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Agricultural Export Subsidies and Developing Countries' Interests

image of Agricultural Export Subsidies and Developing Countries' Interests

A new impetus has been given to faltering WTO trade discussions by the recent EU mandate supporting the liberalisation of agricultural trade policies and removal of export subsidies on agricultural products, within an environment in which all countries start reforming their trade policies. Until now, discussions have centred on agriculture in general, rather than at specific commodity level. This paper rises to the challenge laid down by the EU in identifying the specific commodities for which developing countries would gain benefit in any subsequent reforms. Agricultural Export Subsidies and Developing Countries’ Interests outlines the nature of export subsidies. It discusses the effect of reform on developing countries, indicating the scale of any changes. The policy implications of removing agricultural support in the EU are given and the consequences for net food exporting and importing countries examined. Finally, the paper considers the impact of EU agricultural policy reform on other policies, such as the Protocols of the Lomé Convention.

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Broader Agricultural Reform in the EU

Ever since the late 1960s, the EU has sought ways to reform the CAP. Specifically, it has undertaken measures to reduce expenditure on agriculture (for example the introduction of milk quotas in 1984 when the CAP took nearly 70 per cent of the EU's entire budget) and, more recently, to reduce the market-distorting effects of the CAP both internally and externally. The focus of both the MacSharry reforms of 1992 and Agenda 2000 was on reduction of price support, moving towards decoupled support for farm incomes and, most importantly in the current context, on meeting WTO targets for reductions in export support.

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