What is the Future for EU-Africa Agricultural Trade After CAP Reform?

Abstract

The EU's common agricultural policy seriously distorted not only EU commodity markets but also many world markets, through the subsidised export of large volumes of commodities – produced at double (or even treble) – the economic cost. This is not contested. Amongst those affected wereAfrican farmers who suffered from the depression of world market prices for commodities that they could produce cheaply, such as maize, sugar and beef. With CAP reform, which should soon see all EU-produced commodities trading on the world market without the need for export subsidies, Europe argues that it is now no longer distorting world markets, and so no longer harming African producers. This paper demonstrates how untrue this is. On the one hand, because Europe continues to produce the commodities in question at the same or higher volume (thanks to income support for farmers), the impact on the world market is unchanged. On the other hand, concessions to ACP countries designed to help them under the old regime (such as the ‘protocols’ which enabled them to earn the inflated European prices for quotas of beef and sugar) are disappearing, and preferences over third countries are eroding as tariffs fall. Other elements of policy related to CAP reform, such as the increasingly strict EU food safety standards, and the raised competitiveness of EU processed foods as the price of European inputs falls (a disguised subsidy), are discussed. The paper concludes with some concrete examples of the impact of this on the South African confectionery industry.