Agricultural trade relations between the EC and temperate food exporting countries

After a short account of the development of EC negotiating positions in international talks on agricultural trade till September 1978, the economics of agricultural protection and some basic problems in EC agricultural trade are discussed. It is argued that the nature of the CAP-instruments as well as the way in which they have been used is overprotectionist. The fundamental problem of the CAP is that it is a policy on a community level without a real supranational character. Single member countries' interests play a more important role in the CAP than the overall outcome. Although the Community has always argued that world market stability is important per se and a necessary prerequisite of liberalizing agricultural trade, its own contribution to it has so far been rather negative. Some adjustments of the CAP are proposed in order to absorb more instability at home and to increase agricultural imports into Europe, like making the import levies less variable, widening the band between threshold and intervention prices and, in particular, restricting or abandoning the use of export subsidies. Although adjustments of this kind are by no means radical, they could do much to limit confrontation and enhance cooperation in international trade. Increasing agricultural imports into Europe, moreover, may be a prerequisite of expanding markets for EC industrial exports.