Multilateral trade negotiations, European integration, and farm policy reform

Abstract

Why was it so hard to reach an agreement in the Uruguay Round to reduce agricultural protection? After surveying the growth of agricultural protection in the 1980s, I develop arguments based on political economy that imply a systematic tendency for governments to protect farmers increasingly, at least up to some threshold, as economic development proceeds. Agricultural protection growth in industrializing countries is therefore normal, not exceptional. Liberalizing those policies before reaching that threshold is unattractive politically unless new influences, e.g. from abroad, upset the domestic political equilibrium. The Uruguay Round provided such a force. What made the early 1990s so significant a crossroads for farm policy reform was that coincidently there were other changes taking place in Europe which lowered the domestic political cost of reforming the EC's Common Agricultural Policy. The paper argues that the reforms to farm policy during the rest of this decade as a result of the Uruguay Round agreement will at best be slow and messy – but that is far preferable to the alternative of a failed Uruguay Round and continued growth of agricultural protection.