Common Agricultural Policy - Essay Example

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The European Union's Common Agricultural Policy (CAP) was introduced in the early 1960s. It remains largely managed by the provisions of the 1957 Treaty of Rome. With its combination of high and stable guaranteed prices, the CAP has been successful at boosting production, and also in easing the transformation of a largely rural society to an economy of manufacturing and services, limiting the human and economic cost of transition…
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Common Agricultural Policy
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"Common Agricultural Policy"

Download file to see previous pages Since then, the CAP has now changed dramatically after three successive reforms, the last one taking place in 2003 and being progressively implemented. According to the Common Agricultural Policy, with regard to developing countries the EU is committed to the principle of special and differential treatment. It appeals to all developed and the wealthiest developing countries to provide significant trade preferences to developing countries and it pleads for making these trade preferences more stable and more predictable. On domestic support, the EU is prepared to accommodate concerns of developing countries on food security, rural development and rural poverty by adjusting the "green box"(Harrison et al, 1995). In this paper, we would be discussing the effect of Common Agricultural Policy on developing countries to arrive at a conclusion whether CAP helps or harms the developing countries.
When the EU was formed in 1958, two important conditions already existed. Firstly, all the countries that established the EU or joined it before 2004 had already been protecting their farmers. Secondly, these countries had signed the GATT that asked to combine agricultural protection with supply management (Polaski, 2006). The EU simply harmonized and integrated the existing farm policies of its member countries, so that one common policy was created instead of a patchwork of national policies. In doing so, it adopted a number of guiding principles.

The first one was that of a unified market. Within the EU, the borders were opened. Farm products could freely move from one country to another. It was only at the outer border that import tariffs were imposed to protect EU farmers against cheap imports from the world market. The second principle was that of communitarian preference. This closely resembles the principle of food sovereignty that ECOWAS farmers and policy makers are discussing today. It meant that farm products that were consumed in the EU and that could reasonably efficiently be produced in the EU itself should come from the EU rather than from the world market. The external tariffs should be sufficiently high to ensure this. The third principle was that of parity and productivity. Parity meant that farm incomes should be equal to those in other sectors. This should partly be achieved by price support, but prices should not be too high, for affordable food prices for consumers were also important. Therefore, the productivity of agriculture should be stimulated so that farmers would be able to produce at lower cost. The fourth principle was that of financial solidarity. All costs of the common agricultural policy were financed out of a communal treasury, which in turn was filled with funds originating from import tariffs and some other government revenues.

From a developing country point of view, the impact of the reformed CAP on agricultural markets has become more complex. Even though the "new CAP" still has some unwanted effects, they are less direct and more difficult to assess (Herok & Lotze, 2000). The traditional image of a "fortress Europe" that is closed to developing countries' exports, while the EU dumps considerable ...Download file to see next pagesRead More
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