Bilateral Harmonization of EC and U.S. Agricultural Policies

Abstract

visible that exporting countries are more active, display more efforts toalleviate trade barriers, and argue for free trade as a desirable target.The U.S. appears to be part of that group. Other countries which areeither importers or have inward looking agricultural policies exhibit muchless enthusiasm to see action taken. The EC clearly belongs to the lattergroup as its policies were designed for a net importing situation while ithas now inadvertently become a net exporter of many commodities. A lot ofexternal pressure is now exerted on the EC as this net exporting situationis viewed as lacking legitimacy since it is largely due to protectionistpolicies.As a result of these developments EC-U.S. agricultural trade relationshave become tense over the last few years, to a degree rarely attainedbefore. Two dimensions seem to emerge in the context of the EC-U.S. tradeconflict. One is the domestic political economy of agricultural policymaking which is a widespread feature of developed countries becoming moreprotectionist for agriculture as they get richer (Honma and Hayami, 1986).The other is the international dimension of farm policies. Countries withlarge trade shares cannot ignore both the consequences of partner policieson their own agricultural targets, nor the effects of their own programs onother countries' success or failure to achieve their objectives. Thisinterdependence creates an externality of a probable significant size thatis induced by policies which are often designed only for domestic purposesand mainly driven by domestic forces, but which impact other actors in the