CAP.

Link to the full study: http://bit.ly/585-879

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