Farm Policy and Trade Conflict: The Uruguay Round and CAP Reform

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The book is a detailed chronology of the treatment of agriculture within the GATT and the evolution of agricultural policy in the European Union. It describes in detail the seven years of Uruguay Round negotiations and the somewhat related efforts to reform the CAP. The strength of the book is the institutional detail about how agricultural policy is made within the European Union. European agricultural interests have captured agricultural policy just as they have in the United States and all the OECD countries. However, adding the European Union-level bureaucracy to the producer-national government relationship complicates the lobbying process. Readers interested in the role of the European Commission and the European Council in the policy process can find it here. The main conclusion of the book is that only modest liberalization of agricultural trade has been accomplished by the Uruguay Round and its implementation. However, the authors claim that the principle of subjecting agriculture to the same GATT and World Trade Organization rules as other sectors is an important accomplishment. Export subsidies have been restricted and import quotas have been converted to tariff equivalent. Although some of the tariff equivalents are more than 100%, they may be more vulnerable to future liberalization than they were as quantitative restrictions. Although the subject of agricultural trade policy lends itself to economic analysis, the weakness of the book is that it is short on economic analysis. There is a large empirical literature on the effects of barriers to international agricultural trade and the trade-diverting effects of the CAP, but this literature is rarely mentioned. Past EU enlargement has provided empirical data on the effects of expanding from six to nine to twelve to fifteen members, but the book is silent on these effects. The authors do claim, without detailed analysis, that future EU enlargement to include the transition economics of Central and Eastern Europe would make the CAP no longer viable at current support and tax levels. The book cites D. Gale Johnson's 1973 book World Agriculture in Disarray (1991) and uses that title as the title of Chapter two. It would have been appropriate to also cite Johnson's 1950 book on the incompatibility of domestic price controls and free trade. This conflict explains why the agricultural sector has been most resistant to trade liberalization. Readers of a book on agricultural trade might expect a comparison between the variable levies and export subsidies on grain of the European Union and the British Corn Laws with their tariffs and export countries. The comparison is not made in the book. In the Uruguay Round negotiations on agriculture, a distinction was made between government payments related to current production (such as price supports) and payments unrelated to current production (so-called decoupled payments). The former payments were restricted by