Through Common Agricultural Policy Reforms: A Short Analysis

Through Common Agricultural Policy Reforms: A Short Analysis

Andrei Jean-Vasile (Petroleum - Gas University of Ploiesti, Romania) and Mircea Untaru (University Ioan Slavici of Timisoara, Romania)
Copyright: © 2012 |Pages: 9
DOI: 10.4018/ijsem.2012070103
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Abstract

Common Agricultural Policy (CAP) is one of the major European policies with the highest financial and social impact not only for rural communities but at the whole EU-27 level. Making this policy work has generated serious imbalances and disruptions between member states. For correcting this situation, all the reforms, starting with The MacSharry reform has aimed to improve this policy, the financial allotments and correct the functional mechanism. This paper makes a short analysis regarding the main CAP reforms since 1992 to 2003, reviling the main changes and improvements of it.
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1. Introduction

During the 54 years of existence, the Common Agricultural Policy has undergone numerous reforms whose effects have led both to improving its functioning mechanism and to a compliance with the changes that have profoundly marked the Community economy, being the result of numerous reactions from the Member States. Common Agricultural Policy could not remain disengaged from the other European policies, evolving along with the European construction and the Member States' interests in a specific geopolitical context. According to art.39 of TCE the main objectives of the CAP are (art.39 of TCE):

  • To increase agricultural productivity by promoting technical progress and by ensuring the rational development of the agricultural production and by optimum utilization of production factors and, in particular, of labor;

  • Thus to ensure a fair standard of living for farmers, in particular by increasing the individual earnings of persons engaged in agriculture;

  • To stabilize markets;

  • Ensuring the safety of supplies;

  • Ensuring reasonable prices for consumers.

The need to regulate the agricultural products on the European market was first put into question by the Dutch, which understood that only a settlement of this market may protect the economic interests in the agricultural exports of meat and milk from its traditional rival Denmark. To this idea subsequently joined France, a country with a strong agricultural sector. This was complemented by lowering agricultural production that marked the period immediately after the Second World War, as well as increasing the application of mechanization which lead to a dislocation of labor in agriculture. In this respect we get the whole picture that led to the CAP.

The existence of a policy involves establishing clear principles of application and operation which gives it stability and a high degree of reference. One year after the signing of the Treaty of Rome in 1958 at Stresa there have been defined the principles which would govern the operation of the CAP at EU level. Among these it can be mentioned mention (Letitia et al., 2003):

  • Single market principle;

  • Financial solidarity;

  • Community preference.

The principles are the basis for the functioning of the CAP today. Establishing the measures to implement these principles is the role of the Commission which had to identify a functional mechanism which embedded solutions for the major challenges with which the agricultural community was facing.

Single market principle is a fundamental principle of the operation of the European Union. In the case of the Common Agricultural Policy this principle requires that agricultural products can circulate freely within the Community, without encountering tariff or customs barriers. The price of these products is unique for all Member States, being set and annually managed by the Council.

Financial solidarity, often replaced in the case of the CAP with the term of cohesion, requires the jointly financial participation of the Member States to the formation of the financial resources for the proper functioning of the Common Agricultural Policy, supported by the European Agricultural Guidance and Guarantee Fund. This principle has facilitated the capitalization of agriculture by supporting the financial allocations by stimulating investment and access to bank loans.

The third principle that of preference protects the Member States’ markets from the imports of agricultural products from outside the EU and from the international market price fluctuations, thus stimulating the domestic production. Customs duties are applied to agricultural imports into the Community, which makes these products to no longer be competitive on this market.

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