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The Cap Reform And Ec-Us Relations: The Gatt As A "Cap" On The Cap

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  • Guyomard, Herve
  • Mahe, Louis Adrien Pascal
  • Roe, Terry L.
  • Tarditi, Secondo

Abstract

Reform of the Common Agricultural Policy has entailed the substitution of new income support instruments for the former price based instruments, mainly in the cash crop sector. Our first point is that the domestic political balance was unable to generate such a large change in policy design, in spite of inefficiencies and inbalances. The pressure of the US has been a major factor in the design of the reform. We argue that trade interests have been crucial to catalyze international collective action in order to countervail domestic pressure groups. The pursuit of an agreement in the GATT is therefore a means to place a cap on the CAP and foster some reform and control over sectors such as sugar and dairy in other countries. We do not foresee the disappearance of sources of tensions between the two countries, as EC animal products become more competitive and as the working of the CAP in the vicinity of world prices will make trade flows sensitive to world macro-economic and agricultural shocks. The Uruguay Round, should not be considered as fully satisfactory, and the long-run objective of further decoupling of payments from production incentives should be pursued.

Suggested Citation

  • Guyomard, Herve & Mahe, Louis Adrien Pascal & Roe, Terry L. & Tarditi, Secondo, 1993. "The Cap Reform And Ec-Us Relations: The Gatt As A "Cap" On The Cap," Working Papers 14432, University of Minnesota, Center for International Food and Agricultural Policy.
    • Handle: RePEc:ags:umciwp:14432
    DOI: 10.22004/ag.econ.14432
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    1. Munk, K J, 1989. "Price Support to the EC Agricultural Sector: An Optimal Policy?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 5(2), pages 76-89, Summer.
    2. Herve Guyomard, 1991. "Agriculture in the GATT : an assessment of the USA's 1989 proposal," Post-Print hal-01594074, HAL.
    3. Johnson, Martin & Mahe, Louis & Roe, Terry, 1993. "Trade compromises between the European community and the United States: An interest group-game theory," Journal of Policy Modeling, Elsevier, vol. 15(2), pages 199-222, April.
    4. Paarlberg, Robert, 1989. "THE POLITICAL ECONOMY OF AMERICAN AGRICULTURAL POLICY: Three Approaches," 1989 Annual Meeting, July 30-August 2, Baton Rouge, Louisiana 270661, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Runge, C. Ford & von Witzke, Harald & Thompson, Shelley, 1987. "Liberal Agricultural Trade As A Public Good: Free Trade Versus Free Riding Under Gatt," Staff Papers 13635, University of Minnesota, Department of Applied Economics.
    6. L. P. Mahé, 1988. "Trade Negotiation and Agriculture: New Approaches and Possible Consequences: Discussion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(5), pages 1156-1158.
    7. Barry K. Goodwin & François Ortalo-Magné, 1992. "The Capitalization of Wheat Subsidies into Agricultural Land Values," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 40(1), pages 37-54, March.
    8. Guyomard, H. & Mahe, L. P., 1991. "Agriculture in the GATT: An assessment of the USA's 1989 proposal," Food Policy, Elsevier, vol. 16(4), pages 330-341, August.
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    1. Alain Carpentier & Hervé Guyomard & Chantal Le Mouël, 1998. "Consistency between environmental and competitiveness objectives of agricultural policies: economics of price support, set-aside, direct payments and other Common Agricultural Policy instruments," Chapters, in: John M. Antle & Joseph N. Lekakis & George P. Zanias (ed.), Agriculture, Trade and the Environment, chapter 5, pages 89-111, Edward Elgar Publishing.
    2. Ames, Glenn C.W. & Gunter, Lewell F. & Davis, Claudia D., 1996. "Analysis Of The U.S.-European Community Oilseeds Agreement," Faculty Series 16646, University of Georgia, Department of Agricultural and Applied Economics.
    3. Xinshen Diao & Terry Roe & Agapi Somwaru, 2001. "What is the Cause of Growth in Regional Trade: Trade Liberalisation or RTAs? The Case of Agriculture," The World Economy, Wiley Blackwell, vol. 24(1), pages 51-79, January.
    4. Ames, Glenn C. W. & Gunter, Lewell & Davis, Claudia D., 1996. "Analysis of USA-European Community oilseeds agreements," Agricultural Economics, Blackwell, vol. 15(2), pages 97-112, November.
    5. Guyomard, Herve & Bureau, Jean-Christophe & Gohin, Alexandre & Le Mouel, Chantal, 2000. "Impact of the 1996 US FAIR Act on the Common Agricultural Policy in the World Trade Organisation context: the decoupling issue," Food Policy, Elsevier, vol. 25(1), pages 17-34, February.

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