Impact of the 1996 USFAIR Act on the Common Agricultural Policy in the World Trade Organisation context: the decoupling issue

The United States (US) Federal Agriculture Improvement and Reform (FAIR) Ac t of 1996 represents a watershed, not only from a domestic point of view bu t also from the perspective of the next round of international agricultural negotiations. In particular, it will force the European Union (EU) to refo rm its agricultural policy so that compensatory payments for support price cuts are included in the green box or, at least, are much more decoupled th an at present. US exports of several agricultural products, including maize , pork and poultry meat, barring a prolonged global economic downturn, shou ld increase substantially over the 7-year period of the Act and beyond. Acc ordingly, the US will certainly attempt to ensure that trade barriers with the EU and subsidised competition from the EU in third markets are kept to a minimum. Though the 1999 EU proposals for a new reform of the Common Agri cultural Policy (CAP) represent a courageous step in the right direction, t hey are likely to be insufficient to comply with future World Trade Organis ation (WTO) commitments, in particular with regard to the decoupling of dir ect aid payments. We have made a number of proposals for an internal suppor t policy which explicitly recognises that European farmers have several fun ctions that require specific forms of public intervention and which should comply with future WTO requirements. (C) 2000 Elsevier Science Ltd. All rig hts reserved.