"Between Protectionism and Free Trade: EU Agricultural Policy Toward Central and Eastern Europe, 1990-1994"

O'Hagan, Patrick. (1995) "Between Protectionism and Free Trade: EU Agricultural Policy Toward Central and Eastern Europe, 1990-1994". In: UNSPECIFIED, Charleston, South Carolina. (Unpublished)

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Abstract

This paper examines European Union (EU) agricultural policy toward Central and Eastern Europe (CEE) from 1990 to 1994 and asks whether its agricultural assistance through the Phare program was based more on principles of free trade or protectionism. Phare was created in December 1989 to deliver technical assistance to the CHE during the post-communist transition. It has funded government reforms across a wide range of sectors--such as energy, banking, education, and agriculture--in order to soften the pain of social change and build market economies based on free enterprise and private initiative. This paper focuses on Phare assistance to the agricultural sector, which is perhaps the most significant because the EU has signed Europe Agreements with eleven CEE countries which promise enlargement. Yet, the biggest obstacle to CEE membership in the EU will be agriculture because the budgetary effects of extending CAP subsidies to the CEE could prove explosive. The CEE has a large agricultural sector with millions of farmers who qualify for CAP production subsidies and export refunds, and these farmers produce in abundance those commodities that receive the highest levels of CAP support--cereals, meat, and dairy products. Moreover, the EU has achieved self-sufficiency in these food groups, so the EU would have to subsidize exports of these surplus commodities into new markets. Therefore, EU enlargement will likely involve a trade-off: either the EU reduces its CAP subsidies in order to make eastward expansion affordable, a prospect that is opposed by powerful EU agricultural lobbying groups, or it admits the CEE without CAP reform.and readjusts its finances to meet the lastly increased costs. Phare has played a key role in this enlargement issue by revitalizing CEE agriculture and thereby influencing the terms of this eventual trade-off. The objective of this paper is to test two hypotheses. The first one asserts that Phare agricultural assistance to the CEE from 1990 to 1994 was based on principles of free trade. The second asserts that Phare's choice of free trade agricultural policy is best explained by policy network theory.

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