The Mid-Term Review Of The Common Agricultural Policy: Assessing The Effects Of The Commission Proposals

The paper is aimed at assessing the effects of the reforms proposed by the European Commission in July 2002 for the Mid Term Review (MTR) of Agenda 2000. The proposals are described in the framework of the long standing CAP reform process driven by political priorities such as the enlargement to the Central and Eastern European countries, the budget issues, and the ongoing WTO negotiations. The most important measures proposed are the full decoupling of direct payments, the modulation of direct payments, and changes in the support regimes for cereals and rice. Altogether, the proposals for the MTR appear substantial, especially considering the conservative attitude of the EU decision-making process. The Applied General Equilibrium model provided by the Global Trade Analysis Project was employed to simulate the effects of the MTR. Scenarios were designed to highlight especially the impact of the full decoupling and the modulation of direct payments. The Eastward enlargement of the EU was also introduced; in this case, direct payments were calculated starting from the financial perspectives indicated by the Commission after the Brussels Council. Results indicate that the full decoupling of direct payments is by far the most significant change proposed, whereas both the changes in the CMOs and the payment modulation appear to have a more limited impact.