Impact of the 1996 US FAIR Act on the Common Agricultural Policy in the World Trade Organisation context: the decoupling issue
2000
Guyomard, H. | Bureau, J.C. | Gohin, A. | Le Mouel, C.
The United States (US) Federal Agriculture Improvement and Reform (FAIR) Act of 1996 represents a watershed, not only from a domestic point of view but also from the perspective of the next round of international agricultural negotiations. In particular, it will force the European Union (EU) to reform its agricultural policy so that compensatory payments for support price cuts are included in the green box or, at least, are much more decoupled than at present. US exports of several agricultural products, including maize, pork and poultry meat, barring a prolonged global economic downturn, should increase substantially over the 7-year period of the Act and beyond. Accordingly, the US will certainly attempt to ensure that trade barriers with the EU and subsidised competition from the EU in third markets are kept to a minimum. Though the 1999 EU proposals for a new reform of the Common Agricultural Policy (CAP) represent a courageous step in the right direction, they are likely to be insufficient to comply with future World Trade Organisation (WTO) commitments, in particular with regard to the decoupling of direct aid payments. We have made a number of proposals for an internal support policy which explicitly recognises that European farmers have several functions that require specific forms of public intervention and which should comply with future WTO requirements.
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