Oocumentation ~conomie

Rurale Rennes

l.INTRODUCTlON

Last May, the European Community (BC) Council of Ministers agreed more rapidly than expected on a substantial reform of the Common Agricultural Policy (CAP). The final decisions of the Ministers, compared to the EC Commission proposais, appear to be milder for the CUITent farmers but also far less ambitious as regards the reorientation of European agriculture to meet the long-run objectives of competitiveness and resource conservation. The reform is there however and although it does not cover ail sectors, it does introduce a new instrumentation of support, improves the economic incentives from price signais and covers cereals, the commodity at the core of European agriculture, and the closely related products not controlled by production quotas.

The reform is nearly a revolution by the magnitude of the sbift from market price support to targeted payments borne by tax-payers. But, tbis sbift is yet lirnited to sectors exposed to international pressure because oftheir significant share in world trade.

The reform occurs nearly six years after the initiation of the Uruguay Round where agriculture has played a more central role than even before as many countries, led by the United States, have taken the stance that no deal could be made on other issues without an agreement on the agricultural dossier.

Such an agreement has yet to be found as the negotiating positions are still -officiallyfar apart. Progress has been made to bridge the gap -or rather the gulf -between the declarations initially tabled in the GATT (General Agreement on Tariffs and Trade) from 1987 to 1989. In 1990, sorne rapprochement took place but the Ministerial meeting called in Brussels in December 1990 failed to conclude.

Meanwhile, during 1990, the EC Commission was discreetly very active at designing a new and bold reform project of the CAP. The blueprint of the proposai was intentionally leaked in the press by circles unpleased with its noticeable bias in favour of small and medium farmers. Active discussion between the EC Commission and the Council of Ministers went on during 1991 and spread over 1992.

Being busy with the conception ofa new CAP, the EC was not ready to accept the last compromise tabled in the GATT by A. Dunkel in December 1991, a compromise seen as far away from the EC's concerns and too close to the US positions. A new version of the CAP reform proposal-sometirnes called the Mc Sharry Plan -was published in July 1991 and led to considerable debate between Ministers pressured by their national farm constituencies. The discussion process went on swiftly still, as the Ministers finally have adopted last May an edulcorated version of the Mc Sharry Plan.

At tms stage, several interesting questions are raised by these recent developments in the Ee and in the GATT. In tms paper, we try to deal with the following issues i) what are the relative impacts of the CAP reform and of the Dunkel compromise on the EC and world markets? ü) how does the reform change the negotiating position of the EC and its bargaining power? ili) is an agreement on agriculture now feasible and how ambitious can it be relative to the initial expectations ofthe proponents of the Round ?

The background of agricultural negotiations in the GATT is reviewed in section 2. The aggregate impact analyses of the CAP reform and the Dunkel compromise are presented in section 3, through simulations using a trade mode!. Section 4 deals with the nature of the GATT game and explains why the negotiations tend to foeus on the EC-US conflict. Section 5 examines how the CAP reform relates to the current Dunkel compromise and concludes that a agreement is now quite likely : it should be limited in scope, but it could constrain the decision making in the future CAP more than in the pasto

THE GATT CONTEXT OF THE CAP REFORM

The current GATT Round ofnegotiations was launched in 1986 in Punta dei Este in Uruguay with the explicit intention that the negotiations should aim at a greater liberalization of agricultural trade. In contrast with the declarations of previous Rounds, the Punta dei Este Declaration did not emphasize the "special status" of agriculture and stated that all agricultural policies, including domestic measures and export subsidies, were subject to discussion.

Agriculture in the GA1T,from Geneva to Punta dei Este

i) The special status ofagriculture in the previous Rounds Agriculture was never really brought under the GATT. Instead, it was granted exemptions from the general principles of the Agreement and sorne countries were allowed specifie derogations. The General Agreement admitted explicit derogations for agricultural products : import restrictions were authorized for agricultural products under supply control (article XI) and export subsidies (forbidden for industrial goods) were allowed, under sorne conditions, for agricultural products. Furthermore, the contracting parties have obtained sorne specifie derogations (waiver in the US in 1955) or violated sorne GATT rules (variable levies in the Ee which contradict the principles that tariffs should be bound) with impunity.

To a large extent, agriculture has been left out of the GATT process because of conf1ict between US agricultural policies and the provisions of the GATT [START_REF] Warley | Agriculture in the GATT : Past and Future[END_REF][START_REF] Josling | The Future of International Agriculture Relations : Issues in the GATT Negotiations[END_REF][START_REF] Blandford | US Trade Policy and the GATT: Implications for Agriculture[END_REF]. Import quotas were originally 1imited to products subject to supply management policies, but the GATT stated that imports should not be restricted more severely than domestic products (article XI:2c). In the US, import restrictions were first implemented if they threatened US agricultural domestic support programmes (Section 22 of the US Agricultural Adjustment Act of 1933, as amended in 1948, and which made clear that any international agreement would not apply if it were inconsistent with the Act). In 1955, the US negotiated a waiver (covering cotton, sugar, sorne dairy products and peanuts) of its GATT obligations under the use of Section 22. The waiver implied implicitly that agriculture was a "special case" (Blandford).

Article XVI of the General Agreement on Tariffs and Trade in 1947 allowed the use of both production and export agricultural subsidies, requiring only that subsidizing countries discuss with countries whose interests were seriously jeopardized the possibility of limiting their subsidies. Again, the possibility of agricultural export subsidies was inserted in the GATT at the insistence of the US Congress. Revisions of this article in the 1950s' were only minor, the new requirement being that export subsidies were not used to obtain "more than an equitable share ofworld trade" (Warley).

On the other hand, the Common Agricultural Policy of the EC was obviously not in conformity with GATT rules, especially because of the import levy/export subsidy system (although these types of policies were not foreseen when the GATT was initially negotiated (Josling et al.». The Dillon Round in 1961-62, which was the second phase of the XXIV-6 negotiation, confirmed the special status of agriculture in so far as the contracting parties accepted the principles of the CAP, and more specifically the minimum import price and variable levy-export subsidy mechanisms.

ii) Agriculture in the Uruguay Round: an ambitious programme

The primary objective of the Uruguay Round, as reflected by the Punta deI Este Ministerial Declaration of September 1986, was then to "achieve greater Iiberalization" of agricultural trade by i) improving market access, i.e. reducing import barriers, ii) "improving the competitive environment by increasing discipline on the use of ail direct and indirect subsidies and other measures affecting directly or indirectly agricultural trade, including the reduction of their negative effects and dealing with their causes", and iii) reducing adverse trade effeets of sanitary and phytosanitary regulations.

AIl agricultural policies, including internai support policies, were therefore on the table in so far as the negotiations dealt with "ail measures affecting import access and export competition". This inclusion of domestic policies in the talks was later strengthened by the OECD Ministers in May 1987 who stressed the main Iines along which agricultural policies should be reformed (OECD, 1987) and by the commitments made at the GATT meeting of Geneva in April 1989 (mid-term review). This meeting attempted to set the stage for pursuit of "substantial, progressive reductions in agricultural support and protection" (FOCUS, May 1989, p. 4). Furthermore, no mention was made to commodity-specific agreements. In other words, one of the objectives of the Uruguay Round was to apply GATT general rules and disciplines to agriculture as a whole, which implied the renunciation to the idea of agriculture as a special case.

The explicit inclusion of domestic policies and the stated intention to discipline agricultural trade within the GATT are distinct novelties in the history of GATT negotiations.

Rationales o/the positions o/the contracting parties in the Urugay Round

The successive US proposais in the Urugay Round deal separately with import access, export subsidies and internai support. This approach is also followed by the Cairns Group (except Canada on sorne points), but the EC proposais are based essentially on the reduction of internai support, measured by the decrease in an Aggregate Measure of Support (AMS), and on the principle that AMS decreases would result in a reduced need for export subsidies.

i) Market access

On market access, tariffication, i.e., the conversion of ail border instruments into tariffs which would be bound and then reduced over an agreed transition period, has the advantage to make protection transparent and obvious and to create a direct link between world and domestic prices in protecting countries. This procedure has been successfully used by the US in bilateral negotiations with Japan to obtain more open access to Japanese markets in beef and citrus (Blandford). Success with this approach may explain, in part, the US's propensity to use this strategy in the Uruguay Round. Obviously, tariffication would imply an important reform of the EC variable levy mechanism. But, it would also impact other policies and contracting parties such as the Voluntary Export Restraint Agreement on manioc imports into the EC, the waiver in the US, import quotas on dairy products, eggs and poultry in Canada, the rice policy in Japan,... [START_REF] Hathaway | Agriculture and the GATT: Rewriting the Rules[END_REF].

The US and the Cairns Group proposai on tariffication would be difficult for the EC to apply on grains because it would require replacing variable levies on imports by fixed tariffs that would be progressively reduced over time. The EC has therefore countered with a modified version of tariffication that would inc1ude i) tariffs with a fixed element and a correction factor which takes into account exchange rate changes and fluctuations in world price, and ii) rebalancing, Le., raising tariffs on non-grain feeds. Furthermore, the reduction of the fixed element is measured with respect to 1986 (1986-88 in the US proposai), a year when world prices were particularly depressed. The choice of this base period means that the EC has already removed a significant proportion of the 1986 level of subsidization. The rejection of the different compromises by the EC may then be partly explained by the import access issue.

For example, the Dunkel compromise makes, from the EC point ofview (meeting ofEC trade and farm Ministers on December 23, 1991), unacceptably large concessions on imports, and ii) it omits the problem of rebalancing.

Acceptance of the tariffication procedure would present difficulties for the US too, partieularly for dairy produets. The tariffieation of dairy produets would imply i) linking domestie dairy priees to world priees, ii) the removal of priee differentials between fluid and manufactured milk, and iii) it would be difiieult to differentiate dairy priees on a regional basis (Blandford). The same situation applies to sugar.

In 1988, Japan agreed to partially liberalize its restrictive beef import regime by phasing out beefimport quotas over a three year period. Beef quotas were replaeed by a tariff that will equal 50 % in 1992. Japan also agreed to remove import quotas on cheese, frozen yoghurt, whipped eream, and iee eream. But the major obstacle to a real reform of Japanese agriculture is the high level of riee priee support. Japan has repeatedly used a food-seeurity argument to promote self-suffieieney in that seetor. Renee, in riee, Japan refuses to eonvert quotas to tariffs, and thus rejeet the clause of minimum aeeess.

The Canadian proposal on market aeeess differs from the Cairns Group position (75 % reduetion over 10 years of tariff equivalents). Canada proposes in effeet that quantitative import restrictions continue to be permitted under article XI:2e, and espeeially for produets under supply control (Le., dairy and poultry produets in Canada). Interestingly enough, even "fair" traders have diffieulty eonfronting their own special interest groups.

ii) Export competition "Apart from the uncertainty about the true proportion of the EC levy which would be subjeet to tariffication, neither the US nor the Cairns countries accept the EC argument that export subsidies would decline automatically as domestic support and the linked import levy are reduced (Agra Europe, May 17, 1991).

While Japan tends to support the position of the EC on market aecess and internal support, it accepts the US and Cairns position on export competition. Renee, without unnecessary risks to its trade interests, Japan supports a ban on ail export subsidies, and follows in that sense the Cairns Group for a long-run elimination of these policies.

Nevertheless, given the net-importer position of Japan on ail agricultural produets except rice, this "liberal" line is not too difiicult to follow. A sirni1ar reasoning applies to the Nordie eountries.

A1though Australia may be considered as the traditional ally of the US on agricultural world markets (which is refleeted by the common position of the Cairns Group and the US ofa eut of 90 % in export subsidies over 10 years), it has always accused both the EC and the US for the dumping of their grain surpluses on world markets during the five years of the Round.

US grain sales (with the help of the Export Enhancement Programme or EEP) to China, Yemen and Kuwait, for example, have been the subject of complaints from Australia.

The Cairns' Group position on export competition reflects the gains these countries perceive to obtain on grains from free trade. Therefore, any commitment to reduce subsidized exports and export subsidies, by both the US (BEP) and the EC (restitutions), would imply reductions of American and European exports from CUITent levels, higher world prices, and a better price competitiveness for Cairns countries.

The US position on export competition also reflects its prospects on the grain world market . "While the US responded to surpluses by holding back grain production and exports, the EC continued to provide open-ended price supports to producers and expanded its subsidized exports. As a result, the EC has displaced a cumulative total of more than 300 million tons of other contries' exports since 1977. Much of this displacement appears to have occurred at the expense of the US" (USDA, 1990, p. II).

On export competition, the EC has always refused to discuss a separate commitment on export subsidies because this would result automatically from the decrease in domestic support. On that issue, the EC is therefore isolated. It is clear that the EC does not want to see its export position, particularly on grains, constrained by GATT commitments because it has no a priori highly visible trade gains to expect from liberalization on grains, but only conspicuous political costs. Export competition concerns explain the rejection of the different GATT compromises by the EC as, for example, the so-called De Zeeuw paper which clearly asserts that "the commitments to reduce export assistance shall result in such assistance being reduced effectively more than other forms of support and protection and that these commitments may take the form of commitments to progressively reduce aggregate budgetary outlays on export assistance, per unit export assistance, the total quantity of a product in respect of which export assistance may be provided, or sorne combination of such commitments" (Multilateral Trade Negotiations, The Uruguay Round, July II, 1990).

iii) Internai support

AIl contracting parties accept a reduction of internal support in their proposais. But the conflicts exist on the way reductions are to be implemented (reference year or years, transition period, degree of reduction, list of measures which should be subject to reduction, agreement on a measure of support, definition of the fixed reference world price, measure of credit, especially for products subject to supply management policies,...).

The mid-term review agreement in Geneva called for a substantial and progressive reduction in support and protection which would be achieved through negotiations on the refonn of specific policies and measures or through a reduction in an Aggregate Measure of Support, or sorne combination of the two approaches (FOCUS, May 1989, p.5). The exact way by which the refonn of domestic programmes is to be achieved was therefore left open in the Geneva declaration, but it is worth noting that the various contracting parties have chosen to negotiate a reduction in an Aggregate Measure of Support.

An AMS reduction approach is consistent with the overall position of the EC on agricultural trade refonn. Furthermore, the choice of the 1986 base period is also consistent from an EC point of view since, as mentioned, this choice minimizes future support reduction requirements with respect to the choice of other base periods. In other words, the choice of this base maximizes credits for policy changes made from the beginning of the Round (on this point, see [START_REF] Westhoff | Implications of a GATT Agreement on Agriculture: the Known, the Unknown, and the Unknowable[END_REF]. By choosing 1986, the reductions between 1990 and 1996 would be notably less than 30 %. Still, the EC is not willing to accept the reduction of both the US and the Cairns Group current proposais, i.e., a 75 % reduction in AMS's over a ten year period, measured from a 1986-88 base period. First, the choice ofthis base period reduces the credit of the EC, and second, the reduction of 75 % would require a sharp decrease in domestic support and in export subsidies. The same rationale may also explain the rejection by the EC of the so-called Swedish compromise which was based on a 1990 base period and therefore gave no credit to the Community.

It is also interesting to note that Canada has not been able to follow thorougWy the "hard" line of other Cairns countries calling for "only" a 50 % reduction in internai support (on a 1988 base period) and insisting on the credit to be granted for supply control programmes.

The choice of a 1986-88 base period in the US proposai is also consistent with the reductions this choice implies. An analysis performed by the Center for Agricultural and Rural Development (CARO, 1991) suggests that the AMS reduction on crops necessary to achieve a 30 % reduction with respect to the 1990 level would be 6.7 % if the base period is 1986-88 (i.e., as in the US proposai), 12.4 % ifthe base period is 1986 (i.e., as in the EC proposai), and 30 % if the base period is 1990 (i.e., as in the Swedish compromise). The corresponding AMS reductions in the EC would be equal to 21.9 %, 19.8 %, and 30 % respectively. FinaUy, aU contracting parties agree on the need to distinguish internai support policies according to their distorting effects on trade (policies to be eliminated, disciplined or aUowed in the US, green and non-green measures in Canada, policies subject to elimination or to surveillance for other Cairns Countries, yellow and green boxes in the EC,...). The latest proposition on the negotiation table, i.e., the Dunkel compromise, emphasizes also that the vital question in the domestic subsidy area is the definition and classification of supports, and in particular the classification of the US deficiency payments and of the planned compensatory payments in the "new" CAP ofthe Mc Sharry Plan.

iv) Main points ofdisagreements

To sum up tbis section, contracting parties of the Uruguay Round may be classified into two categories: the proponents of reform and the proponents of restraint (Hathaway, 1990, p. 52). The first group led by the US, the Cairns Group (including Canada, but to a lesser extent), and supported by other exporter developing countries, have tangible terms of trade gains to expect from a multilateral approach of trade liberalization. The second group is composed of Japan, the EC, Nordic countries, importer developing countries and also Canada on animal products, countries who do not have obvious trade gains to expect but whose govemments' position is bighly sensitive to the political influence of farmers. The EC case is even more complex because of the expression of national interests in the Community decision process.

The main points of disagreements are therefore the magnitude of reduction in import barriers, export subsidies and intemal supports, the implementation of tariffication and rebalancing, the definition of export subsidy reduction (quantities, export subsidies, per unit subsidy), the "classification in the boxes" of domestic policies regarding their trade distorting effects, and the choice ofthe base period from wbich the reductions would be calculated.

The gap between negotiators has been further reduced by the end of 1991 when A.

Dunkel issued bis compromise wbich has been accepted by most contracting parties (FOCUS, nO 87, 1992), and in May 1992 when the EC Ministers have decided the CAP reform.

Majorfeatures ofthe C4P reform

The emphasis of the CAP reform on grains makes sense due to their importance in land use,and to crop substitutions and animal-crop interactions via the feed sector. The logic of the reform is c1ear and may be described as follows : i) the market support price for grains is to be cut down to about world prices (nearly 30 %), over a short period (3 years) in order to increase domestic demand and especially derived demand ; ü) this price cut, compensated by direct payments, should induce producers to adopt less intensive production techniques which in the medium term should reduce the trends of yields ; ili) in the short run, supply decrease should result from a set aside, compulsory to be eligible to the direct payments ; iv) decreased supply and increased domestic demand would result in a better balance of the EC grain market.

More precisely, details of the reform as it relates to grains, oilseeds and livestock are detailed in Table 2.1. ii) Introduction of compensatory payments equal, in average, to the gap between the 1992 average market price (i.e., nearly 155 Ecus/ton) and the new target price. These direct subsidies will be paid to the farmer either on an individual base area in Member states who are in position to do so or on a regional base area.

iii) In order to be entitled to compensatory payments, "professional" producers would be required to set aside part of their crop area (grains, oilseeds and protein crops). Rotational set aside is set to 15 %, non-rotational set aside is also permitted but at a higher rate which is not yet defined. Compensation for set aside is equivalent to compensation for cultivated area. iv) "Small" producers producing less than the equivalent of 92 ton of grains (Le., with on EC average less than 20 hectares of grains, oilseeds and proteins crops) are exempt from the set-aside commitment. v) Grains grown for silage are treated like other grains.

b) Oilseeds

i) Institutional prices do no longer apply and support is provided fully in the form of a standardised compensatory payment system with per hectare aids paid directlY to the producer.

Application of the set-aside scheme described above.

ii) The reform is implemented in one step (Le., for 1993-94) following the transitional scheme implementing in 1992-93 also based on direct compensatory payments to producers.

c) Protein crops

i) Same rules as points i) and ü) above.

d) Milk and clairy products

i) Skim milk powder price remains unchanged. Butter price is reduced by 2.5 % in 1993/94 and in 1994/95.

i) No quota cut defined a priori,but the EC Commission will submit reports to the Council before the beginning of the two marketing years 1993/94 and 1994/95, accompanied if necessary by proposais to review the quota volume in the Iight ofthe market situation.

e)Beef

i) Beef intervention price is reduced by 15 %, in equal steps of 5 %, over the three years of the transition period.

ii) Modification of premium regimes as follows :

-A density factor is defined : 3.5 Livestock Units (LU) per hectare in 1993, 3 LU in 1994,2.5 LU in 1995 and 2 after.

-Bovine animais : premium fixed at 90 Ecu per animal, paid at most twice in the life of the animal (10 months and 22 months) and for the first 90 animais ; a Regional Reference Heard (RRH) equal to the number ofpremiums paid in the reference year (i.e., 1990, 1991 or 1992) is defined for each region within Member states : if, in one region, the number of premiums requested exceeds the RRH the number of eligible animais is reduced proportionally for each producer ; an additional premium of 30 Ecus/animal is payable if the density factor is lower than 1.4 LU/ha (extensification premium) ; and an other additional premium of 60 Ecus/animal is payable to favour counter-season sales.

-Suckler cows : premium fixed at 120 Ecus per animal and based on an historical reference corresponding to the number of premiums paid in 1990, 1991 or 1992. ; same extensification premium as for bovine males ; and definition of mies for national reserves and transfer ofpremiums (see sheep, point i) below).

-Calf conversion premiums : Member states will apply either the calf conversion premium (Iess than 8 days, 100 Ecus/animal) or the intervention arrangements for lightweight animais (see point iii) below).

iii) Modification of intervention mIes : admission of carcasses with a weight between 150 and 200 kg ; reduction of intervention purchases from 750,000 tons in 1993 to 350,000 tons in 1997 ; exclusion of 0 category young bulls from 1993 (with special arrangements when this category represents currently more than 60 % of quantities) ; and a safety net is maintained.

j} Sheep i) Modification of premium regimes : limitation of the number of eligible ewes to a reference year (1989, 1990 or 1991), with a ceiling of 1000 animal in less favoured area and of 500 animal in other regions (beyond these limits, a 50 % premium wiIl be paid) ; creation of an , i t l 1 1 additional reserve ; and definition of mies to transfer the premiums (transfer of all the premiums to the suceessor, transfer of 85 % of these premiums to an other produeer and distribution of the remaining 15 % to priority producers or new entrants, possibility ofleasing or/and buying premiums).

Quantitative analysis : model usell, C4P reform scenario and alternative scenarios i) The model

The simulations reported in this paper are carried out with a "trend-augmented" version of the MISS model (Modèle International Simplifié de Simulation). MISS is a price equilibrium model, but time shifters in supply and demand are added in order to take to take into aeeount teehnieal change effects (Mahé and Tavéra, 1989, Guyomard et al., 1991).

The world is divided into four zones : EC, USA, Centrally Planned Economies and Rest of the World. The agricultural sector is disaggregated into eleven outputs 1 and ten inputs 2 . The behaviour of the model is driven by matrices of direct and cross-priee elasticities of agricultural output supply, derived demand and final demand. The complete system of agricultural output supply and derived demand is derived from a sector restricted profit function which satisfies the theoretieal properties of symmetry, linear homogeneity and eonvexity with respect to priees. Domestic prices can be either exogenously fixed or linked to world priees as in the case of tariffs, subsidies or taxes for example. Shifts of supply and demand due to technieal change, set-aside, extensification or income growth can be implemented as weil as import and production quotas 3 . Supply and derived demand shifters were eahbrated on the basis of the 1978-88 period by eorrecting actual trends of production and disappearance volumes for price changes in order to get estimates of pure teehnieal change effects ; final demand trend were also eorrected for price effects. Data and parameters were ealibrated so as to reproduce the evolutions ofworld prices observed over the period 1978-88. 1 Grains, vegetable proteins, vegetable oil, corn gluten feed and other maïze byproducts, manioc, other grain substitutes, beef, aggregate pork, pouilly and eggs, milk, sugar and a residual group (olive ail, vegetables, fruits, wine, sheep, ...) a1lowing the model ta coyer the whole of the farm sector.

2 Six inputs of agricultural origin for animal feed (Grains, vetable proteins, corn gluten feed and other maïze byproducts, manioc, other grain substitutes and milk) and four inputs not produced by the farm sector (other feed ingredients, fertilisers, other intennediate consomption and capital services).

3 The effect of quota level changes on quantities supplied and demanded are taken into account via corresponding sbadow priee changes.

ii) The CAP reform scenario

The CAP refonn scenario, called "CAP refonn" or "Mc Sharry 2", is based on the policy decisions as defined in the text adopted in May 1992 (cf. Table 2.1.). EC market prices 4 for grains, beef and dairy products are then reduced over the period 1993-96 according to the price cuts defined in the reform, but direct payments (grains and beef) offset part of the resu1ting reduction in market receipts for the producers. In other words, compensation to cereals, oilseeds and beef is assumed to be coupled, and the equivalent price taken into account by farmers in order to define their production decisions is then the sum ofthe new market price and the average direct payment (coupled compensatory payment assumption). The set-aside programme, implemented through shifters for grains and oilseeds, reduces the production of grains and oilseeds from 8.8 % with respect to the 1993 base levels. Furthennore, autonomous rates of growth in crop yields (grains, oilseeds and protein crops) are reduced by 2/3 with respect to historical growth rates (extensification assumption). Therefore, the CAP refonn scenario corresponds to an "extensive-coupled-compensated" scenario. More precisely, the CAP refonn scenario is applied over the 1993-96 transition period as follows : i) The Voluntary Export Restraint Agreement (VERA) on manioc is cancelled and the current tariff of 6 % is kept. j) Set-aside of 9.8 % for the area under grains, oilseeds and protein crops : this percentage is applied proportionally to these three crops with a coefficient of translation areaquantity of0.9 (slippage coefficient). k) Decrease in historical rates ofgrowth in yields by two thirds for grains, oilseeds and protein crops.

iii) Comparison scenarios

To assess the impacts of the CAP reform on EC agriculture, empirical resuIts derived from the scenario described above are compared, first to the situation of the EC agriculture in the "base" year, i.e., "1993"5, and second to the situation of the EC agriculture under four alternative scenarios. a. In the trend scenario , called "trend", existing policies are kept in the EC, but the stabiliser mechanism for grains and oilseeds is not applied. Guaranteed prices follow the trends obseIVed over the decade 1978-88. Production quotas on milk and sugar, and the VERA on manioc are kept at their 1990 levels. This scenario is performed over the two periods 1990-93 and 1993-96.

b. The baseline scenario, called "stabiliser" or "MGQ", also maintains existing policies in the EC, with the following qualifications : i) a strict stabiliser mechanism for grains and oilseeds, fi) the price cuts obseIVed on the 1988-92 period for other productions (beef, dairy produets and sugar), and üi) two miIk quota reductions of2 % over each period 1990-93 and 1993-96. Annual price cuts in nominal terms are therefore 3.15 % for grains (0.2 % in the trend scenario) and 4.13 % for oilseeds (0.1 % in the trend scenario). c. The EC Commission reform proposai scenario, called "Mc Sharry 1", is based on the changes in EC agricultural policies described in the July 1991 proposai of the EC Commission (COM(91) 258 final/3). As in the CAP reform case, the Mc Sharry 1 scenario is simulated assuming that compensatory payments are coupled and that growth rates in yields are reduced. The main differences from the CAP reform scenario lie in i) magnitudes of price cuts (grains on demand side, beef and dairy products on supply and demand side), and fi) miIk quota level decrease. More precisely, in that scenario, a complete Iiberalisation for grains on the demand side is performed because the final world price is greater than the final inteIVention price of 90 Ecus per metric ton, the beef price is reduced by 10 % on supply side (beef premiums are 5 The "1993" base year is defined by app1ying priee and quota changes observed on 1990•91and 1991-92, and priee and quota decisions for 1992-93. lower in the proposai than in the CAP reform) and by 15 % on demand side, the price of the aggregate dairy products is reduced by 10 % on supply and demand side, and the miIk quota level is decreased by 3 %. d. In the GATT scenario, called "GATT", the model is fed with the changes in EC agricultural policies implied by the tirst two sections of the Dunkel compromise, namely export competition and internai support. The AMS reduction commitments are obtained by decreasing supply prices of grains, oilseeds, protein crops, beef, dairy products and sugar. Price cuts are calculated so that, starting from a levell00 in 1986-88, a level of90is reached in 1996 (and a level of 80 in 1999). Sugar and milk quota levels are kept at their "1993" levels, and demand prices are then reduced at the same rates as corresponding supply prices. For grains and beef, Nominal Rates of Protection (NRP) are reduced in order to achieve export competition commitments (i.e., reduction of 24 % in the subsidised export volume and of 36 % in export subsidies, over the period 1993-99 and using the average of years 1986 to 1990 as reference period). So, for grains, it turns out that a complete liberalisation is necessary to reduce the volume of subsidised exports from the base 100 in 1986-90 to the level 90 in 1996. There are neither set-aside nor extensitication assumptions in that scenario.

Empirical results

It would be long and boring to go in details through the various scenarios, and we will resist this temptation. Only the results of the CAP reform scenario (scenario Mc Sharry 2) are highlighted, focusing more particularly on grain market balance and on the animal feed sector.

The results of this scenario are compared mainly to the results of the trend and of the MGQ scenarios. Impacts of the Mc Sharry proposai (scenario MC Sharry 1) and of the GATT scenario are only discussed as far as they raise important economic or political issues. Detailed results ofthe five scenarios are provided in Tables 2.2, 2.3, 2.4, 2.5 and 2.6.

Commodity market balances i) Grains

In the trend scenario, EC net grain exports increase by 32.3 million metric tons from 1990 to 1996 (+ 120 %) : production increases by 18.0 %, whereas animal feed demand and final use decline by 3.6 % and 2.8 % respectively. In the stabilizer scenario, the support price cut of 3 % per year is not quite enough to keep the production within the MGQ in 1996 (production increases by 6.7 million tons (+ 4.1 %) to be equal to 162.7 million tons), but it induces a small increase in demand (+ 1.9 million tons for feed use and +1.6 for final use) so that net exports increase by 3.8 million tons only to be equal to 30.6 million tons (Table 2.1).

The CAP reform scenario results in a fairly different market balance. Due to the setaside and the reduction of the trend of yields, supply is 26.9 million tons lower in 1996 than in the trend scenario. But, it is only 6.2 million tons lower than in the stabilizer scenario, because compensatory payments are assumed to be coupled and prices are then kept constant in nominal terms whereas they are decreased at a rate of 3 % per year in the stabilizer scenario. Derived and final demand is stimulated in this scenario by lower user prices than in the two previous scenarios, but this is partly offset by larger cuts in support provided to the animal sector, either directly (-15 % for beef price, but compensated by premiums) or indirectly (decreases in pork and poultry prices following the grain price eut). Feed demand reaches 87.2 million tons in 1996, more than 10 million tons above the level reached in the trend scenario and 6 million tons above the level reached in the stabilizer case. EC net grain exports are equal to 14.8 millions tons in the reform scenario, and therefore the Community complies (in 1996) with the required cut in subsidized exports as specified in the Dunkel compromise.

On the extemal side, the GATT scenario carries a similar outcome. Domestic demand for grains is even higher because the price cut of grains is larger in order to bring EC price in line with world price and because ofthe further expansion ofthe pork and poultry sector.

Because the five scenarios differ widely in terms of export volumes, they differ also in terms of world prices not only for grains but also for other feed ingredients (Tables 2.5 and 2.6).

ii) Animalfeed products

The stabilizer scenario keeps production of oilseeds under control at its initial 1990 level at the cost of a price cut of 4.1 % per year (in nominal terms) which nearly offsets technical change impacts. The CAP reform scenario leads to a supply which is about 2 % lower than this level, but this decrease is due more to set-aside and extensification than to price cut effects. Domestic use of protein feeds keeps increasing slightly in the stabilizer scenario (+ 004 % from 1990 to 1996), but at a much lower rate than in the trend scenario (+ 9.0 % over six years). In the CAP reform scenario, use of oilcakes is equal to 38.3 million metric tons, nearly 6 million tons less than in the trend scenario and more than 2 million tons less than in the stabilizer scenario (Table 2.3). This decrease is essentially due to the competition from cheaper grains on the EC domestic market and to the fall in pork and poultry prices. The price ratio of grains on oilcakes is equal to 1.36 in the trend scenario, 1.11 in the stabilizer scenario, but to 0.88 only in the CAP reform scenario (Table 2.5).

As for oilcakes, grain substitutes suffer from grain competition on the EC market in the CAP reform scenario, but to a lesser extent. Most grain substitutes are byproducts, they have few other outlets than the EC feed market, and their export supply elasticities from the Rest of the World to the EC are then generally small (Le Mouël, 1992). Therefore, their world prices fall sharply as reaetion of any decrease in EC grain prices (Table 2.5). For example, the world price of corn gluten feed and other maïze byproduets decreases by 22.0 % over three years in "reaction" to a price cut of EC grains of 32.0 %. As a consequence, imports of grain substitutes continue to increase because of expansion effects of the animal sector and because oftechnical change effects and despite large EC grain price cuts. So, domestic use and imports of corn gluten feed and other maïze byproducts increase by 1.1 million tons over the transition period 1993-96 (from 9.5 to 10.6 millions tons for use and from 8.1 to 9.2 million tons for imports). Consumption levels are slightly lower than in the stabilizer scenario (10.6 with respect to 10.9 million tons) and in the trend scenario (11.4 million tons).

The reform results then in lower world prices for ail Non-Grain Feeds (NGF). This indirect effect partly offsets the competitive edge gained by cereals in animal feed and therefore reduces the potential increase of grains in feed demand. This applies mainly to grain substitutes and, to a lesser extent, to oilcakes. Despite these price adjustments, derived demand of grains increases by about 7.5 million tons over the transition period of the reform (Table 2.3). Furthermore, different scenarios more favourable to EC grains may not be excluded. EC imports of corn gluten feed could, for example, decrease in larger proportions if the new US price ratio between maïze and corn gluten feed, which is Iikely to make the latter more competitive in the US, induces a strong demand from US compounders. This event would even become more likely if the US would eut sugar prices and subsidies to ethanol production. On the other hand and following the theory of induced innovations [START_REF] Binswanger | Induced Innovation : Technology, Institutions, and Development[END_REF], new price ratios in the EC will modify past technical change biases (favourable to oilcakes and to grain substitutes at the expense of domestic grains) and induce a technical change "grain using and imported ingredient saving". Clearly, the modelling exercise which relies upon constant behavioural parameters and smooth regimes finds its Iimits in the present case.

iii) Animalproducts

In the two reform scenarios (Mc Sharry 1 and Mc Sharry 2), results for the EC milk balance are dominated by the impacts of changes in supply control measures and, tO.a lesser extent, by the efrects of changes in prices. In the scenario Mc Sharry 2, milk quota level is kept unchanged with respect to "1993" and prices of dairy products are reduced ooly by 1.25 % (in nominal terms) over three years. Therefore, net trade increases ooly slightly (+ 0.4 million tons over the transition period) due to lower domestic use. In the scenario Mc Sharry 1, the 3 % reduction in milk quota results in a corresponding reduction in production and the 10 % price reduction (always in nominal terms) results in an increase of 1.7 million tons in domestic use.

Therefore, in that scenario, net trade of dairy products decreases from 13.3 million tons in "1993" to 8.8 million tons in 1996 (-33.8 %). Obviously, the CAP reform scenario does not satisfy to Dunkel compromise commitments on AMS decrease and on reduction of subsidised exports and export subsidies 6 whereas the scenario Mc Sharry 1 does.

In the Mc Sharry 2 scenario, beef supply remains unchanged with respect to 1993 and it falls, but only slightly, in the scenario Mc Sharry 1 (-2.5 %). Domestic demand increases in the two scenarios (+ 0.4 million tons from 1993 to 1996, i. e., + 5.5 %) due to the price cut of 15 % which is nevertheless partly offset by the larger price cut ofpork and poultry.

Grain-fed pork and poultry production expands significantly in the two reform scenarios and in the GATT scenario because it benefits from price decreases of alI feed ingredients and because technical change shifters are important in that sector. Nevertheless, the expansion of these productions is limited by the supply price decreases resulting from grain price cuts in the EC. The smallest increase in production is in the Mc Sharry 2 scenario because prices of feed ingredients falI less in that case (Table 2.5). As production increases exceed consumption growth, net exports of pork and poultry grow significantly in these three scenarios in the order Mc Sharry 2, Mc Sharry 1 and Dunkel. But, the latter development for pork and poultry production assumes that environmental constraints do not become more binding and that outlets on the world market can be found without non-tariffbarriers.

Budget costs

European Agriculture Guidance and Guarantee Fund (EAGGF) expenditures increase steadily in the trend scenario because subsidised exports continue to growth in volume and because nominal protections increase also as a result ofrapid world price declines partly due to growing EC surpluses. The stabiliser scenario does bring sorne relief by the decrease in grain export restitutions, in crushing subsidies for oilseeds and, to a lesser extent, in dairy export 6 At least, given the assumptions of that scenario, i.e., without quota level change over the transition period.

Nevertheless, an alternative scenario with a reduction of quota level is possible in sa far as "the Commission will submit reports to the Council before the beginning of the 1993/1994 and 1994/1995 quota periods on the market situation, accompanied, as appropriate, with proposais, 50 as to allow the Council to review the decisions taken" (CCE, 1992,6532/92, p. 11).

restitutions. In that scenario, budgetary costs of EC fann programmes decrease by 1.7 billion 1990 Ecus from 1990 to 1996.

Implementation of the CAP reform (scenario Mc Sharry 2) increases the budget costs by 9.6 billion 1990 Ecus over the transition period (from 19.7 to 29.3). The decline in restitution payments, mainly on grains, are offset by the introduction of compensatory payments for grains, by the increase of premiums for beef and by the cost of the set-aside programme. In the scenario Mc Sharry 1, budget expenditures are 29.0 billion 1990 Ecus, i.e., nearly as much as the scenario Mc Sharry 2. Aggregate expenditures are about the same in the two reform scenarios, but the break down is different. The cost ofMc Sharry 1 was smaller on grain, beefand dairy restitutions, on sheep and beefpremiums and on the set-aside programme. But, compensatory payments for crops were also greater (55 Ecus per ton versus 45 Ecus per ton), and dairy cow premiums (1.37 billion 1990 Ecus) nearly offset the decrease in export restitutions on dairy products.

In the GATT scenario, budget expenditures are equal to 30.3 billion 1990 Ecus, i.e., +1 billion Ecu with respect to the scenario Mc Sharry 2. Expenditures for dairy products, sugar and the aggregate rest of agriculture decrease, but increase for grains, oilseeds and beef. In order to meet the subsidised export commitments, the EC reduces border protection much more than the AMS and therefore implement quasi-deficiency payments for grains and beef without the saving effects of set-aside and extensification.

Farm incarne

From the EC fanner's point of view and ignoring the trend scenario, the GATT scenario is likely to be the worst ofall (-5.6 % in nominal terms over three years), Mc Sharry 1 and MGQ being slightly better, and Mc Sharry 2 being the most acceptable of al1 (-1 % in nominal terms over the three years of the transition period). In real terms, fann income decrease by 9.4 % in the CAP reform, but a 2.5 to 3 % rate oflabour outmigration would keep nearly constant real fann income per head.

Although the joint representation ofthe farm sector does not allow us to provide clearcut income indicators for separate commodity groups, it tums out that crop producers (grains and oilseeds) would be the most affected in the MGQ scenario (strict application of stabiliser mechanism), that income losses would be spread more evenly across commodities (with the noticeable exception of sugar) in the EC Commission proposai, that beef and milk producers would suffer from most important income losses in the scenario Mc Sharry 1 than in the scenario Mc Sharry 2, and that income losses would be the most serious and spread over ail commodity groups, including sugar, in the GATT scenario. -~--~~_._ .. -'---'--~~~-., ..,.....,----,.,-.~--,-!::t

THE FINAL OUTCOME OF THE ROUND: BETWEEN MERCANTILISM AND COLLECTIVE ACTION

There is ample evidence that free trade in agriculture is unlikely to result from spontaneous unilateral government actions, even if extensive reforms of agricultural policies have occurred recently in a few countries. In spite of economic gains to the society as a whole, the political balance appears to favour specific group interests as opposed to the long-run general interest. Govemments also appear to have a tendency to weight heavily the short-run political costs that trade liberalization would entai! relative to the longer run gains that would most surely be obtained. These long-run gains are delayed, dispersed and furthermore difficult to demonstrate. Collective action shows why interest groups are efficient in making their case to the politicians, and to alter public opinion because specific income losses are more obvious to show than are the potential gains from the foreign trade and its stimulus to economic growth.

Free trade is in general a preferable policy for an individual country, but it also benefits to other countries so that free trade among nations is a public good, a good which in itself requires collective action to ensure its procurement. When government actions disproportionately reflect the preferences of specific interests, they tend to make protectionism a dominant strategy. Therefore, the political game prevents the society as a whole from capturing the benefits that free trade can provide, and the discrepancy between govemment behaviour and welfare of the society creates a situation similar to the prisoner dilemma. In this case, There is Iittle general incentive to deregulate on a unilateral basis.

To the extent that governments have mercantilist motives in trade relations [START_REF] Siamwalla | Agriculture, the Uruguay Round and Developing Countries[END_REF], bilateral agreements are more Iikely to occur between large countries with strong interactions. Agreements are more Iikely in that case because gains can be obtained to both countries from trading a reduction in protection of import competing seetors for access to markets in which the countries have a comparative advantage. In the case of numerous small countries, agreements are more problematic since these types of gains tend to be dispersed among many parties.

In a multilateral framework such as the GATT, mutual trade concessions are less Iikely to occur since the Most Favoured Nation principle extends to ail other contracting parties the benefit of the concession made by any country. When a large number of countries is involved, they have less incentives to make reciprocal concessions since the gain one country might "pay for" by a mutual concession must, in a multilateral framework, be shared by ail. The sharing of the benefits means, for example, that other countries can also compete for the markets that have been liberalized. Effeetively, the sharing of benefits from a concession with other countries implies that a particular country has less incentives to enter into or invest in a multilateral agreement. This is another consequence of the free-rider problem. The proliferation of free trade areas, bilateral trade agreements, and trade blocks is a clear illustration of the attempt to circumvent this externality which is built into the GATT principles.

On the other hand, the benefits of multilateralliberalization have been shown by several authors (see, for example, DECO, 1987) to be less harmful to farm incomes and/or government budgets than is unilateral action.

Using a 4-zone (EC, US, rest of DECO and rest of world) world agricultural model and agame theory approach based on political payoff functions, [START_REF] Johnson | Politically Acceptable Trade Compromises between the EC and the US : AGame Theory Approach[END_REF] have

shown the existence of these political externalities in the agricultural trade negotiations. One example is that when the rest of DECO countries liberalize their agricultural policies, it becomes feasible • politically -for the US to liberalize partly. The public good nature of agricultural trade deregulation therefore extends to the political gains to be expected from multilateral action. The need for a treaty to ensure that commitments are fulfilled and to give incentive to everybody to move in concert is therefore demonstrated, and the improvement of the rules of dispute settlement as a way to make the enforcement of the GATT treaty more efficient is important in this respect. It is therefore politically beneficial for any one country to induce other countries to Iiberalize, but own political costs tend to prevent the country itself to do so.

If political costs dominate economic benefits in all countries, a treaty is therefore unlikely unless sorne players take the role of catalysts in a collective action capable to ensure political gains to every country when the treaty is implemented. If all countries were of equal size and small, no one would have the incentive to initiate a costly negotiation process. [START_REF] Oison | The Logic of Collective Action[END_REF] suggested that organisation of interest groups is more likely when the group is heterogeneous with players having high stakes in successful collective action. It seems that big actors with large trade interests in agriculture provide such a case in the Uruguay Round.

The important role of the US in this Round, and in particular its active role on agricultural issues, can probably be better understood by the relative size of this country and the existence of irnmediate sizeable trade gains capable to circumvent the overall adverse politicallosses. One may also admit the existence ofthe free trade minded opinion prevailing in the US, but this was apparently not sufficient to stop the US Congress to insist on the waiver in the early stages of the GATT (the ambitious content of the US proposais may however be Iinked to the free trade ideology).

The irnmediate interests of the US in agricultural trade are concentrated in cash crops, and such is the case actually for Canada and for sorne of the Cairns Group countries. It is hardly debatable that agriculture would have played such a big role in this Round without these clear cut trade interests, in spite of more far reaching ambitions on deregulation from the part ofthe negotiators.

This also explains the concentration of the effort on the BC and, to a lesser extent, on Japan. It is less costly to concentrate the pressure on big defensive players than on hundreds of tiny protectionist countries. Moreover, broadening the issues of negotiations into more general methods of deregulation than pure reciprocal concessions will force the minor, follower countries to conform to the agreement cooked up by the big players, thus opening further outlets for exporters.

The capability of the US to strongly determine the course of events in agriculture is of course reinforced by its general economic size as weil as its political power. The EC is weaker in that respect, and it is more passive in the negotiations because of much less obvious short run trade interest to balance the political costs.

But now, the economic changes have made the principles of the CAP increasingly inadequate even to fulfil domestic policy objectives. The shift to a permanent net export position with the budget and trade conflict consequences have made action necessary, particularly in the cash crop sectors where interactions with other countries are the greatest.

This combination of domestic and international pressures has made it possible for the BC Commission project to pass the scrutiny of the Council ofMinisters, even if major concessions to vested interests have been made along the process.

CONCLUSION

Eventually, the final stage of the Uruguay Round as far as agriculture is concerned is increasingly appearing as the casting of an old play which gives the irresistible impression of "déjà vu".

After much talking on broad principles and ambitious plans, the setting is now likely to amount to a deal between the two big players that focuses on the solution to the immediate trade dispute, i.e., international competition in the cash crop sector.There may be other limited general commitments, but they are likely to be far apart from the prescriptions following the rich debate on decoupling and targeting assistance which has taken place a10ng this Round.

This is in itself an achievement which should have positive effects on the mood in favour of deregulation. But, the more firm commitments will most certainly narrow down on trade measures and trade issues.

To sum'up, ifwe combine the main driving forces of the active players in the Round (Le., essentially US trade interests in cash crops) and their political constraints together with those of the European Community in other sectors, a treaty between the EC and the US that partially Iiberalizes trade in grains is the most Iikely, while the animal sector and sugar, politically most costly to Iiberalize, would be kept pretty much free of strong commitments, at least in the short run.

Therefore, we seem to be moving toward a minimal agreement in agriculture which would a1leviate the EC-US trade dispute in the crop sector, while other sectors would be nearly unaffected and whereby derogations from the general principles of the GATT such as quantitative restrictions will remain, such as those included in the Dunkel compromise even if their purpose is to Iimit distorted trade or to guarantee minimum access. This is far from the initial objective of the Uruguay Round and agriculture is yet unlikely to be fully brought under the GATT rules, once again.

This medium way is more or less what the CAP reform is about since it satisfies to a large extent the AMS cut requirements of the Dunkel compromise in the grain and beef sectors even with the compensatory payments not eligible for the green box. For oilseeds, the CAP reform does not satisfy either the Dunkel paper nor the US demands, particularly after the GATT panel recommendation. Sorne flexibility in the CAP reform could be brought by further decoupling a part of the compensation from future factor use and by basing its calculation ona past reference situation only, so as to be eligible for the green box and to meet the 20 % cut in AMS requested in Dunkel. As regards dairy and sugar, there is a large gap however between the CAP reform and the Dunkel compromise. Nevertheless, the US should be happy with the reform (except for oilseeds) as it is difficult for this country to reform dairy and sugar too.

This is where the Uruguay Round may turn out to be somewhat different from the previous ones in spite of the likely minimal agreement foreseen above. If there is an agreement, it cannot be discriminatory according to commodities. As the Dunkel compromise has already been accepted by nearly ail contracting parties, the final treaty cannot be drafted along different Iines, and only qualifications, date exceptions or numbers can eventually be altered. This means that, while European political leaders state firmly that the CAP reform cannot be changed or negotiated, an agreement in the GATT will necessarily mean sorne constraints on the CAP, either now or in the future. In that sense, things may not be quite the same as before when the CAP was for the most part unilaterally framed by domestic forces.

As a consequence, the reform of the CAP is far from being completed and GATT pressures will be more constraining in the future than in the pasto In the long run, the GATT should constrain the CAP, even if it is for a limited extent, in the areas of export subsidizing (wheat, beef, dairy and sugar), Aggregate Measure of Support (dairy, sugar and oilseeds) and probably market access (maïze and animal feed ingredients). Any export Iimit commitment should in the long run be constraining and force the EC to use further land set-aside as a regulatory instrument or allow for a non-subsidized grain export sector from a defined land base area. Limits on subsidized exports as weIl as any commitment in AMS should entail a further reform package targeted on the dairy and sugar sectors which have been able to escape, up to now, domestic pressures because of the supply control policies. Domestic political forces will add their pressure to the international one emanating from the GATT because of the new instrumentation of the CAP. Transfer from the budget, both between individuals and countries, will become visible. Unavoidably, this will trigger political scrutiny and influence decision making. Distributional issues will also come to the front much stronger than in the pre-reform CAP. The targeting of subsidies on people and social objectives should improve from these debates. The increased visibility of transfers will initiate a virtuous circie.

New domestic pressures on the CAP will also develop from the environrnentally sensitive groups. The environrnental programme of the CAP reform is ambitious and potentialIy very costly. It could open the door for further transfer to farmers with token environrnental objectives to keep quiet their political activism. A large green box is potentially a way to deviate environrnental policy into a transfer policy with serious problems of administration and control (how will decrease in intensification be monitored ?). One weak feature of the reform is the lack of integration between the natural conservation and food production and trade roles of agriculture. Farmer organisations have had a negative influence in that respect as they are strongly biased in favour of maintaining vested private interests of their constituency at the expense of defending society's wider goals in rural areas. Import access AIl tariffs, including those reSlÙting from conversion on non-tariff barriers to tariffs, would 00 bound on January l, 1991 and then reduced over a lO-year transition period down to final rates to 00 negotiated. Final rates would 00 zero or small.

Export competition A 100 % reduction in expert subsidies (bath in terms of expenditures and in terms of subsidized export quantities) over a 5-year transition period.

Internai support A three-tiered approaeh to domestie subsidy discipline: policy measures whieh contribute to domestie support are divided into three categories according to their distorting effects on production volume, and therefore on trade.

i) polieies whieh have a significant impact on trade (administered priees, production and input subsidies eupled with production levels) are to 00 progressively elintinated over a 10-year transition period. Contracting parties would 00 free to ehoose the transition mechanism oost suited te their particular polieies (for example, by reducing administred priees, or the amount of production eligib1e for priee support, or both).

ii) polieies providing subsidies to inputs or to investments on an eqnal basis, and those whieh have not led to excessive use and are 1ess distorting, are to 00 reduced over a 10-year transition period. The use of an Aggregate Measure of Support (AMS) would provide a convenient method of redueing support from these policies.

iii) policies not tied to production volumes (conservation and environment policies, researeh, e"1ension and education programmes, bona fide domestie food aid and resouree retirement programmes) are still al10wed.

Sanitary andphytosanitary meosures Disciplines are proposed whieh would establish new notification, consultation and eonflict solution procedures.

The October 1990 proposaI

Import access Tariffication, and a 75 % reduction of tariifs OOtween a 1986-88 base period and 2000. A minimum access eqnivalent to 3 % of domestie use and with zero or 10w tariffs is introduced.

Export competition A 90 % reduction in expert subsidies (always in terms of expenditures and in terms of quantities) between a 1986-88 period to 2000.

Internai support A reduction of 75 % over a 10-year period in eqnal steps of 7.5 % each year OOtween 1991 and 2000. The base period is again 1986-88 and the reduction would 00 mesured by the decrease in an AMS.

Table A.2. The "Cairns Group" positions 1. The October 1990 proposai (12 countries : Argentina, Australia, Brazil, Chile, Colombia, Hungary, Indonesia, Malaysia, New Zeland, Philippines, Tbailand, and Uruguay) Import access

Conversion of an border measures other !han normal custom duties into tariff equivalents, binding of these tariff equivalents, and reduction in eqnal annnal steps over a 10-year transition period OOginning in 1991-92 : for developed countries, the tariff equivalent should 00 reduced by an amount of no less !han 75 % on an average trade weighted basis and should 00 subject to a reduction of no less !han 50 % by tariff line. Furthermore, the proposaI expreses particular coneem for tbe interests of developing countries and emphasizes the need to give them special consideration. Export competition A no less \han 90 % reduction in export subsidies (in terms of budgetary oullays, per UIÙt export assistance and quantities of subsidized exports of each product) in equal annual steps and over a transition period of 10 years beginning in 1991-92. Again, the needs and conditions of developing countries should be taken into account br specifying specific commitments.

Internai support

From 1991-92, all internai support should be reduced over a 10-year transition period by an amount no less \han 75 0/ .. using AMS's.

The Canada position ofOdober 1990

Import access A tariffication of all import prohibitions, variable import levies, import quotas and all other non-tariff barriers, except those explicilly allowed by the new or revise GATI rules, particu1arly in respect to article XI. Tariff eqivalents would be reduced using "harmonizing" formula which would reqnire the greater of a 50 % reduction or a reduction to a ceiling binding of no more \han 20 % by the end of a 10-year transition period.

Export competition A complete elirnination ofexport subsidies over a transition period of 10 years (maximum).

Internai support

Non-green support measures should be reduced br up to 50 % over a 10-year transition period (the refemce year is 1988) using AMS's, but green support measures (farm income safety nets, crop insurance, disaster relief, farm credit, environmental and conservation measures, and regional development) would not be subject to reduction.

Table A.3. The EC positions

The November 1990 proposai Import access

A progressive and limited reduction of border measures br tariffication, in line with the decreases in internai support as defined below, and use of a correction factor to protect domestic markets against changes in world market prices and exchange rates. This tariffication (and the internai support reduction) is contingent on the acceptance by other contraeting parties of the principle of "rebalancing", i.e. the fixation ont tariffs on oilseeds and non-grain feeds.

Export competition Tbere are no commitments in the EC proposai in the area of export subsidies, the EC arguing that AMS reductions would result in decreases in the need for export subsidies.

Internai support

A 30 % reduction of the AMS between 1986 and 1996 for grains, rice, sugar, oilseeds and protein crops, olive oil and livestock products, but a 10 % reduction for seeds for sowing, cotton, hemp, f1ax fibre, silkworms, hops, tobacco,frnits for processing and vegetables for processing.

Table A.4. The compromise tentatives 1. The Swedish compromise ofDecember 1990 Import access Tariffication ofborder measures and a 30 % reduction oftariffs over a 5-year period between 1991 and 1996. A minimum access eqnivalent to 5 % of domestic use from the period 1991-92.

Export competition A progressive reduction of either export subsidies, or per UIÙt export assistance, or export quantities subsidized (in that case, the base period is 1988-90 and the export quantities wouId be reduced br 30 % over a 5-year transition period).

Internai support A 30 % reduction, in equal steps and over a S-year transition period between 1991 and 1996, of an AMS by commodity. The base period for the calcu1ation oflhis reduction wouId be 1990.

The Dunkel compromise ofJanutl1')l1992

Import Qccess Tari1l's, including those resulting ftom convetting non-tariffs barriers into tariffs, should be redueed over the period 1993-99 by 36 % in average, but the decrease for a specific product must not be less than 15 %. There mustbea minimum increase in import access of3 %, risingto 5 % by the end of the 1993-99 period, and the proposai specifies safeguard provisions ta limit the imports of a product if the volume of imports exceeds a trigger level and/or if the import priee fails below a trigger level.

Export competition

A 36 % cut in bugetary expenditures on export subsidies, combined with a 24 % reduction in the subsidized export volume over the period 1993-99. The referenee period is the average ofyears 1986-90.

Internai support

A 20 % reduction of domestic support over the period 1993-99, but the base referenee is nox the average of support of years 1986-88. This reduction is measured by the decrease of an AMS, calculated on a product-specific basis with a fixed external referenee priee (based on 1986-88).

  3. A SIMULATION OF THE MAy 1992 CAP REFORM AND THE DUNKEL COMPROMISE.

  a) No supply price cuts, in nominal tenns, for grains, oilseeds and protein crops. b) Demand price cut, in nominal tenns, of 32 % for grains from 1993 level in order to have a price of 100 Ecus per metric ton in 1995-96. c) Supply price cuts, in nominal tenns, of7.3 % forbeefand of 1.25 % for milk. d) Demand price cuts, in nominal tenns, of 15 % for beef and of 1.25 % for the aggregate dairy products. e) No miIk quota level reduction. f) Cut of the Nominal Rate ofProtection of 15.2 % for pork, poultry and eggs. g) No price or quota level reduction for sugar. h) No protection decrease for the aggregate Rest of Agriculture.

Table 2 .

 2 1. The CAP reform ofMay 22, 1992 : main features(CEC, 1992).

	a) Grains
	the 3-year transition period 1993 to 1996 :
		tarl!et orice	intervention orice threshold orice	como.
	marketing year	130	117	175	25
	1993/94
	marketing year	120	lOS	165	35
	1994/95
	marketing year	110	100	155	45
	1995/96

i) Base mechanisms of the grain regime (guaranteed prices, variable export restitutions and variable import levies) are maintained, but target and intervention prices are reduced over (ail cereals, in green Ecus/ton)

Table 2 .

 2 2. Evolution of market balances in the EC (million metric tons).

		Base 1990	Trend 1996	MGQ 1996	Base "1993"	Mc Sharry l	Mc Sharry 2	GATT 1996
						1996	1996
	Grains
	supply	155.5	183.5	162.7	163.9	159.2	156.6	176.3
	feed use	79.3	76.4	81.1	79.7	90.0	87.2	92.5
	food use	49.4	48.0	51.0	49.5	56.1	54.6	56.3
	net exoorts	26.8	59.1	30.6	34.7	13.0	14.8	27.4
	Protein cakes
	supply l	14.9	18.0	15.3	14.9	14.7	14.4	16.9
	feed use net exoorts	40.5 -25.7	44.2 -26.2	40.7 -25.4	41.3 -26.4	37.3 -22.6	38.3 -23.9	37.8 -21.0
	Maïze byproducts
	feed use	8.1	11.4	10.9	9.5	10.3	10.6	10.4
	Manioc
	feed use	5.8	5.8	5.8	5.8	5.7	5.9	5.0
	Other grain substitutes
	feed use	25.8	32.3	30.1	28.3	30.0	31.0	27.8
	Beef
	supply	8.1	8.4	8.2	8.1	7.9	8.1	8.1
	demand	7.3	6.8	7.0	7.2	7.5	7.6	7.9
	net exports	0.8	1.6	1.2	0.9	0.4	0.5	0.2
	Milk
	supply	98.6	98.6	94.7	96.7	93.8	96.7	96.7
	demand	83.0	81.5	83.5	83.3	85.0	83.0	85.9
	net exoorts	15.6	17.2	11.2	13.3	8.8	13.7	10.8
	Pork, poultry and eggs
	supply	23.6	26.4	27.5	25.6	28.5	27.8	28.3
	demand	22.9	25.8	25.9	24.1	25.9	25.8	25.5
	net exports	0.7	0.6	1.6	1.6	2.6	2.0	2.9
	1 Protein cakes of domestic origin.

1::

Table 2 .

 2 3. Evolution of market balances in the EC (changes in percent from 1993 1 to 1996). The year "1993" corresponds to the Base "1993" in Table2.2. for the scenarios Mc Sharry l, Mc Sharry 2 and GATT. For the Trend and MGQ scenarios, the year 1993 is defined by applying the relevant scenarios from 1990 to 1993.

		Trend	MGO	Mc Sharrv 1	Mc Sharrv 2	GATT
	Grains
	supply	+8.7	+2.3	-2.8	-4.4	+7.6
	feed use	-1.9	+1.1	+13.0	+9.4	+16.1
	food use	-1.4	+1.6	+13.5	+10.3	+13.8
	net exports	+39.5	+6.7	-62.4	-57.2	-20.9
	Protein cakes
	supply	+9.8	+1.2	-1.5	-3.2	+13.3
	feed use	+4.5	+0.2	-9.8	-7.3	-8.5
	net exports	+1.1	-0.4	-14.5	-9.6	-20.8
	Maïze byproducts
	feed use	+18.6	+16.1	+9.1	+11.5	+9.5
	Manioc 3 feed use	0.0	0.0	-2.2	+1.1	-14.7
	Other grain substitutes
	feed use	+12.0	+8.3	+6.0	+9.6	-1.7
	Beef
	supply	+1.8	+0.8	-1.7	-0.3	+0.6
	demand	-3.4	-1.6	+4.2	+4.9	+10.0
	net exports	+33.1	+18.6	-51.7	-43.7	-78.2
	Milk
	supply	0.0	-2.0	-3.0	0.0	0.0
	demand	-0.9	+0.3	+2.0	-0.4	+3.1
	net exports	+4.6	-16.3	-34.1	+0.2	-19.1
	Pork, poultry and eggs
	supply	+5.7	+7.9	+11.1	+8.5	+10.5
	demand	+6.1	+6.2	+7.9	+7.5	+6.0
	net exports	-7.8	+44.6	+57.7	+23.3	+77.3
	1

Table 2 .

 2 5. Evolution ofratio ofdomestie grain priee with respect to priees of other animal feed ingredients.

		Trend	MGQ	Mc	Mc	GATT
				Sharrv 1	Sharrv 2
	Domestie priee ofgrains
	1(fUeen Ecus/ton)1	158.4	127.1	90.2	100.0	87.8
	Domestie priee ofgrains
	w.r.t. to priees of
	protein cakes	1.36	1.10	0.81	0.88	0.80
	corn gluten feed	1.87	1.70	1.40	1.46	1.35
	manioc	1.30	1.23	1.16	1.28	0.88
	other grain substitutes	1.75	1.52	1.32	1.42	1.15

Table 2 .

 2 6. World priees (in green Ecus/ton, nominal terms).

		Base 1990	Trend 1996	MGQ 1996	Base "1993"	Mc Shany 1	McShany2	GATT 1996
						1996	1996
	Grains	92.8	83.9	87.7	89.2	90.1	90.0	87.6
	Protein cakes	131.0	116.6	1I5.3	124.1	111.4	113.2	109.2
	Corn wuten feed	101.0	84.8	74.6	89.0	64.5	68.4	65.0
	Manioc	74.2	70.3	70.3	72.2	70.1	70.4	68.6
	Othee lUain substitutes	85.6	72.4	67.1	77.2	68.3	70.3	63.2
	Beef	2112.5	2249.9	2306.6	2215.4	2405.9	2403.9	2427.7
	Pork:. Iloultrv and el!:l!:S	1285.0	1244.8	1233.9	1248.5	1219.4	1230.4	1207.2
	Milk	136.8	128.8	137.4	137.1	140.7	134.0	136.9
	SUl!:ar	206.6	215.2	216.3	211.3	216.1	216.2	218.3

  The political ANNEX 1. THE POSmONS OF THE CONTRACTING PARTIES FOR AGRICULTURE IN THE URUGUAY ROUND

	Table A.I. Tbe US positions
	1. The October 1989 proposaI

It is assumed !hat market priee changes are equal to institutional priee changes.

influence of the greens and the sensitivity of the public opinion to environmental problems would most certainly manage to impose in the future cross-compliance conditions which would make compensatory payments contingent on nature friendly farm praetices. The way may be long, but progress must be made in that direction.

Different environmental constraints imposed on farmers in various nations are to become a key element in food trade, either because of distortions provided by greenly-dressed domestic support or because of health related issues. Therefore, there is Iittle doubt that this Round, which has dealt with domestic policies more than even before and which still ends up focusing as usual on bargaining purely trade policy commitments, will be followed by a new one where domestic support, sanitary and environmental issues will have a greater of the play.


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Fish muscle quality assessment

Benoit Fauconneau

To cite this version:

Benoit Fauconneau. Fish muscle quality assessment. [0] 1990, 19 p. hal-02847198