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GTAP Resource #1134

"The European Union: Expanding its Agricultural Domain "
by Frandsen, Soren and Hans Grinsted Jensen

The European Union (EU) stands at the threshold of a new expansion of its Common Agricul-tural Policy (CAP) to include several Central and Eastern European countries (CEEC). In antici-pation of this enlargement the EU has reformed its CAP in the form of the Agenda 2000 agreement in the hope that the gap between internal market prices and the world market prices will be re-duced, minimising eventual possible constraints from the WTO agreement on agricultural trade and maintaining the EU CAP budget within its limits.

The aim of this paper is to highlight the possible need for further reforms of the CAP in the near future. Firstly can the enlargement of the EU be undertaken with out further reforms of the CAP in the light of the existing WTO agreement on agricultural trade and the budget restrictions stipulated in Agenda 2000. And secondly the likelihood of increased WTO constraints in the up-coming negotiations in the WTO Millennium Round is large. What would a further reduction of the budgetary outlay and quantity commitments limiting subsidization of exports entail for the CAP in an enlarged EU?

The analysis is untaken using a CAP specific GTAP model where both the EU agricultural budget and the CAP instruments are modelled. The GTAP Version 5 database is used where EU milk and sugar quota rents are incorporated into the database at the individual EU member state level. The GTAP database is aggregated into 29 commodities and 31 regions/countries of which 12 are primary and 8 are secondary agricultural commodities. The 31 regions/countries include among others the 15 individual member countries of the EU together with the 3 CEEC re-gions/countries specified in the GTAP database.
The expected findings are that further reforms of the CAP are necessary, given the WTO and Agenda 2000 budgetary constraints in an enlarged EU.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
2002 Conference Paper
Status: Published
By/In: Presented at the 5th Annual Conference on Global Economic Analysis, Taipei, Taiwan
Date: 2002
Created: Bacou, M. (7/2/2002)
Updated: Hertel, T. (9/17/2002)
Visits: 2,133
- Domestic policy analysis
- Agricultural policies
- European Union

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