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Trade Policy in Agriculture - Essay Example

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The policy has been criticized both in the EU for its wastefulness and elsewhere for being a hindrance to free trade, particularly for developing countries. This paper will discuss this policy as a case that has an important implications for the future global free trade.
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Trade Policy in Agriculture
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Trade Policy in Agriculture

Download file to see previous pages... From this study it is clear that known as the Common Agricultural Policy (CAP) , it is a system of agricultural subsidies and price support programs. It consists of direct payments to farmers for crops as well as land cultivated with price support, tariffs and quotas on agricultural goods imported from outside the Union, and intervention prices whereby the EU would buy all production if prices fall to these levels. The objective was to achieve food self-sufficiency, set fair and stable consumer prices, preserve the rural heritage, and ensure a fair and reasonable standard of living for EU farmers.
As the study outlines  the CAP imposes import tariffs on certain goods; import quotas designed to restrict quantity that enter the EU market, except for some countries with which it has had some traditional links; intervention prices, already described above; direct subsidies designed to motivate farmers to cultivate certain crops that would ensure stable domestic supply, paid on the basis of land area devoted to such crops; and production quotas intended to prevent overproduction of some food crops. “Set-aside” payments (meaning payment for setting aside land that were difficult to farm) were also made, although this has been suspended. Several attempts to reform the CAP system have been made. The first one was made in the 1960s by the Mansholt Plan, sought to consolidate small farms into larger ones for more efficient farming. This proposal was defeated by powerful farm lobbies. The MacSharry reform plan sought to limit rising production while simultaneously promoting less restricted market through reduced support levels for agricultural products such as beef and cereals. ...Download file to see next pagesRead More
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