The Development of Agricultural Policy of the EU: with focus on the Reform of the Guarantee Section

The Common Agricultural Policy of the EC was established by the Treaty of Rome in 1957, and soon became a cornerstone of the Community. It covered over 90 percent of agricultural goods and was regarded as one of the most developed of the EU"s policies. Since the 1980s, however, the CAP has caused not only financial crisis but also much political and economic conflict due to its particularly high price support system. Its export refund system has also disturbed the world agricultural market and created problems for the major exporters of farm products. Furthermore, the large share of agricultural expenditure in the EC budget has continued to block the development of other EU programs. To settle these disputes, the EU has introduced a number of reforms over the past 30 years. Even though these attempts achieved some significant progress, the key problems still existed. Moreover, the operations of the CAP are expected to be more complicated in the future due to the EU pursuit of the EMU and the Fourth enlargement. In this paper, I first examine the prevailing economic and political conditions when the CAP was established. Then I review how the CAP, especially Guarantee Section, has evolved and reformed during the past 30 years. In the conclusion, I will discuss the main problems of the CAP, and suggest the direction of future reform