European Union Political Economy by Konstantinos Hazakis

Author:Konstantinos Hazakis
Language: eng
Format: epub
ISBN: 9781498560061
Publisher: Lexington Books, a division of Rowman & Littlefield Publishers, Inc.

Chapter 8

The Common Agricultural Policy

Policymaking, including the agricultural sector, is of idiosyncratic nature and differs widely from country to country. EU’s CAP is also considered a very special case which is in no way comparable to the agricultural policy regime in any other country because of its sui generis stance within EU institutional mechanism.

In particular, the specificity of the CAP is due to several reasons, including the path dependency of European integration process, the historical origin of agricultural policymaking in Europe, the unique process of EU decision-making mechanism, the peculiarities and complexities of the financing regime for agriculture, and the significant weight of the EU’s agricultural sector in global agricultural trade.

The abovementioned specificity is clearly mirrored in the unusually large share of the EU budget that is devoted to agricultural sector (41% in 2011 and approximately 38% in 2015 of the EU budget which means that 0.4% of the Union’s GDP is spent on agriculture and rural development).

Historically, the CAP is unique as a highly politicized regime in the sense that it has not evolved smoothly over a long period, but it evolved through intense political debates among member states since 1960s. Undeniably, the decision to include agriculture issues in the common internal market of the EEC, taking into consideration diverging agricultural policies of the six founding states, was perceived necessary to achieve a kind of a political balance (Tangermann, 1992) between the advantages accrued by Germany in the industrial sector and France’s interest in realizing a larger market for its agricultural exports.

According to OEEC (1956), the main type of farm in Europe at 1950s was a fairly small-scale, family-owned farm with major and chronic structural problems. Further, different patterns of economic development among the six countries (Tracy, 1982, 5–17) imposed diversified national agricultural policies. Enforcing production outcome was perceived as the answer to the farmers’ income problem and in all six countries a price policy combined with structural policy tools was picked up as the way to achieve this target. Thus, in Belgium, France, Germany, and Luxembourg the policy was applied through market organizations for the key products, with governments intervening in the market to achieve a higher price than the international market price.

Although the Treaty of Rome established a CAP, it left enough space for policy maneuvering to the states. Very soon, it became evident that implementing a CMO for the fundamental agricultural commodities was not enough and that protection and support of agriculture products was also crucial in EEC market. Indeed, the CAP is along with European trade policy among the most intensely integrated policy domains in the EU, where countries have given up a significantly large degree of national sovereignty.

Mansholt (1963) mentioned four major motives for CAP in EC. First, it was not possible to isolate agricultural sector from European integration process because of its multiple linkages with industrial sector. Second, agricultural sector was considered important and had a major role in the economies of the six countries in the 1960s, taking into account its contribution to national trade balances.

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