The Politics of Change: Reforms of the Common Agricultural Policy of the European Union A thesis submitted to the Miami University Honors Program in partial fulfillment of the requirements for University Honors with Distinction by Justin Anthony Nigro May 2006 Miami University Oxford, Ohio ii ABSTRACT The Politics of Change: Reforms of the Common Agricultural Policy of the European Union by Justin Anthony Nigro Beginning with the MacSharry reforms of 1992 and continuing under the Agenda 2000 reform package and the Fischler mid-term review reforms of 2003, the Common Agricultural Policy (CAP) of the European Union has experienced a fundamental restructuring in recent years. This was impossible only twenty years before, as proven by the quiet death of the Mansholt Plan in the early 1970s. From where did this impetus to reform originate? I begin by tracing the history of the CAP, dividing it into two stages—1) the evolution of the CAP, ranging from its inception in the 1950s to the end of the 1970s, and 2) the modification of the CAP, from the 1980s onward. After studying the history of the types of reform proposed and pursued, I focus on the major reform period of the last two decades. In this part of the analysis, I investigate the pressures behind CAP reform in the past fifteen years, seeking to explain how internal and external forces compelled policymakers in Brussels either to take or to refrain from action. I identify explanatory variables to characterize the politics of inertia and change within CAP policymaking and decision-making. Lastly, I classify these variables as endogenous or exogenous in nature. In doing so, I find that external pressures prompt CAP reform, while internal pressures ease reform and give it new dimensions. Research of the topic relies upon of two methods. From May 20, 2005, to June 24, 2005, I participated in Miami University’s Transatlantic Seminar, directed by Dr. Warren Mason in the department of political science. During these five weeks, seminarians traveled to six European capitals, where participants met with various high-ranking officials of the public and private sector. These individuals serve as excellent primary sources, and some of my research draws upon these observations. Secondly, I searched traditional sources for research, including scholarly works in academic journals, primary documents and treaties, and news items from periodicals. From these I gain insight on the most recent developments relevant to my thesis. iii iv The Politics of Change: Reforms of the Common Agricultural Policy of the European Union: by Justin Anthony Nigro Approved by: _________________________, Advisor Dr. Warren Mason _________________________, Reader Dr. Sheldon Anderson _________________________, Reader Dr. James Dunlevy Accepted by: _________________________ Dr. Carolyn Haynes University Honors Program Director v vi ACKNOWLEDGEMENTS I would especially like to thank Dr. Warren Mason, not only for his guidance as the chair of my thesis, but also for his direction of Miami University’s Transatlantic Seminar on European Union. The seminar developed and refined my thesis while also allowing me to participate in a pre-professional program that gave me access to top European and American officials. As I reflect on the experience—of learning about European integration from a bird’s-eye-view—I realize that those five weeks were some of the greatest in my young life. I must acknowledge the Miami University Honors Program for granting me a summer tuition waiver, thereby partially providing the financial assistance needed to attend Dr. Mason’s seminar. Their support of my endeavors over the years has enabled me to participate in a number of programs—from Boston to Brussels. Within the department, I especially acknowledge Dr. Carolyn Haynes, Dr. Enid LaGesse, Mr. Jason Lanter, and Mr. Paul Brown for their direct involvement with this project. I am grateful to Drs. Sheldon Anderson and James Dunlevy for serving as readers on my thesis and providing me with additional feedback. Together with Dr. Mason, these three individuals embody the essence of the word “professor.” Lastly, as always, I deeply thank my family and friends for their love, understanding, patience, and support throughout my academic career. vii TABLE OF CONTENTS Introduction..........................................................................................................................1 Part I: Stages of CAP Reform Chapter 1: The CAP in Evolution............................................................................5 Chapter 2: The CAP Reformed..............................................................................16 Part II: Analysis Chapter 3: The Politics of Inertia...........................................................................24 Chapter 4: The Politics of Change.........................................................................31 Chapter 5: Concluding Remarks............................................................................41 References..........................................................................................................................49 Appendices Appendix A: CAP in the Treaty of Rome..............................................................54 Appendix B: Selected Eurobarometer Poll Results ...............................................58 viii LIST OF TABLES Table 1: Agriculture’s Declining Share in Economic Activity............................................2 Table 2: The Mounting Budget Crises of the 1980s..........................................................14 Table 3: The Winners and Losers of the CAP in the EU-15 .............................................28 Table 4: Shares of CAP Expenditure by Commodity........................................................29 ix LIST OF ACRONYMS ACP African, Caribbean, Pacific Group CAP Common Agricultural Policy CDU Christian Democratic Union CEEC Central and Eastern European countries COPA Comité des Organisations Professionnelles Agricoles DBV Deutsche Bauernverband DG VI Directorate-General for Agriculture EAGGF European Agricultural Guidance and Guarantee Fund EC European Community EEC European Economic Community EU European Union FEOGA Fonds Européen d’Orientation et de Garantie Agricole FNSEA Fédération National des Syndicats d’Exploitations Agricoles GATT General Agreement on Tariffs and Trade GMO genetically modified organism MTR mid-term review QMV qualified majority voting SAPARD Special Accession Program for Agriculture and Rural Development UMP Union pour un Mouvement Populaire UK United Kingdom US United States of America WTO World Trade Organization x 1 INTRODUCTION As set forth by six brief articles (32-38) in the Treaty of Rome,1 the Common Agricultural Policy (CAP) is arguably the European Union’s (EU) most important vehicle of integration. Such a statement may surprise most Americans and even many Europeans, given that highly technical agricultural policy has none of the glitz and glamour of foreign and defense policy dialogues; less of the noticeable social benefits than cohesion and structural policy; and little of the media attention given to other high profile policies of economic convergence. Even so, the CAP, developed alongside the customs union, remains one of the EU’s original areas of integration and, according to some, its first “genuinely supranational policy.”2 In this way, University of California (Berkeley) researchers John Peterson and Elizabeth Bomberg rightly cite the CAP as a “cornerstone” of the EU and a key to understanding Brussels’ complex decision-making processes.3 With such an extensive history as an element of EU policy, the CAP has formed a crucial part of the saga behind Europe’s drive to union. For instance, its divisiveness has spurred a number of crises in the European Council, such as de Gaulle’s “empty chair” conflict and subsequent resolution by the Luxembourg compromise. Even today, CAP disputes regularly enter the ambit of contentious high politicking, most recently in the European Council’s failure to agree upon the 2007-2013 financial perspectives in June 2005. The centrality of the CAP to the EU is unquestionable. 1 See Appendix A for the original, unamended text of the Treaty of Rome. 2 Hix, Simon. The Political System of the European Union. 2nd ed. New York: Palgrave, 2005. p. 281. 3 Peterson, John and Elizabeth Bomberg. Decision-Making in the European Union. New York: St. Martin’s, 1999. pp. 120-121. 2 Similarly, the CAP also takes on great importance within the EU because of its burden on budgetary expenditure. Agricultural subsidy dominates Brussels’ strapped resources, comprising a staggering 90% share of the budget in the 1970s, over 50% in the 1990s,4 and still some 43% projected for 2013.5 Even given these relative decreases in its share of the budget, CAP expenditure continues to increase consistently in absolute terms, despite efforts to reduce this as well. These high levels of subsidization and economic inefficiencies are striking at first, especially considering the fading role of agriculture in terms of employment and national income. Table 1.1: Agriculture's Declining Share in Economic Activity 6 Share of Employment Share of National Income ~1950 ~1975 ~2000 Change ~1950 ~1975 ~2000 change Austria 32.0 n/a 6.9 (25.1) 16.4 n/a 0.9 (15.5) Belgium 12.0 3.9 2.7 (9.3) 8.8 4.2 1.1 (7.7) Denmark 22.0 9.4 3.7 (18.3) 20.0 9.0 2.4 (17.6) Finland n/a n/a 7.7 n/a n/a n/a 0.7 n/a France 32.0 11.9 4.6 (27.4) n/a 6.5 1.9 (4.6) Germany 23.0 7.3 2.9 (20.1) 12.3 3.5 0.8 (11.5) Greece 54.0 n/a 19.9 (34.1) 33.5 n/a 5.9 (27.6) Ireland 40.0 25.1 10.9 (29.1) 31.3 19.0 3.4 (27.9) Italy 39.0 16.3 6.5 (32.5) 29.5 9.9 2.5 (27.0) Luxembourg 26.0 9.5 2.4 (23.6) n/a 4.2 0.7 (3.5) Netherlands 19.0 6.6 3.5 (15.5) 12.9 5.8 2.6 (10.3) Portugal 47.0 n/a 13.3 (33.7) 26.8 n/a 2.4 (24.4) Spain 49.0 n/a 8.3 (40.7) 35.0 n/a 3.3 (31.7) Sweden 18.0 n/a 3.2 (14.8) 7.0 n/a 0.4 (6.6) UK 5.0 2.9 1.9 (3.1) 6.0 3.0 0.7 (5.3) EU-15 n/a n/a 5.0 n/a n/a n/a 1.6 n/a 4 Pinder, John.