World Agriculture & Trade
12
Economic Research Service/USDA
Agricultural Outlook/October 1999
The European Union’s (EU) Agenda
2000, finalized in March, builds on
key agricultural reforms of 1992 by
further reducing support prices for some
commodities while partially compensating
producers for the price declines through
direct payments. In general, Agenda 2000
changes in the grain, oilseed, dairy, and
beef sectors are modest and depend on
world price levels. But for wheat, the
reforms will likely move the government
purchase price below a rising world price,
enabling the EU to expand wheat exports
without subsidies. Besides moving the EU
further from price supports in favor of
direct payments, Agenda 2000 will mod-
ify supply control measures.
While Agenda 2000 effects on production
and trade are modest, implications for the
next round of World Trade Organization
(WTO) negotiations are more profound;
the EU will have more negotiating room
on support prices, tariffs, and export sub-
sidies (depending upon the commodity)
while still protecting its domestic markets
from imported agricultural products.
In 1992, the European Community (EC)
adopted a set of reforms to its Common
Agriculture Policy (CAP) in pursuit of an
agreement in the General Agreement on
Tariffs and Trade (GATT) multilateral
trade negotiations. The reforms, the most
comprehensive in the nearly 30-year his-
tory of the CAP, have become the philo-
sophical basis for future changes in the
CAP, featuring lower support prices, par-
tially decoupled direct payments, and
cropland set-aside.
Agenda 2000 represents the European
Union’s initial position for the next round
of WTO negotiations on agriculture, to
begin in November 1999. Agenda 2000 is
also a financial package and a prelude for
the next EU enlargement, which will
include a number of Eastern European
countries. The EU also imposed a ceiling
on CAP spending from 2000 to 2006, a
ceiling that will surely be surpassed if EU
enlargement occurs during that time. In
fact, the ceiling probably would hav