US-EU Ag Policy Differences Will Continue

October 25, 1999

A USDA report says the United States and the European Union will continue to have different agricultural policies for the foreseeable future because of historical, political and agronomic conditions and circumstances. But the EU's Common Agricultural Policy "must answer to an alarmed consumer constituency and a strong environmental movement that often have different concerns and rely on different institutions and history than U.S. consumers and environmentalists," the report says.

The United States likely will face challenges to its exports to the EU as EU regulations restrict the free flow of food and agricultural goods between the two competitors in the global market, the report continues.

In March, the EU adopted a reform package, known as Agenda 2000, for the CAP that attempts to smooth the process of EU enlargement and establishes the EU position for the upcoming round of World Trade Organization negotiations on agriculture.

Under Agenda 2000, the EU will have "more flexibility in meeting stricter WTO commitments to reduce tariffs, export subsidies and domestic prices supports," says USDA. For example, with a lower government purchase price for wheat and expected higher world wheat prices, the EU is expected to export wheat without an export subsidy starting in 2002.

Lower grain prices also will allow the EU to "marginally" increase pork, poultry and egg exports without subsidy, the report says. "There is a general consensus that the export subsidy constraint will continue to be the most binding limitation on EU production of most commodities. Access to some EU markets may be more difficult to negotiate because Agenda 2000 increased protection for some commodities. The EU also could afford to offer significant cuts in its support of farmers in WTO negotiations because of Agenda 2000."

As an attempt to accommodate EU enlargement, Agenda 2000 "does not appear sufficient in the medium to longer term to financially accommodate the impacts on the CAP budget. In the short term, however, it does present problems for the WTO negotiations. In addition, the CAP will continue to depress world markets as Agenda 2000 does not substantially reduce incentives to produce and export agricultural commodities," according to the report.

Printed copies of The EU's Common Agricultural Policy: Pressures for Change will be available in about three weeks. The full report also will be available electronically via the ERS web site at http://www.econo.ag.gov

The summary report for the article is available on the Internet at