Agriculture

Once the keystone of European integration, the Common Agricultural Policy (CAP) was created in 1962 to stimulate agricultural production and to guarantee food supply and farm income in postwar Europe. The same CAP mechanisms that helped Europe to increase agricultural productivity and achieve self-sufficiency, however, led to serious overproduction and high public intervention stocks and costs in the 1970s and 1980s.

In 1992, a major reform of the CAP severed the link between production and farm income in order to reduce agricultural surpluses and stabilize EU farm spending. Since that reform, EU farm spending declined from more than 60 percent of the budget in the 1980s to 45 percent in 2001. The 1992 reform was the basis for EU commitments in the General Agreement on Tariffs and Trade (GATT) Uruguay Round. The EU is currently the biggest importer, and the second biggest exporter, of agricultural products. Marking the launch of the new WTO (World Trade Organization) Trade Round in Doha, Qatar, on November 14, 2001, EU Agriculture Commissioner Franz Fischler declared, "When we came to Doha, I made clear that Europe would take a constructive position on agriculture, that we were in for a deal. Today, we made it happen. We have the new round Europe has been pushing for so hard. This is good news. It is good news not only for Europe, but for all the members of the WTO. A new trade round is a slap in the face for isolationism. The European Union has delivered. We have shown the necessary flexibility. Today we have kicked off a party where everyone gets a prize. Agriculture was one, but not the only key point in the end game. I do not know whether we have written trade history today. But I do know that history will remember these days in Doha, when the free world backed multilateralism by opposing isolationism, when developing and developed countries opted for trade instead of terrorism."

Further reform of the CAP is necessary as the European Union enlarges to take on new members, so that Europe's agricultural production can continue to respect both EU budgetary ceilings and WTO obligations. Under Agenda 2000—the European Commission's blueprint for managing internal policies after enlargement—the CAP places more emphasis on competitiveness through lower prices, food safety, rural development, and environmental protection. SAPARD is the Community's Special Accession Program for Agriculture and Rural Development. Its overall budget of $478 million for each of seven years (2000-06) is divided among the ten Central and Eastern European applicant countries.

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