WTO Contstaints and the CAP: Domestic Support in EU 25 Agriculture
The most recent EU notifications to the World Trade Organization regarding domestic support refer to the EU-15, i.e. before significant reforms of the direct payments as well as the reforms of the Mediterranean products, hops, sugar, etc. that took place after 2003. We estimate the actual level of domestic support, as measured by the WTO Aggregate Measure of Support (AMS), given the 2004 EU enlargement and the recent reforms of the Common Agricultural Policy (CAP). We then compare the different proposals for a new discipline on domestic support that were recently issued under the Doha Development Round and we assess the constraints imposed on the Common Agricultural Policy (CAP). The EU proposal prior to the 2005 Hong Kong WTO ministerial meeting was that the EU would cut its present AMS and Overall Trade Distorting Support (OTDS) ceilings by 70% in either case. We find that such a cut mainly consolidates under the WTO the significant changes made to EU domestic support policies since the conclusion of the Uruguay Round. However, there are some downside risks for the EU and much depends on the further negotiations on the details of the disciplines to be agreed (e.g. the base period for the OTDS reference). In addition, a 70% cut leave no freedom for counting some potentially controversial subsidies against the AMS if needed. Accession of Bulgarian and Romania will make the constraints more binding. The ability to meet the domestic support discipline of the EU offer relies on the assumption that its market access component will lead to a significant reduction in the remaining AMS (particularly important in the case of fruits and vegetables). Overall, the EU proposal regarding a cut in the AMS is binding, even though it requires rather minor and sectoral changes to the CAP. Proposals that beyond the EU ‘Hong Kong’ offer require reforming some common market organizations, but could be dealt with if the EU implemented a significant reform of the fruits and vegetables sector, that might give a larger degree of freedom regarding the AMS ceiling.
|Date of creation:||02 Aug 2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 00 353 1 896 3888
Fax: 00 353 1 896 3939
Web page: http://www.tcd.ie/iiis/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Anderson, Kym & Martin, Will, 2005.
"Agricultural trade reform and the Doha development agenda,"
Policy Research Working Paper Series
3607, The World Bank.
- Kym Anderson & Will Martin, 2005. "Agricultural Trade Reform and the Doha Development Agenda," The World Economy, Wiley Blackwell, vol. 28(9), pages 1301-1327, 09.
- Will Martin & Kym Anderson, 2006. "Agricultural Trade Reform and the Doha Development Agenda," World Bank Publications, The World Bank, number 6889.
- Kym Anderson & Will Martin, 2005. "Agricultural Trade Reform and the Doha Development Agenda," Centre for International Economic Studies Working Papers 2005-17, University of Adelaide, Centre for International Economic Studies.
- Hart, Chad E. & Beghin, John C., 2006.
"Rethinking Agricultural Domestic Support Under the World Trade Organization,"
Staff General Research Papers
12510, Iowa State University, Department of Economics.
- Chad E. Hart & John C. Beghin, 2004. "Rethinking Agricultural Domestic Support under the World Trade Organization," Center for Agricultural and Rural Development (CARD) Publications 04-bp43, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Chad E. Hart & John C. Beghin, 2004. "Rethinking Agricultural Domestic Support under the World Trade Organization," Food and Agricultural Policy Research Institute (FAPRI) Publications 04-bp43, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
- Chantal Le Mouel, 2004. "Impacts of alternative agricultural income support schemes on multiple policy goals," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(2), pages 125-148, June.
- Daniel A. Sumner, 2005. "Production and Trade Effects of Farm Subsidies: Discussion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1229-1230.
- Alan Swinbank, 2005. "Developments in the Doha Round and WTO dispute settlement: some implications for EU agricultural policy," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 32(4), pages 551-561, December.
- Sumner, Daniel A., 2003.
"Implications of the US Farm Bill of 2002 for agricultural trade and trade negotiations,"
Australian Journal of Agricultural and Resource Economics,
Australian Agricultural and Resource Economics Society, vol. 47(1), March.
- Daniel A. Sumner, 2003. "Implications of the US Farm Bill of 2002 for agricultural trade and trade negotiations," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(1), pages 99-122, 03.
- Brink, Lars, 2005. "WTO Constraints on U.S. and EU Domestic Support in Agriculture: Assessing the October 2005 Proposals," Working Papers 14601, International Agricultural Trade Research Consortium.
- Gohin, Alexandre & Bureau, Jean-Christophe, 2006. "WTO Discipline and the CAP: the Constraints on the EU Sugar Sector," Working Papers 18872, TRADEAG - Agricultural Trade Agreements.
When requesting a correction, please mention this item's handle: RePEc:iis:dispap:iiisdp171. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Colette Keleher)
If references are entirely missing, you can add them using this form.