Agricultural Policy Reform and the Uruguay Round: Synergistic Linkage in a Two-Level Game?

Abstract

Domestic agricultural subsidy policies in the United States and in the European Union (EU) underwent substantial liberal reforms between 1990 and 1996. In the United States in 1990, Congress reduced acreage on which farmers could receive income-support payments (deficiency payments) by 15 percent under a budget reconciliation act. In the EU in 1991–92, the Common Agricultural Policy (CAP) was dramatically modified under a set of reforms (the MacSharry reforms) that reduced internal cereal price guarantees by 29 percent over three years and obliged larger EU farmers to leave 15 percent of their arable land idle as a further check on excess production. Then in 1995–96, the U.S. Congress passed the Federal Agricultural Improvement and Reform (FAIR) Act, a sweeping measure that eliminated for at least seven years all deficiency payments to farmers as well as all annual land-idling programs. U.S. Senator Richard Lugar, chair of the Senate Agriculture Committee, asserted that this new law would “change agricultural policy [in the United States] more fundamentally than any law in sixty years.”