The Agenda 2000 CAP reform, world prices and GATT-WTO export constraints

Abstract

This paper examines the compatibility of the Agenda 2000 reform of the Common Agricultural Policy (CAP) of the European Union (EU) with the EU's commitments to reduce export subsidies made under the GATT Uruguay Round Agreement on Agriculture. A multi‐region applied general equilibrium model, which includes relevant CAP measures, is used to obtain a quantitative assessment and to analyse the effects of alternative world market price changes on the fulfilment of these commitments. We show that Agenda 2000 helps the EU to remain within its export subsidy commitments, but to a lesser extent within its export volume constraints. Furthermore, conclusions with regard to export subsidies depend on the world market situation. A forward‐looking analysis that anticipates the WTO Doha Round indicates that further adjustments to the CAP are inevitable.