CAP Reform and Implications for Member States: Budget and Trade Effects

Abstract

The 1992 MacSharry reforms represented the most substantial modification of the instruments of the CAP since its inception. Before the reforms, support had been administered through high market prices engineered by import restrictions and support buying. The new system, by contrast, depended to a large extent on direct payments from government to farmers to supplement a lower market price. Moreover, whereas support except for the dairy and sugar sectors had previously been open-ended, now the EC sought to constrain the quantities of production eligible for support (see Swinbank, 1993 as well as parts of other chapters of this book for information on the details of the 1992 reforms). From a support instrument perspective, therefore, the 1992 reform marked a significant change from the past. The CAP had moved to a new trajectory.