The Common Agricultural Policy

Policy Dynamics in a Changing Context

Grace Skogstad, Amy Verdun

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781317988526
• Edition: 1
• Topic: Economics
• Subtopic: International Economics
• Index: Economics

The Common Agricultural Policy (CAP) is a unique agricultural policy worldwide. For many years, its status as the only common European Community (EC) policy governed by EC institutions put it at the heart of European integration. Today the CAP is not the only common European Union (EU) policy. Even while it remains the sole instance of a regionally integrated agricultural policy, the CAP no longer embodies the same degree of cross-national harmonization of agricultural policy among EC/EU member states that it once did.

The CAP has undergone policy reforms in the past two decades and these reforms have spawned a host of questions. What has caused the CAP to reform? How path-breaking are CAP reforms? Are they consistent with founding CAP goals or do they encompass new ideas about agriculture's place in the economy and society? And what are the consequences of agricultural policy reforms: for European farmers, consumers and taxpayers; for European 'public goods' such as environmental sustainability and preservation of rural communities and landscapes; and for third parties outside the EU, including the WTO?

This book was published as a special issue of the Journal of European Integration.

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The Common Agricultural Policy: Continuity and Change

 

GRACE SKOGSTAD* & AMY VERDUN**

 

*Department of Political Science, University of Toronto, Ontario, Canada

**Department of Political Science, University of Toronto, Ontario, Canada

 

The Common Agricultural Policy (CAP) of the European Union (EU) is a unique agricultural policy worldwide. When it was devised in the late 1950s and its objectives enshrined in the Treaty of Rome, it constituted ‘the first successful attempt to create a single policy for an economic sector, implemented in a unified manner over the territory of a number of independent states, and which governed their relationships not only with one each other but also with the rest of the world’ (Fennell 1997, 1). For many years, its status as the only common European Community policy governed by EC institutions put it at the heart of European integration.

Today the CAP is not the only common EC/EU policy. Even while it remains the sole instance of a regionally integrated agricultural policy, the CAP no longer embodies the same degree of cross-national harmonization of agricultural policy among EC/EU member states that it once did. It has undergone policy reforms in the past two decades and these reforms have spawned a host of questions. What has caused the CAP to reform? Have factors endogenous to the EU been especially important drivers of change or have exogenous pressures from trade competitors and in the form of international trade agreements under the rubric of the World Trade Organization (WTO) been the major catalyst of reforms? How path-breaking are CAP reforms? Are they consistent with founding CAP goals or do they encompass new ideas about agriculture's place in the economy and society? And what are the consequences of agricultural policy reforms: for European farmers, consumers and taxpayers; for European ‘public goods’, such as environmental sustainability and preservation of rural communities and landscapes; and for third parties outside the EU?

These questions are addressed in the contributions of this collection on The Common Agricultural Policy: Policy Dynamics in a Changing Context. In the first contribution, ‘The CAP: Looking Back, Looking Ahead’, Alison Burrell documents a trajectory of continuous reform to the CAP. She tracks its evolution, first, from a protectionist policy isolated from market signals to one that is more market sensitive; secondly, from a policy preoccupied with farm incomes (Pillar II) to a policy also directed to rural development and sustainable environment policy goals (Pillar); and, thirdly, from a policy characterized by centralized EU-level decision making to one that gives member state governments greater flexibility to determine the configuration of CAP policy goals and expenditures (re-nationalization). Burrell attributes the scope and timing of CAP reforms to the endogenous pressures of budgetary constraints and societal demands within the EU, exogenous constraints of international trade negotiations and agreements, and enlargement of the EU eastward. ‘Looking Forward’, she also appraises the likelihood that reformist-inducing factors will continue to be a catalyst for reform.

A somewhat different view of the factors that have driven policy development in the CAP is presented in the second contribution, ‘The Logic of Policy Development: Lessons Learned from Reform and Routine within the CAP 1980–2003’. Kennet Lynggaard and Peter Nedergaard depart from the over-whelming tendency of most analysts of CAP reform to focus on the causes and consequences of specific instances of reform: the introduction of milk quotas in 1984, the 1988 ceiling on growth in agricultural expenditures, the 1992 MacSharry reforms, the Agenda 2000 reforms in 1999, and the 2003 Fischler reforms. The overriding perspective, they argue, is to view CAP reforms as the outcome of rationalist bargaining, with the interests and institutional conditions of member states and the Commission being important explanatory factors. In their view, such an approach fails to appreciate both the importance of periods ‘in between’ reforms and the role of ideational factors in explaining CAP policy developments. Arguing that CAP policy developments are best explained by ‘the dialectic of ideas and interests’, Lynggaard and Nedergaard demonstrate how the ideas of central decision makers and their constituencies about agricultural support and problems have altered over time. These new ideas shape the preferences of actors and the outcomes of their bargaining at specific periods of agricultural policy reform.

The third contribution, ‘Ideational Change in the WTO and its Impacts on EU Agricultural Policy Institutions and the CAP’, also investigates the role of ideas as a driver of CAP reforms. The authors, Carsten Daugbjerg and Alan Swinbank, argue that the Uruguay Round Agreement on Agriculture (URAA) introduced the market liberal paradigm as the ideational underpinning of the new farm trade regime. In their view this market liberal paradigm and the terms of the URAA have been major factors in the evolution of the CAP. Both the amount and manner by which agricultural support is distributed have been affected, and new concerns (protection of the environment, maintaining viable rural communities, for example) have been added to traditional policy goals of farm income support. Nonetheless, the authors argue that the paradigm on which the original CAP was constituted — the state-assisted paradigm — has been sustained, albeit in a new version of multifunctionality.

Reforms to the CAP in the 1990s and 2000s have been made in a context of EU enlargement and an important question is the impact of enlargement on CAP policy developments. This question is tackled in the fourth contribution, ‘Enlargement of the European Union and Agricultural Policy Reform’, by Maria Skovager Jensen, Kim Martin Lind and Henrik Zobbe. Using cluster analysis and examining the 1992 MacSharry and 2003 mid-term review reforms, the authors demonstrate that member states' willingness to reform the CAP is related to whether their agricultural sectors are subject to extensive production, characterized by smaller farms using low production (fertilizer, pesticide) inputs, or intensive agricultural production characterized by larger farms using more inputs. They find that some but not all countries with intensive agricultural production are more willing to reform the CAP than are those with extensive production. By increasing the amount of extensive agricultural production in the EU, enlargement has decreased the prospects for reform of the CAP. Still, the structure of agriculture in a member state does not determine completely its reform position.

The next two contributions in this collection look at the impact of EU policies on domestic agricultural and agro-environmental policies. ‘Domestic Change and EU Compliance in the Netherlands: Policy Feedback during Enforcement’ by Gerard Breeman and Pieter Zwaan investigates how the EU directive on Foot and Mouth Disease (FMD) ran asunder domestic politics in the Netherlands. They situate their case study within a broader European integration literature that recognizes that domestic factors can delay the national implementation of EU directives, but which assumes that such delays will eventually be overcome. The authors examine implementation difficulties that arise owing to a conflict between domestic economic, environmental and ethical norms and those embodied in EU legislation. As norms in the Netherlands turned against killing all animals infected with FMD, as well as those in the vicinity of the contamination, the EU directive requiring this practice caused national implementation difficulties. Domestic criticism led the Netherlands government to reintroduce vaccination programmes. There were also feedback effects at the EU level as emergency vaccination was recognized as an important strategy to control FMD.

The potential environmental effects of liberal reforms to the CAP are considered in the sixth contribution in this collection. In ‘Environmentally Sustainable Agriculture and Future Developments of the CAP’, Helle Oersted Nielsen, Anders Branth Pedersen and Tove Christensen begin by reviewing the main reforms to the CAP and the likely drivers of future change. They then sketch and address the implications for environmental sustainability of three possible policy scenarios that represent different degrees of liberalization: further market reform within the EU, re-nationalization of the CAP and significant trade liberalization under the WTO. They conclude that it is not obvious whether reforms under any of the three different scenarios will yield environmental benefits. The greater the trade liberalization, in their view, the greater appears the need for environmental policy, whether in the form of agri-environmental subsidies, taxes and/or regulations.

The CAP has long been a target of criticism, not only inside but also outside the EU, and EU agricultural competitors, including the USA, have attempted to use international trade negotiations to force its reform. More recently, however, CAP has had to share its place as a source of controversy with genetically modified organisms (GMOs). In his article, ‘Competitive Governance and the Quest for Legitimacy in the EU: the Battle over the Regulation of GMOs since the mid-1990s’, Yves Tiberghien asks why EU GMO regulatory policy has oscillated over time and become the strictest in the world. He finds his answer in the dynamics of ‘competitive governance’. The competition for leadership between the European Commission and the Council of Ministers, he argues, has resulted in a cycle of ‘competitive regulatory reinforcement’ that has raised GMO regulatory standards. It has not, however, ended conflict within the EU on how to regulate GM crops and foods.

The EU's GMO policies have also created conflict in the international trading system and the final contribution in this collection takes a close look at efforts to resolve them in the WTO. In ‘The GMO Panel: Applications of WTO Law to Trade in Agricultural Biotech Products’, Gilbert R. Winham examines the background to the WTO case and the ruling of the WTO panel in ‘EC-Measures Affecting the Approval and Marketing of Biotech Products’. He explains why the WTO panel ruled that certain measures of the EU with respect to GMO regulation violated WTO law, and addresses the implications for the EU of the WTO ruling. Winham concludes that the GMO case ‘will likely continue to cause political conflict within Europe’.

Individually and collectively, the contributions that make up this collection of papers offer new insights into the dynamics of the Common Agricultural Policy and the factors that are shaping its evolution. In their theoretical and methodological diversity, the contributions present a variety of perspectives: sometimes disagreeing with one another on the magnitude of change the CAP has undergone, as well as on the contribution that various factors have made to its development. If there is no unanimity on how best to understand the CAP, there is none the less consensus that it is a worthy and fascinating subject of analyses.

Acknowledgement

Earlier versions of the contributions that appear in this collection were first presented at an international conference hosted by the Jean Monnet Centre of Excellence of the University of Victoria, 13–15 September 2007. The conference was funded by a number of sources: the Social Sciences and Humanities Research Council of Canada (SSHRC) conference grant (awarded to Amy Verdun), the Jean Monnet Centre of Excellence, the Canadian and Dutch Ministries of Agriculture, the FLP group, the University of Victoria Vice-President Research, Canada Research Chair (Van Kooten), and the Rabobank. All articles were subject to double-blind peer review in keeping with the policy of this journal. Fourteen other papers presented at the conference appear in a special issue of volume 56 (2008) of the Canadian Journal of Agricultural Economics. The editors thank the Jean Monnet Centre of Excellence, SSHRC, the authors and the reviewers for making this collection possible.

Reference

Fennell, R. 1997. The Common Agricultural Policy: continuity and change. Oxford: Clarendon Press.

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The CAP: Looking Back, Looking Ahead

ALISON BURRELL

Agricultural Economic and Rural Policy Group, Wageningen University, Wageningen, The Netherlands

This paper offers a brief overview of the Common Agricultural Policy (CAP) from its origins until the present day in order to identify the factors that have been shaping its evolution. It then attempts to evaluate how persistent these trends will be in the future, whether new policy imperatives are gaining relevance in CAP reform and what they imply for the CAP over the coming years. Budget crises, international trade pressures and enlargement have driven the CAP reforms of the last fifteen years. In the future, change will be driven by the need to maintain the economic rationality and political acceptability of agricultural policy in an enlarged European Union of twenty-seven heterogeneous member states. Further decentralization of decision making and financing can be expected.

Introduction

Critics of the Common Agricultural Policy (CAP) of the European Union (EU) like to depict it as a highly protectionist set of measures, resistant to change and unresponsive to outside pressures. In fact, for some years the CAP has been evolving along a relatively consistent reform trajectory, even if this has sometimes been masked by short-term fluctuations caused by the vagaries of EU decision making and exogenous developments. In fact, some of these shocks may have accelerated the underlying policy reform process and determined the particular parameters of the reform path chosen.

This paper begins with a brief overview of the CAP from its origins until the present day in order to identify the factors that have been driving and shaping its evolution. It then attempts to evaluate how persistent these trends will be in the future, whether new policy imperatives are gaining relevance in CAP reform and what they imply for the CAP over the coming years.

The First Forty Years of the CAP

The mechanisms of the CAP were put in place over the eleven-year period following the Treaty of Rome in 1957. High internal farm prices, strong market intervention and border protection were its essential characteristics from the start. Most commodity regimes were based on variable import levies and variable export subsidies as the main instruments of border protection, while target prices and internal intervention purchasing provided a floor for domestic prices. The Community budget directly financed all expenditures on agricultural support.

For the first twenty-five years, the CAP's commodity support regimes remained largely unchanged. Decisions on farm prices were taken annually in a context detached from outside pressures or constraints. There were no binding limits on agricultural policy expenditure for much of the period, and the policy regimes operated largely in isolation from macroeconomic and world market trends. Annual CAP expenditures were usually a compromise to accommodate the domestic political objectives and strategic interests of the member countries. The result was continuing high prices and escalating expenditure as member states negotiated to increase benefits for their domestic farmers.

Pressure for change came from various fronts. First, the integration goals and projects (including the single market, monetary union, energy policy, regional policy) of the Delors Commissions (1985–1994) ended agriculture's status as the only sector subject to comprehensive Community-level policies and the main recipient of the Community budget. Secondly, rising production levels strained CAP commodity regimes and the Community budget. Thirdly, Community enlargement significantly diluted the relative homogeneity of farm conditions and sectoral preferences of the original six members and fragmented member state support for the CAP's regime structure. The three northern European countries that joined the original six members in the early 1970s had a stronger free-trade orientation, while the three new Mediterranean country members during the 1980s had technologically and structurally weak agricultural sectors whose commodities were subject to ‘light’ price support regimes. Fourthly, the CAP came under attack from trading partners within the Uruguay Round multilateral trade negotiations (launched in 1986) for its prohibitive tariffs and its persistent dumping of subsidized surplus products on world markets. Fifthly, changing societal perceptions of the CAP challenged the status quo. The media consistently highlighted the large food surpluses in intervention storage, and their wasteful disposal drew heavy public criticism. There was also criticism of the inequitable distribution of CAP support across individual farmers and of the environmental damage from intensive farm...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• 1 The Common Agricultural Policy: Continuity and Change
• 2 The CAP: Looking Back, Looking Ahead
• 3 The Logic of Policy Development: Lessons Learned from Reform and Routine within the CAP 1980–2003
• 4 Ideational Change in the WTO and its Impacts on EU Agricultural Policy Institutions and the CAP
• 5 Enlargement of the European Union and Agricultural Policy Reform
• 6 Domestic Change and EU Compliance in the Netherlands: Policy Feedback during Enforcement
• 7 Environmentally Sustainable Agriculture and Future Developments of the CAP
• 8 Competitive Governance and the Quest for Legitimacy in the EU: the Battle over the Regulation of GMOs since the mid-1990s
• 9 The GMO Panel: Applications of WTO Law to Trade in Agricultural Biotech Products
• Index