The Common Agricultural Policy
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Transcript The Common Agricultural Policy
T HE C OMMON A GRICULTURAL
P OLICY
Impact on International Trade
29th November 2009
European Economic Integration, Institute of economic studies
E XPORT
SUBSIDIES
I MPACT ON INTERNATIONAL
TRADE
Lower
export
subsidies
Higher
direct
payments
I MPACT ON INTERNATIONAL
TRADE
EU prices closer to world prices
International agricultural trade liberalization
Fall in cereal prices by 50%
Fall in income of African countries, which were
making profits on selling goods to Europe (under
Lomé convention)
An increase in the export price competitiveness
of basic EU food and agricultural exports for
African countries
F URTHER
The Agenda 2000
“multi-functionality” of farming activities
The reform in 2003
REFORMS
A reduction in direct payments for bigger farms
to finance the new rural development policy
CAP “Health Check“ 2008
Increase of milk quotas, ...
„CAP
VS .
African exporters seem to be
sensitive to EU reforms
Pros and cons of CAP reforms
(from African point of view)
Future prospects
A FRICA“
CASE
P ROS
+
Large food surpluses exported
to Africa as a food aid (before
Mac Sharry)
Certain African (sugar) exporters
profited from Lomé convention
(€500 mil. in 99/2000)
AND
C ONS
—
2001: free access to the market
granted to the least developed
countries under „Everything Buts
Arms“ initiative.
Problem? – sugar, rice and bananas
excluded
After Mac Sharry reform, EU price
reductions drove some African
exporters out of the EU market
Undermining of African markets by
price-competitive EU goods (wheat)
– „markets of last resort“
EU policy emphasis shift – „from
quantity to quality“
S ITUATION WHEN A FRICA
REJECTS TO TRADE WITH EU
higher value food
Africa
Qh
PPF
Ql
lower value food
T RADING SITUATION
R ICARDIAN
MODEL
Africa has comparative advantage in producing
lower value food
Africa
EU
QH
QH
PFT
TT
TT
CFT
higher value food
higher value food
PA = CA
IFT
PPF
IA
CFT
IFT
IA
PFT
lower value food
PPF
PA = CA
Ql
lower value food
QH
F UTURE
African exporters:
PROSPECT
lower value food and agricultural products
distributors
European exporters:
higher value food and agricultural products
C ONCLUSION
Trend in reforms of CAP – lower direct payments
Decoupling:
↑ economic prosperity
↓ negative impacts on the environment
From import levy to direct subsidies – before and
after Mac Sharry reform
Africa has to trade with lower value food
Petra Andrlíková
Radovan Parrák
REFERENCES
Institure for Agriculture and Trade Policy: The
Common Agricultural Policy: A Brief Introduction,
Prepared for the Global Dialogue Meeting (May 14 and 15, 2007,
Washington, D.C.)
European Economic Policies: Common
Agricultural Policy; Laurent Weill: Université de Strasbourg,
Charles University - Prague , April 2009
Policy Notes 2009/7: The Impact of Common
Agricultural Policy (CAP): Reformon Africa-EU Trade in Food
and Agricultural Products
http://ec.europa.eu/budget/index_en.htm