Trade Negotiations in the OECD by David J. Blair

Author:David J. Blair [Blair, David J.]
Language: eng
Format: epub
Tags: International Relations, Ethnic Studies, Social Science, Political Science, Regional Studies, General
ISBN: 9781136882418
Google: TvwmBngSfSoC
Goodreads: 20855220
Publisher: Routledge
Published: 1993-01-01T00:00:00+00:00

(e) Changes in Interest Definition

For most OECD countries, there were no significant changes in their definition of self-interest on the agricultural trade issue. The interest of the United States in liberalising agricultural trade remained constant throughout the 1970s and 1980s, and the only major change was in the intensity of that interest. Canada, Australia and New Zealand were equally consistent in their commitment to trade liberalisation, and Japan did not change its negotiating position over the two decades. The only major shift of interest took place in Western Europe, particularly in the European Community, where proposals for a reduction of farm support gradually gained acceptance. A purely systemic analysis of this development may lead one to conclude that the EC’s acceptance of the norms established in the OECD in May 1987 was the result of the successful application of American pressure, since the shift followed the introduction of the EEP. Indeed, this is a conclusion that architects of the EEP in the US government tend to support. However, like the case of export credits, a closer examination of the decision-making process in the Community reveals that the change resulted primarily from forces operating within the Community itself.

Plans for the reform of the CAP were drawn up as early as 1980, when the EC Commission recommended limiting price support guarantees to a fixed quantity. Price support expenditures had been growing so fast that they threatened to exceed the limits of the Community’s budget, which according to the Treaty of Rome cannot be in deficit. Also, Great Britain was dissatisfied with its contribution to the EC budget, most of which was being spent on the CAP. No action was taken immediately because the increase in world agricultural prices had eased pressure on the budget, since smaller restitution payments would be needed to bridge the gap between Community and world prices. But with changing market conditions in 1983, the budget ceiling appeared about to be reached once again, and internal negotiations began on controlling agricultural expenditures and on the size of the budget.107

In March 1984 agreement was reached to increase the budget ceiling from 1 to 1.4 per cent of the VAT rate. In addition, a number of changes to the CAP were introduced, including the extension of price guarantee limits to other products, the establishment of dairy production quotas, and a slight limitation on price supports. One analyst of EC agricultural policy commented that “these proposals signaled that the era of open-ended financial commitment to support of the CAP was over”.108 However, the changes did not represent a fundamental restructuring of the CAP, and when pressure on the budget was relieved by the decision to increase the Community’s revenue and by the high level of the dollar which raised the price of world agricultural products, the incentive to carry out further reforms of the CAP subsided, at least for a period of time.

After 1984, surplus production remained a problem in the Community, as self-sufficiency in many products had been reached and export markets were shrinking.

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