PROCESO ÁREA 100

In many respects, the CAP has gone a long way towards achieving its objectives. Having regard to the general measures, the CAP has successfully achieved the objectives of developing agricultural growth with a view to improving the structure of Community productivity and competition as a whole.^^ The EC is by far the world’s biggest importer and second biggest exporter in agricultural products.Today, the Community is more than self-sufficient in most important agricultural products. Since 1973 the annual increase

^^Priebe, Hermann. * European Agricultural Policy: a German Viewpoint ’, In Priebe Hermann, Denis Bergmann, and Jan H on in g. Fields o f Conflicts in European Farm Policy. (1972), at 5.

^^Duchene Francois, Edward Szczepanik, and Wilfrid Legg. New Limits on European Agriculture. Politics and the Common Agricultural Policy. (1985), at 205 and 206.

^^Case 49/79, Pool v Council, [1980] ECR 569 at 581.

^^Case 38/79, Butter - und Eier - Zentrale Nordmark v Hauptzollamt Hamburg - Jonas, [1980] ECR 643 at 655.

Usher, John A. ‘ Agricultural Policy and Commercial Policy % in Maresceau, Marc, (ed.) The European Community’s Commercial Policy after 1992: The Legal Dimension. (1993), at 151.

GATT. Trend in International Trade: A Report by a Panel o f Experts. (1958), at 87.

^^Snyder, F.G. Law of the Common Agricultural Policy (1985), at 22.

in the Community’s exports of agricultural products has been greater than its imports/^ The achievements of the CAP, however, are at a high cost. The CAP has led to surpluses in agricultural production at the cost of other sectors. The CAP has attracted most of EC resources and has caused wide-spread conflicts both within the EC and between the Community and third countries. There is the cost to consumers of paying higher prices, and to taxpayers for paying farm subsidies.^* Surpluses depress prices so that they can only be sold at high cost to the EC budget.^^ The farm expenditure has been, and still is, very substantial in EC budget: 63.2% in 1988 and 58.2% in 1992.^® The problem of financing has been an important political issue since the operation of the CAP.®^

In 1957, GATT examined the agricultural provisions of the Rome Treaty in relation to the GATT.®^ GATT considered that the application of minimum prices could result in a displacement of trade with third countries. In other words, ‘ if there is an increase in demand, there is no assurance that outside suppliers will share in that increase, and, if there is no increase in demand, it is quite possible that imports from outside would decline ’. In addition, ‘ if minimum prices are applied to trading among the Six, it could become necessary, depending on the level of prices established, to apply to imports quotas, which would not be consistent with the GATT provisions, or, if imports would be subject to minimum prices plus an external tariff, this could in effect seriously restrict and perhaps even prevent imports ’. The GATT further pointed out that minimum import price system was a restriction " other than duties, tax or other charges " within the meaning of Article XI: 1 of the GATT. Therefore, this system was inconsistent with the obligation of

Commission. A Common Agricuitural Poiicy for the 1990s (1989), at 37.

Commission. Our Farming Future. (1993), at 15.

Commission. Plan M ansholt COM (68) 1000. 21 December 1968. Brussels, at 34 and 35.

^^EC Commission. Our Farming Future. (1993), at 23.

^ Melchior, MicheL * The common organization o f agricultural markets % in EC Commission. Thirty Years o f Community Law. (1983), at 463.

^^GATT. " The Treaties Establishing the European Economic Community and the European Atomic Energy Community ", BISD 6S/68, at 81-89.

the EC under Article The GATT also considered that a system which fixed domestic prices to producers at above the world price level might be considered as a subsidy in the meaning of Article XVI of the GATT. A system under which a government, by direct or indirect methods, maintains such a price by purchases and resale at a loss was also regarded as a subsidy by the GATT.*"^

The EC subsidy for agricultural products is usually in the form of export refund. In the " European Communities - Refunds on Exports of Sugar " case*^, the GATT Panel held that ‘ the Community system for granting refunds on export of sugar must be considered to be a form of subsidy and thus subject to the provisions of Article XVI ( of the GATT regarding subsidy The EC’s subsidies thus constitute export-promotion, price-undercutting, and market-share-increasing measures in aid of EC agricultural products. They also bear harmful effects of sale-opportunities-reducing, market displacement, and export-eaming-diminishing for third countries, in particular developing countries. The GATT Panel considered that ‘ the quantity of Community sugar made available for export with maximum refunds and the non-limited funds available to finance export refunds on sugar had contributed to depress sugar prices in world market, and that this constituted a serious prejudice to Brazilian interests, in term of Article XVI(l) In addition, the Panel also held that ‘ the Community system and its application constituted a permanent source of uncertainty in world sugar markets and therefore constituted a threat of serious prejudice in terms of Article X V I(l)’.*® The CAP is therefore inconsistent with GATT obligations in many respects.

GATT. " EEC-Prograinine of Minimum Import Prices, Licences and Surety Deposits for Certain Processed Fruits and Vegetables ", BISD, 25S/68.

^ G A T T . " Review Pursuant to Article XVI:5 ", BISD 9S/188, at 191.

*^GATT. BISD, 27S/69.

*^GATT. BISD, 27S/96.

*^GATT. BISD, 27S/97.

D. Taiwan and EC Trade in the Preserved Mushrooms