Common agricultural policy reform and national compensation strategies

Abstract

While providing income support to producers the Common Agricultural Policy also redistributes resources between EC member states. As a net agricultural exporter Ireland is a significant recipient of resource transfers in this way. Irish strategy in the past has been to maximise these transfers by supporting as high a level of price support under the CAP as possible. A reduction in agricultural support is one of the objectives of the Uruguay Round of GATT negotiations now underway. If successful, this would adversely affect the size of the transfers provided through the CAP. This paper quantifies the benefit to Ireland from the CAP in recent years and looks at possible compensation options if CAP transfers were reduced. It argues that switching resources from CAP to non-CAP spending within the EC budget could leave this country better off in real terms while also being desirable on other grounds.