Agriculture in the United States and the European Community : domestic developments and the GATT, with particular reference to the crises of the 1980s and to the Uruguay round negotiations
thesisposted on 2014-12-15, 10:44 authored by Giuseppe La Barca
This thesis argues that hostilities between the two main trade partners in the international farm market, the United States and the European Community, have their roots in the defence of their market share rather than in the conflict between different economic ideologies. In contrast to non-primary products, the agricultural trade rules in the stillborn Havana Charter and in the long-lasting GATT allowed wide room for manoeuvre for protectionist and subsidising measures. In the twenty years that followed the coming into being of the General Agreement on Tariffs and Trade the United States tried to secure its market in the member states of the European Community and to curb its growing competitive potential in the world market, but it does not seem that it was ready to make a reshaping of its own system conditional on an international agreement. The strains that afflicted the US and the EC systems in the early 1980s had some features in common but their causes and their effects differed. It is, therefore, natural that the attitudes of the parties in the Uruguay Round negotiations differed. The proposals tabled by the United States aimed at a freer market but did not mean the removal of all kinds of government-financed support and above all were bound to impose a much heavier burden on EC farmers than on their US competitors. In turn the European Community was not ready to commit itself to international deals whose effects on its farm policy would go beyond those of the limited domestic reforms agreed on by the member states. Finally, a formally multilateral, but actually bilateral, agreement was reached when the European Community implemented a farm reform that partially replaced its traditional price support system with an income support system similar to that in place in the United States and the latter abandoned its demands for a radical curtailment of domestic and export subsidies and focused on limited commitments that, however, could rein its European competitors' export capacity.