US-EC Farm Trade Confrontation: An Outsider's View

This paper seeks to understand why the US-EC farm trade dispute has been so difficult to resolve, and whether the Blair House accord of November 1992 will sufficiently satisfy not only those two parties, but also other GATT contracting parties to enable the Uruguay Round to be brought to a successful conclusion. It argues that even though such an agreement would involve a major reversal of the long-run upward trend in agricultural protectionism, it may well be achievable. This is because the politically `difficult' product groups such as dairy and sugar will not be liberalized greatly, and because the United States and EC are under pressure to reform unilaterally anyway for budgetary reasons. Also, EC enlargement to absorb some EFTA countries will make it easy for Western Europe to meet any export reduction targets, because in the process of accession, those even-more protectionist EFTA countries will, in any case, have to lower their internal food prices to EC-12 levels. For other countries, particularly food-exporting developing countries and the Cairns Group, the Blair House accord will be seen as less liberal than they would have liked but one which at least offers some reform. Japan and South Korea would prefer less liberalization but are likely to accept it if it enables the completion of the Uruguay Round.