Agricultural trade

Lack of progress in the Doha Round of trade negotiations has not been entirely due to difficulties over agricultural issues. Nevertheless, as in the Uruguay Round, they have remained a substantial obstacle to agreement. One part of the story is weaker impetus both from the US administration and agribusiness interests for agricultural trade liberalisation. However, the European Union (EU) has also proved resistant to change, particularly over market access and the maintenance of high tariff barriers. There is an underlying political dynamic to this resistance. The EU has relatively large numbers of marginal farmers who would find it difficult to compete on world markets without protection – often located in peripheral regions with broader economic problems that are also either politically marginal or are strongly represented within a ruling party. It is hence difficult to suggest policies that might harm their interests. Interests of consumers and taxpayers are more diffuse compared with these concentrated interests, while input industries lend support to subsidies. Indeed, the latest EU reform proposals for agriculture envisage reducing the subsidy for more competitive farmers, confirming that the Common Agricultural Policy (CAP) is conceived of primarily as a social policy, albeit a very inefficient one in meeting its objectives. France has remained a resolute defender of the CAP, although in the longer run budgetary pressures could shift its position. However, it has sought with some success to revitalise its defence of the CAP through a discourse of food security, which has some credibility given structural shifts in the global balance of supply and demand and long-term threats posed by climate change. Nevertheless, a policy of protection and subsidisation is not an effective answer to these challenges.