Europe under Pressure? A Case of Globalisation of the Policy-making Process: The 1992 CAP Reform

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European University Institute 3 0001 0035 0260 8 © The Author(s). European University Institute. version produced by the EUI Library in 2020. Available Open Access on Cadmus, European University Institute Research Repository.

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EUI Working Paper RSC No. 2001/26

3 2 1 . 0 2 0 9 <¥ EUR P °0 <yr °& fl3 Fouilleux: Europe under Pressure? A Case o f Globalisation of

the Policy-making Process: The 1992 CAP Reform

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The Robert Schuman Centre was set up by the High Council of the EU1 in 1993 to carry out disciplinary and interdisciplinary research in the areas of European integration and public policy in Europe. Research publications take the form of Working Papers, Policy Papers and books. Most of the Working Papers and Policy Papers are also available on the website of the Robert Schuman Centre for Advanced Studies: http://www.iue.it/RSC/ PublicationsRSC-Welcome.htm. In 1999, the Centre merged with the European Forum to become the Robert Schuman Centre for Advanced Studies. © The Author(s). European University Institute. version produced by the EUI Library in 2020. Available Open Access on Cadmus, European University Institute Research Repository.

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EUROPEAN UNIVERSITY INSTITUTE, FLORENCE

ROBERT SCHUMAN CENTRE

FOR ADVANCED STUDIES

Europe under Pressure ?

A Case of Globalisation of the Policy-making Process :

The 1992 CAP Reform

EVE FOUILLEUX

RSCAS Jean Monnet Fellow and CNRS, Rennes

EUI Working

Paper RSC

No.

2001/26

BADIA FIESOLANA, SAN DOMENICO (FI)

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No part of this paper may be reproduced in any form without permission of the author.

Badia Fiesolana I - 50016 San Domenico (FI)

Italy © The Author(s). European University Institute. version produced by the EUI Library in 2020. Available Open Access on Cadmus, European University Institute Research Repository.

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1. The Common Agricultural Policy and the problem of its reform'

1.1. The CAP and the emergence o f the problem o f a reform

The principles and instruments of the CAP were laid down in the Treaty of Rome (1957) and the Stresa Conference (1958). Resulting from a mix of previous French, German, and Dutch policies, it was based upon high institutional guaranteed prices for agricultural products and border tariffs to control exchanges with the rest of the world. This protectionist and productivist policy was more or less in line with the political and economical context of that time. After the food shortages experienced by the European population as a consequence of the second world war, reaching food self sufficiency was a major objective for Europe. In the context of the beginning of the cold war, ensuring Europe’s independence for food was also seen as a political imperative.

Aimed at organizing the European agricultural market by individual product, the CAP instruments were progressively implemented during the 60's. Due to their very “incitative” aspects (guarantee of price and outlet), as early as the mid-70's, overproduction problems began to accumulate for various food products on the European market. These problems increased dramatically throughout the 80's. Overproduction caused critical budgetary problems, due to its costs (high storage costs for food products, restitution paid for exportation* 1, etc.). Such budgetary problems raised the question of the costs of future enlargements, and of the development of other common policies. For these reasons, a growing number of actors began to denounce the CAP for preventing the development the European Community as a whole. This is how the general issue of reforming the CAP appeared on the European political agenda as an attempt to stop the continuous increase of European agricultural expenses by containing overproduction. As a consequence, and with great difficulty, parts of the CAP were successively reformed in 1979 (cereals), 1981 (general reform), 1984 (milk), 1987 (cereals, generalized to the whole policy afterwards) and in 1992 (cereals, oilseeds and beef).

' Previous versions o f some empirical parts o f this paper were presented at the 27th Joint Sessions o f Workshops, European Consortium for Political Research, 26-31 March 1999, Mannheim, Germany, and at the Structure and Organization o f Government Conference, University o f Wisconsin, Madison, 22-24 April, 1999. Many thanks to Andy Smith for his language support.

1 The agricultural products stored and exported by the EC were paid at the guaranteed price to the producer, and sold at a lower price on the world market, at the expense o f the European budget. © The Author(s). European University Institute. version produced by the EUI Library in 2020. Available Open Access on Cadmus, European University Institute Research Repository.

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From an economic point of view, in a situation of overproduction (supply exceeding demand) there are basically two alternatives : reduce the supply or increase the demand. With the CAP as a policy of high guaranteed agricultural prices, two major policy options are logically possible. One option aims at limiting supply by implementing production quotas, that is by imposing institutional limits on the quantities produced; this option was the one chosen at the EC level during the eighties. Restrictions were progressively imposed on quantities to be produced ("guaranteed ceilings" in 1981, milk quotas in 1984, Generalized Maximal Guaranteed Quantities Regime in 1987-88). Despite these changes, the guaranteed prices for agricultural products remained very central in the CAP. In this sense, the CAP reforms implemented during the 80’s can be considered as "path dependent" policy changes.

Another option consists of decreasing the level of guaranteed prices. This deals with both the supply (with a lower price the policy becomes less incitative for the producers) and the demand (especially in the field of cereals, a lower price can enable producers to regain market shares lost to cereal substitutes, which are generally cheaper). This was the option chosen in 1992. On May the 21st, the Agricultural Council signed a compromise implementing a 30% decrease in the level of guaranteed prices for crops, and a 15% decrease for bovine meat, compensated by individual direct payments to the farmers. Such a transformation profoundly questioned the role of guaranteed prices as a core instrument of the CAP. For this reason, the 1992 change need to be seen as a radical shift in policy.

1.2. From incremental to radical change. Explaining the reforms...

As already mentioned, the mainly supply-control option chosen to reform the policy during the 80’s can be viewed as an incremental reform process. This incrementalism can be explained by a number of elements, both at the EC and national levels, which opposed the reform process and sought to maintain a policy status quo2.

2 Numerous political economy studies have been published on this theme. This literature traditionally mentions the producers' organized interests, their political weight, and their collective actions as the main variable to be taken into account to explain the difficulties to reform the CAP. Cf. for instance Duchene and al., 1981; Harris and al., 1983; Petit, 1985; Gardener, 1987; Moyer and Josling, 1990. Nevertheless, the main critic that can be addressed to these analyses is that they totally ignore the values and the cognitive dimension attached to the policy and which explain the farmers’ conservatism. Another criticism is that, in most o f the cases, they implicitly consider “producers” as forming a coherent and homogeneous community with a coherent position (interests, ideas) and a common strategy towards the policy and policy makers.

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At the national level, political pressures against change were very intense. Indeed, the dominant farmers’ unions were completely opposed to any change of the CAP. This can be explained both by their economic and financial interests in the status quo, as well as their fear of loss of a traditional identity in the perspective of a policy change. Due to their high level of political influence in the European countries and their mobilization capacities, farmers' organizations were able to exert important pressures on their governments. These pressures were particularly intense in France and Germany (electoral weight of the farmers, favourable public opinion, "rural" national culture), which were the two main Member States involved in establishing the initial CAP compromise.

At the European level, these national “brakes” on change were reinforced by the number of Members States represented in the Agricultural Council and the number of products dealt with in the CAP (package decisions concerning various products at the same time). Indeed, the rules of the game characterising the CAP policy-making within the Agricultural Council resulted in a fundamentally inflationist and conservative compromise3. As a consequence, the lock-in of policy established at the national level (due to the corporatist exchange between the farmers’ unions and the government) was even stronger at EC level.

This total lock-in of the policy-making process of the CAP provides an initial explanation of the difficulty of reforming the CAP. It also explains to some extent the nature of the instruments implemented in the 80's CAP reforms. In such a situation, the quota solution appeared to be the "less unacceptable" alternative, by keeping guaranteed prices as the core element of policy. In short, quotas were a kind of compromise between the political will of the Member States to limit European agricultural expenses in order to deepen European integration as a whole, and their electoral need to manage their farmers’ reluctance to accept change.

On the other hand, this lock-in also explains that the other policy option, price decrease, was not adopted, despite some increasingly active calls for this, especially coming from social scientists (welfare economists). Denouncing the CAP as “protectionist” —not only preserving fanners from competition with the rest of the world, but also generating trade distortions with producers of some less favoured countries (developing ones for instance)— welfare economists actively claimed in favour of a radical shift of the CAP. They promoted the price decrease solution in order to give regulating powers back to the market and to get

3 As a consequence, each decision which would have led to a reduction o f the agricultural expenses or would have changed the financial and budgetary redistributive effects o f the policy was rejected a priori by the Council (Cf. the annual price review for instance).

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rid of distortions between producers4. On the contrary, these economists denounced the production quotas solution as freezing the production capacities and hampering the competitive advantage of individual producers.

But despite their support for the guaranteed prices decrease option since the 60’s, economists’ arguments had no concrete success. Due to the conservative elements responsible for the double national/European lock-in of the policy within its original policy path, the options chosen to reform the CAP in the 80’s, mainly quota oriented, were even totally opposed to the opinion of these specialists.

But the original policy path was apparently suddenly cast aside in 1992. While justified by decision-makers using the same arguments as for previous reforms (overproduction, budgetary problems, development of other common policies, European enlargement plans), direct payments partly replaced the guaranteed prices in two major sectors of the CAP. How can such a dramatic departure from the original policy path be analysed and interpreted ?

Why did the economists’ ideas and criteria of efficiency fail to be adopted for so many years only to be presented in 1992 as the only solution available? Why were previously-developed solutions not simply be implemented again with a greater intensity? Can one hypothesise that European policy-makers suddenly realised they had to recognise economists' wisdom? As this paper argues, such an explanation is not as naive as it may seem: welfare economists’ ideas actually had an influence -albeit indirect- on the policy process. However, an over-arching explanation is a little more complex.

Less naive is the social and political learning hypothesis. In Peter Hall’s words (1993), the CAP could also be described as resulting from a learning process: by a classical mechanism of trial and errors, the permanence of policy problems despite the accumulation of numerous “second order” changes in the 80’s would have logically lead to a paradigm shift in 1992. At that time, this was indeed the main discourse used by the decision-makers to justify the reform. Moreover, such an explanation fits somehow with reality because one can that the experience of previous reforms have repetitively and progressively induced the building of a common sense of a “crisis” of the CAP. From this perspective, the 1992 reform may have been better accepted by the public, and especially by the farmers, because of the effects of previous ones. However, especially regarding

4 As regards what they called the “political” or “social” dimension o f the problem, they argued in favour o f letting policy-makers choose to implement or not some direct payments to the farmers to support their revenue —assuming nevertheless that such a scheme might increase bureaucratic burdens. © The Author(s). European University Institute. version produced by the EUI Library in 2020. Available Open Access on Cadmus, European University Institute Research Repository.

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its causal dimension, this learning hypothesis cannot be considered totally convincing because of the extent of change which occurred in the European and international agricultural policy-making context at the end of the 80’s. As we will show, due to these changes, and especially due to the informal links which progressively established during the 80’s between the CAP reform question and some international trade questions, the 80’s and 1992 CAP reforms cannot be compared so easily. By identifying in a dynamic and precise way the very nature of these links, the aim of this paper is to go beyond this linear and ultimately rather simplistic learning hypothesis to explain the 1992 CAP reform. From a more general perspective, the objective of the paper is also to shed some light on the mechanisms of internationalisation —of “globalisation”— of a previously domestic European policy-making process.

2. Agriculture and trade on the international agenda. The CAP under pressure

As mentioned above, despite making public their ideas on the CAP for decades, the economists’ views were not at all taken into account by policy-makers at European and national governance levels. Nevertheless, as the following sections will illustrate, an intensive exchange took place in the 80's between the academic sphere and the international level, via the mediation of some OECD officials. Their publications and meetings regarding agriculture and trade led to the emergence of some new agricultural policy norms at the international level which, progressively but profoundly, transformed the international trade political agenda.

2.1. International impact upon new domestic policy norms in agriculture

In the context of the general destabilisation of the world agricultural market at the beginning of the 80’s, the OECD launched some important studies on the theme of agriculture and trade. In 1982, the 24 ministers of trade of the OECD member countries gave a new mandate to their organisation, and more precisely to the experts of the OECD Secretariat General. The so called Ministerial Trade Mandate (MTM) asked for an analysis of the links between agriculture and trade, as well as an examination of the domestic policies implemented by different OECD countries and their links with agricultural trade. With the aim of improving the agricultural world market, it sought recommendations for achieving balanced reductions in agricultural protection and thus better integrating agriculture into the multilateral trading system.

On the basis of this mandate, the officials in the OECD Secretariat General started to analyse the impact of agricultural domestic policies on trade. Never having been asked for this kind of study on agriculture before, and faced with the

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huge heterogeneity of agricultural policies in the different countries, this was not an easy task. As concepts used in other sectors were of little or no use5, these officials had to imagine some new analytical tools. To do so, they were helped by a number of applied agricultural economists coining from the academic sphere. The welfare economics paradigm provided them both the theoretical and the technical tools (modelization and econometrics) they needed to address the mandate. As explained by one of the actors involved in these studies within the Secretariat General (1982-83) during an interview, such work was quite innovative compared to what had been done before in term of policy analysis at the OECD:

“ this was a radical departure, you know, from anything the OECD had done before. Talking about elasticity o f supply and demand, w e’d never talked about that sort o f stuff at the OECD. Deriving some sort o f model to represent things. I mean, w e’d never done that before. So this was a very radical stuff and it took a long time for people to digest it, absorb it [...] and come aboard”.

This work gave birth to the so called OECD Ministerial Trade Mandate model (MTM model) which aimed to derive estimates of the impact of changing domestic policies on world prices and trade. The analytical tools constructed to measure the support provided by each country to its farmers (that is, the spending of the different governments to support their agriculture) were called Producer Subsidy Equivalents (PSE) and Consumer Subsidy Equivalents (CSE).

During the international discussions which took place in the frame of the OECD regarding these studies, the use of the PSE/CSE methodology was progressively generalised within the international policy community. As Cahill and Legg (1990) (two experts from the OECD Secretariat-General) underline, in the beginning, the ESP were only supposed to help solve problems arising from the mandate given by the Ministerial Council to the Secretariat in 1982. As the work progressed however, a larger place was made for the ESP now seen as support measures and analysis tools which enabled the carrying out of in-depth mutual evaluations of a large selection of measures affecting agricultural exchange between OCDE member states. Today, ESP and ESC are often used for comparisons between two products in two different countries and two different periods. Allan Buckwell

5 The first concepts put forward by applied economists were “nominal” and “effective rates o f protection” (NPC and EPC : nominal and effective protection coefficient), designed to enable comparisons o f protection in the industrial field. These concepts proved to be inadequate in the field o f agricultural trade, notably because there was no such thing as a stabilised and unified world price for each agricultural product in the international markets. Another reason for these concepts being incomplete indicators o f support in the agricultural policy field was the great variety o f measures from one country to another, and from product to product, each o f these affecting trade directly or indirectly.

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(1996) also notes that the PSC/CSE methodology has now become almost a routine exercise conducted by the OECD and many of its member countries.

Beyond the importance of the scope of their use, the ESP/ESC indicators have induced a deep change in the shaping of agricultural policy issues. In fact, the PSE methodology was a way to convert a very complex political problem (all the various reasons and the different objectives which can be linked to a policy) into a technical and quite simple problem6. The criteria of farmer income, for instance, their social needs or the need to maintain people in specific areas by providing public support (land planning issues) were totally excluded from the debate. The only criteria retained was one of trade distortion. In short, the basic reasoning was as follows : a country that presented high level of PSC generated trade distortion, so it ought to reform its agricultural policy in a less trade distorting way. Around such ideas, a kind of “slippage” took place, leading the political debate to a more technical discussions, which directly prepared the ground for the liberalization of this policy area.

In sum, it can be assumed that the OECD discussions and studies were the origin of a very large and deep learning process. An actor interviewed in the OECD described it as follows :

“ there has been a major process o f educating the policy makers along the way because really, in terms o f agriculture, 20 years ago I don’t think it’s too severe to say, they were pretty illiterate in terms o f understanding how the policies worked, what they actually did, and what their impact was. People didn’t have any idea. I mean, often the reason was the policies themselves were so incredibly complicated -nobody could really figure out what on earth they were doing at the end o f the day. There they were. But nobody really sat down and said ‘well, OK, what’s the actual impact o f this stuff ?’ I mean what does it do to the farmers, what does it actually do to the level o f production and consumption, what does it actually do to trade. Nobody could actually figure that out. So, particularly the OECD work in this area I think it’s been a major public education project, actually for “sensitising” people. Fifteen years ago you’d talk about a policy having an impact on trade and people would look at you as if you’re crazy : ‘What do you mean an impact on trade ? What do you mean a distortion o f trade ? How can it be ?’ Seriously! It was that level. But now, it wouldn’t tum a head : o f course it has an impact on trade, we know that”.

6 As noted by Cahill and Legg (1990, p.39),: “ Le processus d’évaluation des ESP et des ESC à l’OCDE a entraîné la collecte et la diffusion parmi les pays Membres d’un important volume de données sur l’action gouvernementale, susceptibles d’être résumées par un seul indicateur représentant la valeur des transferts induits par les politiques agricoles au profit des producteurs de denrées agricoles. ”

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On the basis of some theoretical and technical concepts forming part of a specific scientific paradigm (i.e. neo-classical welfare economics), that is a specific scientific vision of the world, the OECD studies came to build some new policy analysis tools which prepared the ground for the spreading of a new conception of agricultural policy efficiency within the international policy community. Such a learning process both induced a progressive transformation of the dominant ideas and beliefs regarding agricultural policy, and directly provided arguments in the international trade struggle on agriculture.

2.2. Agriculture, CAP and international trade : an old story

For years, agriculture and agricultural trade had been a major subject of political tension in the international arena, especially between Europe and the US. The main arena where these struggles took place was the General Agreement on Tariffs and Trade (GATT). Various GATT negotiation rounds took place (Geneva 1947, Annecy 1949, Torquay 1951, Geneva 1956, Dillon Round 1960- 61, Kennedy Round 1964-67, Tokyo Round 1973-79), but agriculture had never constituted a specific global subject of negotiation, and the conflict between the different protagonists of the GATT were solved in individual product panels and other isolated discussions.

On the trade negotiating arena, the main subject of struggle dealt with the protectionism of national policies, mainly by means of tariff borders and variable levies. In this regard, since its very beginning, the CAP gave rise to important international trade controversies, notably with the US. As already mentioned, high institutional guaranteed prices for agricultural products were the core elements of this European policy. To be effective, the latter instruments necessarily implyed (particularly in maintaining farmers’ revenue), adopting a very protectionist external policy: variable import levies (and export restitutions) were designed to protect the domestic market from non European agricultural products sold at lower prices on the world markets7.

For this reason, the US governments repeatedly denounced the protectionism of the CAP from the early 60’s onwards, notably arguing that barriers set up at the borders prevented American exporters entering the European market. This is the reason, for instance, why a specific zero tariff measure for cereal substitutes (Soya, com gluten field, manioc, etc.) was conceded by the EU as early as 1967, thereby authorizing these products,

7 The amounts o f the restitution paid to the exporters and the level o f the tax paid by the importers in the frame o f these variable levies were calculated as to equal the difference between the internal guaranteed price level and the world price level.

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produced and exported mainly by the US, to be sold on the European market at the world price.

If the CAP had thus always been a subject of international political tensions, these increased dramatically when the EC became one of the major exporters of agricultural products on the world market in the early 80’s. The issue of the sharing of the agricultural world markets was indeed a factor of major tension then, and the opposition between Europe and the United States was particularly intense. In such a situation, opening a GATT negotiation on agriculture was clearly seen by the United-States as a mean to reconquer their lost shares of the agricultural world market.

As underlined by Swinbank (1992), the question of launching a new round of multilateral negotiation was first raised during the GATT Ministerial Meeting in Geneva in November 1982. Talks went on for many months since a number of GATT members were reluctant to embark upon another potentially disruptive round (the Tokyo Round had been closed in 1979). There was a disagreement on the question as to whether or not agriculture should be included, and a number of developing countries were reluctant to allow the service sector to be swept into the package.

The Uruguay Round of the GATT finally opened at Punta del Este, Uruguay, in 1986, comprised three major parts: agriculture, services, and industry. This round was set to last for four years, with a mid-term review in Montreal in December 1988 and a ceremonial conclusion in Brussels in December 1990 (Swinbank, 1992). Regarding agriculture, the opening declaration mentioned that “ negotiations shall aim to achieve greater liberalisation in agriculture and bring all measures affecting import access and export competition under strengthened and more operationally effective GATT rules and disciplines ”8. This part of the negotiation rapidly became the main focus of the whole round, and transformed into a bilateral confrontation between EU and the US.

The first proposal in the agricultural field, radically market-oriented, was made by the United States in July 1987. This proposal, subsequenly known as the “ Zero Option ”, called for a freeze of export subsidies followed by their total phasing out over a set period of years, called for an end to all trade distorting domestic subsidies and import barriers, and stressed the need to improve market access and to get rid of all quantitative restrictions on imports. Whereas the

8 Uruguay Round opening declaration. Cf. Croome (1995, p. 382-392).

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Cairns Group9 agreed with it, the proposal was immediately rejected by the EC, Japan, Sweden and Norway, thereby leading to the failure of the Mid-Term meeting in Montreal in December 1988. In short, this proposal clearly aimed at denouncing the EC and the protectionism of its agricultural policy. Its implementation would have implied the complete dismantling of the CAP10.

After this initial clash, the debate rapidly turned to a bilateral confrontation between the United States and the European Community on agricultural matters11, which were clearly the core element of the round. Troughout the period of negotiation, the EC position was to refuse to negotiate in terms of specific policies or instruments. Given the policy norms dominating the international trade policy community (cf. supra), such a move was feared as the first step to a compromise implying the end of the CAP (guaranteed prices and variable border levies in particular). Thus, whereas the US and the Cairns group insisted on negotiating separate commitments on export subsidies, domestic support and market access, the EC argued for the negotiation of a global decrease in public support to agriculture (measured by the AMS, Aggregate Measure of Support12). Its aim was uniquely to stabilize world markets, and thus to go no further.

A new American proposal unveiled in October 1989 was denounced by the EC as a second “ Zero Option ” and therefore rejected for this reason. A third one was made in October 1990, again by the United States, to which the EC answered by issuing its own detailed proposal. This was the first EC proposal since the beginning of the Round. It notably envisaged a 30% reduction of the AMS over a ten-year period for main products, a rebalancing of the European support for oilseeds and cereal substitutes (introducing a tariff equivalent) but refused to engage in a separate discussion about export subsidies (the EC argued for a “ concomitant ” adjustment of export restitutions).

9 The Cairns group is constituted by 14 countries which are net exporters o f agricultural products (notably Argentina, Australia, New Zealand, Thailand, Uruguay).

10 The United States saw its wheat exports fall from 49 million tonnes in 1980-81 to 25 million tonnes in 1985-86, and had to store more and more grain from the beginning o f the decade onwards. Seeking to regain the markets lost to the EC, they targeted the end o f EC exports as the means o f achieving this goal (Coleman and Tangermann, 1998).

11 This confrontation has already been described in details or summarised by many authors. Cf. Guyomard and Mahe (1995), Coleman and Tangermann (1998) or Swinbank (1992) for instance.

12 The AMS was a PSE short o f many o f the direct and indirect payments which were politically argued to be minimally trade distorting, part of “ production limiting programmes ” or transfers below a “ de minimis ” level and in which the market element was based on the price gap between internal whole sale prices and fixed international reference prices based on

1986-88 (Buckwell, 1996). © The Author(s). European University Institute. version produced by the EUI Library in 2020. Available Open Access on Cadmus, European University Institute Research Repository.

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This is why the Brussels Ministerial conference (the Heysel conference), originally supposed to close the Round, reached a dead-end. Despite the attempts of Arthur Dunkel (the GATT Secretary General), the compromise he had proposed was rejected by the EC for being too close to US interests.

As Alan Swinbank (1992) underlines : “ Some might have thought that the December 1990 debacle in Brussels would lead to a collapse of GATT, and a breakdown in world trade relations ”. But, in fact, this is precisely what happened. Not only did the trade negotiations on agriculture appear to be in crisis at the end of 1990, but the GATT negotiations as a whole were totally blocked. Indeed, the United States and the Cairns Group refused to go forward on non- agricultural matters as long as the agricultural problem were unsolved. In other words, the whole international political exchange on trade matters was threatened to collapse if an agreement on the agricultural side of the GATT was not found. In such a situation of crisis, the international trade policy community come to see only one solution in order to be able to relaunch the negotiations: this was to reform the European Common Agricultural Policy, which is what finally occurred in 1992.

2.3. The OECD as an active think tank

I would like to underline here the role of a “think tank”, of a “laboratory of ideas” the OECD has had in the international arena during this period, which led to the implementation at the EC level of these newly dominant international norms. In the context of the 80’s, with the increasing international tensions over agricultural trade matters, the learning process promoted by the OECD studies reinforced by the active participation of Secretariat-General officials in the discussions progressively -and deeply- transformed the international negotiation and the nature of the pressure on the European agricultural policy.

In fact, the work done by the OECD works only participated in changing the dominant tools and beliefs of the international policy community. The ESP/ESC studies first provided the United States with effective arguments to obtain the inclusion of agriculture as a new specific subject for negotiations within the Uruguay Round of the GATT. Moreover, througout the Uruguay round GATT negotiation process, the OECD studies played a crucial role by providing weapons in the international struggle (policy evaluation and measures of support, impact on trade of different policy changes, etc.).

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Finally, not only were the OECD evaluation tools used, but officials from the OECD Secretariat-General themselves were actively involved in the debates. They appeared to be particularly active in pushing the idea of a CAP reform based on decreases in the level of the guaranteed price:

‘T h e people who were involved in this closely in the OECD, were many o f the same people who had very close links to the people who were involved in the GATT negotiations. [...] And so, in the very early stage I think it’s fair to say that the OECD studies and the philosophy that were built into that, really sort o f set the agenda for what needed to be done in agriculture on the Uruguay Round. [...] There was a lot o f networking going on. A lot o f just active discussion o f ideas. I remember being in Washington in the late 80’s and discussing how should the U S’ negotiating position change. One o f the things that we were particularly trying to work on at that time was we all realized that a reform o f the CAP was absolutely critical to getting a deal. The issue was: how could you get a reformed CAP that would allow a reasonable deal within the URA. What a lot o f us was trying to push for at that time was the Community should introduce some sort o f direct payment scheme. And, in fact, that’s exactly what they did.” (an actor from the Secretariat General)

Indeed, the backroom work done by officials from the OECD Secretariat seems to have been particularly effective in pushing forward the idea of a radical shift of the CAP instruments. As explained during an interview, the US themselves did not seem to apply pressure for a particular European agricultural policy reform (in the sense of some precise instruments to be implemented), but simply wanted to get rid of the destabilizing effects of the CAP on the world market. But in the name of “their agenda”, the OECD Secretariat-General elites not only wanted to get rid of trade distortions, but also of domestic inefficiencies.

“One thing is the general economic gain you can have from a package of liberalization measures across the sectors. The other thing is, the domestic gains apart from the trade gains which you can have. I remember having a lively discussion with an Assisstant Secretary o f Agriculture in some international meeting in which I was trying to argue from an OECD perspective, what we wanted out o f the Uruguay Round agreement was progress that would improve both the trade situation , as well as get rid o f some o f the domestic inefficiencies and distortions. (I mean you can solve it all by putting in production quotas and freezing the pattern of production and all that sort o f stuff. But you don’t necessarily gain domestically from that ; all you do is you simply reduce your volume o f subsidized exports for example). There was a bit o f disagreement there, because you know, the US people were saying at that time: we don’t care how they do it [...] as long as they get rid of these trade distortions. So, obviously, from an OECD perspective, we couldn’t buy that because we wanted them to get rid o f the trade distortions and also get rid of the domestic distortion. That’s our agenda.”

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Viewed from this perspective, it seems clear that the 1992 CAP reform can be understood as resulting from external pressures to implement at the EC level some policy norms produced at an international one. Such pressures related both to the US interest in obtaining a change in the EU agricultural policy, and to the OECD actors’ desire that such a reform fit their criteria of efficiency.

Having been implemented in order to enable the GATT negotiations to go ahead, the 1992 CAP reform can thus be considered as the product of an external / internal adjustment at the European level. While the 80’s CAP reforms were the result of a simple internal adjustment process between EC sectoral and global objectives, the 1992 radical reform resulted from an additional internal / external adjustment process. The political need for a standardisation of the CAP to some newly dominant policy norms at the international level thus explains why the nature of the chosen instruments departed so significantly from the previous policy path.

3. A European desire to change? Some internal dimensions of the so-called “external” constraint

As the previous sections have shown, there is absolutely no doubt about the extremely close links between the 1992 CAP reform and the international trade context of the 80’s. One can even say that the CAP was reformed under the pressure from GATT. Nevertheless, given that the EU directly takes part in the international negotiations as an actor in the GATT process, a simple “external” constraint explanation remains incomplete. In other words, some advocates for the reform also existed within Europe. Indeed, as the next sections will show, different European actors (European Commission, national governments in particular) actively participated in the political construction of this “external” constraint.

3.1. The European Commission as a policy entrepreneur

At the EU level, the CAP reform process proceeded as follows. It was launched by early 1991, that is some weeks after the Heysel crisis, when the European Commission (EC) presented to the Council its reflections in favour of radical CAP reform13. The so-called Mac Sharry proposal (due to the name of the Agriculture Commissioner at that time) was centred on a dramatic decrease of the guaranteed prices for oilseeds and cereals. To maintain farmer’s revenues, this

13 Commission o f the European Communities (1991), Development and Future o f the CAP, COM(91)100 final, CEC : Brussels, February, 1st.

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price decrease was to be compensated for by some direct individual payments to farmers. With the aim of maintaining a balance between crops and livestock, a decrease in the level of the guaranteed prices in the beef sector, again compensated by direct payments, was also proposed.

As already mentioned, this radical reform project was formally justified using internal reasons, without any explicit mention to the GATT problem It was presented as aiming to solve the deep budgetary problems the EC was facing due to agricultural overproduction costs and on the basis that the previous reforms had been unable to solve them. This first document was followed by a second one14, revised because of reactions emitted by the Council and presented under a more precise and “operational” format used as a basis for the intergovernmental negotiation. The reform compromise was finally signed by the Agricultural ministers of the twelve EU Member States on May the 21st, 1992.

By taking the initiative to submit a radical CAP reform proposal to the Council in early 1991, the European Commission was clearly one of the main actors of the reform process at the EU level. Regarding the external pressure for change during this period due to the GATT negotiations, the EC can be viewed as the driving belt (conveyor belt?) which introduced to the European level the “liberal” ideas produced by the OECD and that had recently become dominant at the international level. But did the Commission only have a passive intermediary role ? Was it forced to act in a specific way due to a situation of international political crisis? This was certainly not the case.

In reality, radical CAP reform had been seen as a priority by the officials in charge of the agricultural policy prospective in the Commission since its renewal in the mid 80’s. The question of reform had not only been mentioned by Jacques Delors in his investment speech in front of MEPs in 1985; some precise views had also been expressed in the famous “ Livre Vert ” about the future of the CAP, published a few months later in July of the same year15. Already mentioning the international context and some likely forthcoming trade tensions, these documents warmly advocated the price decrease solution and rejected the inefficient one of quotas. But due to the various national pressures against change (and the consequent reluctance of the Council), they could not introduce these ideas during the previous reform negotiations. Particularly in 1987-88, the Commission had to propose an option that it did not fundamentally agree with in terms of the

14 Commission o f the European Communities (1991), Development and Future of the CAP,

COM(91)258 final, CEC : Brussels, July, 12th.

15 Commission o f the European Communities (1985), The future o f the CAP, Livre Vert, COM (85) 333 final, July, 30th, CEC : Brussels.

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instruments implemented (general stabilizers and maximised guaranteed quantities scheme). From this point of view, the 1990-1991 international context clearly gave the Commission the opportunity to propose its ideas on reform to the Council.

In fact, the initial decision to deal secretly with the preparation of a reform was taken in 1989 by a small group of highly-ranked civil servants at the top of the General Direction for Agriculture of the European Commission (DG VI). They saw reform as a crucial element in the wider international trading context. On the basis of their know-how of the newly dominant beliefs regarding agriculture at the international level and of the potential power of the GATT constraint, they concluded that the CAP would not be able to resist international pressures much longer. The fact that the EC lost the GATT Soya Panel against the US by early 1989 was seen as one more piece of proof16. In such a situation, a reform taking the international pressures into account, but being defined on a voluntary and European basis, was viewed as a better solution than any other directly imposed by the outside. From an internal political point of view, these reflections and the evolution of the project remained totally secret until the end of 1990 (even as regards the rest of DGVI and other DGs within the Commission), because of the very intense tensions likely to arise in the different Member States around any perspective of CAP change17.

As a conclusion, one could say that the European Commission was effectively the actor which introduced at the EU level the liberal agricultural policy views which for some years had already been dominant at the international level. But by defining both a political project regarding European agriculture and implementing a strategy to enforce it in order to soften and “Europeanise” the international constraint, the Commission’s role went far beyond being a simple conveyor belt of globalisation pressures. The EC can clearly be viewed as the mediator of the change, a term used here in Jobert and Muller’s sense18, i.e. a mediator designates an actor who manages to decode and recode reality into

16 Within the framework o f a GATT panel (held alongside the Uruguay Round negotiations), the United States had attacked the EC on the specific issue o f the European oilseeds (Soya) policy, based on the argument that the payments granted to European farmers to produce oilseeds considerably reduced the tariff concessions agreed by the EC to the US in the Dillon Round (zero tariff for oilseeds and cereal substitutes). The United States won the panel at the end o f May 1989.

17 A few days after the Heysel debacle, the European Commissioner for Agriculture Ray Mac Sharry had already announced that the CAP should be changed (Coleman and Tangermann, 1998). By early December, a “ non paper ’’ summarizing the reform proposal leaked from the European Commission to journalists and the European farmers’ representatives (COPA). 18 See Jobert et Muller, 1987.

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policy instruments in order to allow the carrying out of both global / sectoral and internal / external adjustments.

But the EC was not alone at the EU level: with decisional power lying in the Council, one can obviously not understand the reform as a whole without taking into account the role of European national governments in the reform process.

3.2. The Council as a recycling arena

The CAP reform debate was highly explosive and political within the various Member States. Regardless of their political orientation, the Agriculture Ministers in Brussels were constrained by their national public opinion, and as a consequence were generally —at least publicly— very reluctant to accept any change of the CAP.

But in reality, despite their public opposition to the reform which lasted until the very end of the negotiation process, the Member States had long before agreed on the principle of a radical shift in the CAP’S instruments to fit international requirements (guaranteed price decrease and direct payments). The principle had even been agreed upon during an informal meeting between François Mitterrand and Helmut Kohl as early as March 1991.

As a matter of fact, despite the violent opposition of their farmers’ organizations to the reform, France and Germany, the two major national actors of the CAP compromise since its initial definition, both had crucial interests in achieving this reform: they were both particularly interested in keeping political exchange on the international arena going, and in achieving a compromise to conclude the Uruguay Round. Germany had important interests at stake in the industrial part of the GATT negotiation (intellectual property), and the German industrial policy community developed increasing pressures towards the government (Coleman et Tangermann, 1998). As set out in the next section, France was relatively favourable to solving the international crisis rapidly and had important crop exports interests to defend.

These changes in the hierarchy between their sectoral and extra-sectoral preferences, resulted for the governments of the Member States in their acceptance of a “recycling” of the CAP. Recycling the CAP compromise meant changing its form by implementing new instruments for external reasons but also keeping it as close as possible to the previous CAP compromise for both budgetary (for each MS to maintain its budgetary returns on the CAP) and national political reasons (for each MS to retain its farmers within the scope of

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CAP support)19.

For these reasons, the Agricultural Council’s negotiating activity considerably reduced the scope of the reform initially planned by the Commission. In its first proposal for instance, for social purposes, the EC had proposed a sliding scale compensating payment scheme in order to modulate the guaranteed price decrease. The “big” producers were supposed to be strong enough to resist world trade competition and were thus not to be compensated by direct payments for the price decrease. The “medium-sized” ones were to be only partially compensated, and the “small” ones, seen as more needy of public support were to be paid complete compensatory payments. This first proposal was almost immediately rejected by the Council (notably under French and UK pressure, both considerably benefiting from the redistributive effects of the current CAP due to their numerous large sized arable farms), using the argument that a sliding scale compensation scheme was totally unacceptable for farmers. Faced with this refusal, the second EC proposal document no longer featured the sliding scale compensation scheme20.

3.3. Some details about the French case

The basic elements of the French position in Bmssels regarding the reform are important to analyse, as they clearly illustrate that the agreementgiven to CAP reform by the French government was also the result of a deep transformation of national governance which took place in the 80’s in the agricultural sector (balance of powers between the actors, transformation of the dominant vision of the sector). It is also a means of seeing how much discourse matters in any policy change configuration, how crucial the use of discourse can be in a conjuncture of crisis. Indeed, among the twelve EU Member States invlolved, the French case is perhaps the one where the gap between national official political rhetoric and the reality of the decisions taken proved to be the biggest.

The main element explaining the French position is the French agricultural

19 This means to maintain the CAP’S redistributing effects, whether measured at the national level (difference for a country between its contribution to the CAP budget, and the financial amount o f support benefited from the CAP) or at the individual level (depending, for instance, on the nature o f the crop or cattle grown, on the size o f the farm, on the economic power o f its owner).

20 Compensatory payments were to be paid in full to all farmers, independently from any social or economic criteria but dependant on the area of the farm and the annual medium yield performed during a 3 years reference period. This meant reproducing exactly the same redistributive effects as the previous policy, i.e. more support for the biggest farmers, less for the smallest and poorest. A compulsory set-aside scheme was also introduced

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policy community model (“/a cogestion”)21. Inherited from the De Gaulle period, this model was based on very close links (common definition of the agricultural policy to be implemented) between the government and the dominant farmers’ representative organization (FNSEA, Fédération Nationale des Syndicats d’Exploitants Agricoles), allied to right wing political parties. Traditionally, French positions on CAP matters were thus decided according to the FNSEA’s positions. Since their arrival in government in 1981, the French socialists had hardly experienced the power of the “cogestion” model. Due to the important capacity of mobilization demonstrated by the FNSEA, the government was directly constrained to actively take its views into account.

The fear of farmers’ mobilization was certainly the main reason why the French Agriculture Minister Louis Mermaz was officially so reluctant to accept any change of the CAP, and maintained such a negative discourse towards the reform from the beginning until the end of the negotiating process. The FNSEA totally rejected the idea of direct payments to individual farmers since these did not fit at all with its inherited professional values: farmers were supposed to actively work the earth in order to sell the products they had grown so as to extract a revenue from those activities and be able to support their families. They considered themselves first of all as individual entrepreneurs, and as such were not to be supported by any public payments from the State (viewed as salaries or, even worse, as social aids).

Such a rhetoric clearly keeps hidden, of course, the fact that any institutional price support system is also a state support system, which acts through the market, without being directly targeted to (and visible for) the individual farmer22. But the guaranteed price of the CAP had always been used as a political tool by the elites of the sector. By symbolically nourishing the myth of a peasants’ unity, they can even be viewed as a fundamental element of the FNSEA's monopoly of representation: in appearing to uphold the idea of being “for all peasants the same” while supporting profoundly unequal levels of support, they were regularly used to re-mobilise the “peasant’s community” (mobilizations to defend and promote guaranteed prices levels).

21 For a good presentation and explanation o f this model see Jobert et Muller (1987), and for more details, see Muller (1984).

22 These very deeply rooted values explain the reluctance o f farmers to see the guaranteed price system disappear. In this view, quotas that would permit the retention o f guaranteed price as the central feature o f the policy while controlling the quantities produced, can be seen as the "less unacceptable" one from the farmers’ point o f view.

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But since the beginning of the 80’s, the traditional power of the FNSEA was threatened from the inside, due to the increasing number of free-riding strategies of some particularistic groups among its members, 3bch as cereal growers23. As regards the Mac Sharry proposal, the biggest French cereaj^p growers developed intensive pressures towards the French government TfiTftb sense of an even more radical decrease of the guaranteed prices of crops. Their claims were of course made in private during their meeting with the government; their public discourse remained in line with the FNSEA in opposing to the reform. In truth, they had a real interest in the price decrease, based on the fact that it would allow them to sell their products better on the world market, a point they were able to persuasively put to the government by underlying the participation of crop exports to the national trade balance. Above all, such a decrease was aimed at helping them regain the upper hand in the internal EC market over US cereal substitutes24. But to be of most benefit to them, of course, the price decrease had to be obtained with a flat-rate compensation payment scheme. This is partly how —as surprising as it may seem regarding its political orientation— the French socialist government developed the most ardent pressure within the Council to get rid of the only “ social ” measure existing in the Mac Sharry proposal, namely the decreasing compensation payment scheme.

Over and above the budgetary aspects, CAP reform was viewed by this government both as a way to enhance French economic power on the European and international scenes25 and as likely to undermine the FNSEA’s power and monopoly of representation in the agricultural sector by accentuating its internal tensions.

23 The cereals growers are represented by the AGPB, Association Générale des Producteurs de Blé et autres céréales, affiliated to the FNSEA as is each by product-specific fanners’ organization.

24 As already mentioned, since 1967 these products had been sold in Europe with a zero border tariff, that is at the world market price. They have taken an increasing share o f the European market o f livestock food products since the mid 70’s.

25 From a general point o f view, the important weight o f such economic arguments can be explained by a profound renewal in the intellectual orientation o f the administrative elites and officials involved in the policy process at the natioanal level. Many authors have demonstrated that “liberal” ideas about economic policies have had an increasing influence on the French socialist government since 1983, notably via the activism o f the financial elites directly influenced by the welfare economics paradigm Cf. (Jobert and Théret, 1994). This can be illustrated in agricultural matters by the violent conflicts which have opposed the “ Direction de la Prévision ” o f the Ministry o f Finance and the Ministry o f Agriculture, still keeping the “old” vision o f agricultural policies in the 80’s.

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To sum up, if CAP reform is clearly the product of Europeans yielding to international pressure for change, it is above all the consequence of the political will of the Member States to individually play a role in international trade, supported in so doing by some specific interest groups.

4. Conclusion : about Europe in the globalisation process...

As we have shown, the 1992 CAP reform has clearly been a direct result of a powerful international constraint. It can even be considered to be the result of a kind of “global” policy-making process in which various specific actors intervened: the OECD defined and promoted some new agricultural domestic policy norms at the international level, which were then introduced in the European debate by the European Commission, and institutionalised at this level by the Council as a consequence of a reorganisation of their political (sectoral, extra-sectoral) priorities by the MS.

In sum, the empirical study presented in this paper provides a clear example of the increasing impact of international negotiations on domestic policies and policy decision processes, and of the complex aspects linking the various national, European and international actors and balances of power at stake. Furthermore, by showing the major role played by the OECD in the 80's in the agricultural policy field, it illustrates the increasing influence of some international structures of experts on policy norms production and diffusion, and learning processes. At the same time, the paper has underlined the progressive loss of influence of some traditional state interlocutors (e.g. unitary corporatist groups), to the profit of new ones (e.g. particularistic groups like cereal exporters). In short, this is the story of the progressive transformation of traditional forms of governance within an increasingly globalised policy-making context.

Apart from these empirical results, some more theoretical ones have also been produced, particularly regarding the role and impact of ideas and values in the public policy change processes. The paper first has highlighted that the impact of ideas (either put forward by farmers, or by scientific welfare economists) on policies and rule making processes depended on various aspects.

The first aspect is a structural one, regarding the type of political exchanges established at each level of governance between actors producing ideas and policy-makers. For instance, the ideas and values advanced by farmers regarding the CAP proved to have a very important role at the national level for historical, institutional and political reasons (electoral weight, neocorporatist arrangments). But they have had much less weight at the European level

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(weakness of the COPA26 especially due to the lack of a direct political exchange with decisional power, i.e. the Council), and no influence whatsoever at the international level (no farmers' representative even consulted). Conversely, ideas advanced by economists dealing with agricultural policy matters in academic forums have counted a great deal at the international level, while they were much less influential at the national level. This may be essentially due to a traditionally greater communication between the academic and policy-making spheres characterising the “American” public management style, which is particularly influential within international organisations (the OECD made a major use of expertise in order to deal with the 1982 Trade Mandate).

As the pertinent political arenas switched from the national to the international level, this inverse gradient of the influence of ideas thus partly explains the “slippage” in the nature of the policy debate (and consequently the reforms implemented). Of course, as already underlined, other aspects must be taken into account here, notably the increasing influence of welfare economy ideas both at the national (increasing weight of financial elite), and at the EC (since Jacques Delors’s arrival in 1985) levels, as well as the shift in the nature of the farmers’ dominant ideas from unitary representatives defending the farming community as a whole to some particularistic groups defending their own specialised interests.

But beyond these structural characteristics of the exchanges at stake at each level of governance, a second aspect must be underlined here regarding the role and impact of ideas on the policy process. There is no doubt that ideas are politically instrumentalized either in political discourse or in negotiation strategies. But the point is that ideas also have an influence of their own. Thanks to their ability to deal with some specific problems raised at some given place and time, the argument here is that they have an internal capacity to convince. This has to do with the point that political analysis must take into account the fact that everything in politics is not politically constructed; the reality —and the question of how to practically deal with it— matter. In the example studied here, the reality had to do with some important world markets instabilities. Indeed, before being used to legitimise changes in the preferences of the different States, welfare economists’ ideas were used because they provided some tools, both theoretical and technical, to solve some very concrete questions OECD officials had to deal with at that time regarding international issues of trade and market stability. Then they fed into a deeper learning process which finally provoked the neo-liberal turn

26 Comité des Organisations Professionnelles Agricoles, the European farming community representative. The COPA is mainly used by the Commission as a “pre-testing” arena for its proposals before to present them to the Council.