Unilateral Trade Liberalization by the EC or the USA

Abstract

The CAP of the EC is often regarded as a policy that distorts global agricultural trade significantly. Since, as seen in Chapter 5, the OECD countries gain from agricultural trade liberalization, it is of interest to see what would be the impacts of a unilateral trade liberalization by the EC, globally and on its domestic situation. However, to appreciate the impact of the removal of the currently pursued CAP by the EC, one first needs to know the objectives of the CAP. These are (Commission of the EC, 1958):

• (1) To increase agricultural productivity by developing technical progress and by ensuring the national development of agricultural production and the optimal utilization of the factors of production, particularly labor.

• (2) To ensure thereby a fair standard of living for the agricultural population, particularly by increasing the individual earnings of persons engaged in agriculture.

• (3) To stabilize markets.

• (4) To guarantee regular supplies.

• (5) To ensure reasonable prices in supplies to consumers.