After a series of political scandals, the LDP lost control of the upper house of the Diet, and with it, the desire for agricultural policy reform. In order to position itself for the 1990 elections, the LDP promised farmers that, “not one single grain of foreign rice would be permitted to enter the Japanese market” . Yet again, close ties to politicians and a general belief in the electoral importance of farmers allowed agricultural interests to sway the position of their governments. Ultimately, the GATT Midterm Review meeting failed to produce a draft text on agriculture. The failures of the MTR extended beyond agriculture, as the Cairns Group “refused to approve the draft texts of any of the other fourteen negotiating groups…until there was a text on agriculture” . The contracting parties agreed to adjourn the talks until 1989 and left the task of resolving the impasse on agriculture to GATT Director General Arthur Dunkel . Dunkle attempted to jump start the negotiations by circulating a draft final act, black plastic planting pots better known as the Dunkle Draft, which provided a broad negotiating framework. An opening was created for the negotiations to move forward after the EC completed the MacSharry Reform of the CAP.
Three main aspects of this reform helped bring the CAP in line with GATT objectives and thus increased room for a negotiated agreement between the US and the EC. First, cereal prices were reduced and controls were placed on surpluses, which implied a reduction in EC cereals exports, indirectly addressing the US concerns over EC export subsidies. Second, lowering Europe’s own cereals prices made EC cereals more competitive with imported duty-free foods. As a result, the need for market rebalancing was no longer a sticking point for the EC in negotiations over market access. Finally, the transition from production subsides to partially decoupled direct income supports gave the EC and US a new basis upon which to discuss domestic support policies. The negotiations resumed with the US and EC agricultural representatives engaged in a series of bilateral negotiations at Blair House in Washington, resulting in an agreement on the agriculture portion of the GATT UR, called the Blair House Accord. There were two major components to the Blair House Accord that facilitated an agreement. First, the “blue box” was added to the GATT’s subsidy stoplight system as a category for domestic support. Essentially, this category served to exempt the US deficiency payments and CAP area and head age payments from reduction commitments, which they would have been subject to without the creation of the new “blue box” category.
The second important addition was the inclusion of a peace clause, which exempted support schemes that complied with the agreement from dispute settlement actions. After the intense negotiations within the EC over the Blair House Accord, the Commission, under the guise of seeking “clarification” on the Accord, received further concessions from the US. While the majority of the concessions were minor, there were two noteworthy concessions. First, it was agreed that when implementing export subsidy reductions countries could base those reductions on the level in any year between 1986-1992. This modification removed front-loaded reductions in those commodities that had high base levels in 1986. Essentially, the agreement allowed the EC and the US to continue to subsidize a much large number products during the implementation period. The second modification related to tariffication rates. In exchange for accepting higher minimum import levels, select countries could delay tariffication of specific products. This modification was negotiated specifically for Japan45 to allow it to delay tariffication of rice. This concession was vitally important to Japan, which took a defensive position throughout the negotiations, resisting tariffication at every turn, and only agreeing to a system that guaranteed special treatment for rice, “a sacrosanct product in Japanese agricultural politics” . In addition to a full exemption for rice at the time, Japan was also permitted a slower tariff transition process for non-rice products.
For example, Japan was permitted wide use of tariff rate quotas , which allow more control over the amount of foreign goods that may enter the market. Products governed by the TRQ system included starches, dairy products, and legumes. Delaying or preventing tariffication was the main focus of Japan’s efforts because it was the tariff system that allowed Japan to continue to support its farmers with high prices. Because Japan was successful in extracting this concession, it avoided having to make domestic reforms to its agricultural policy. However, the defensive position of Japan with its single minded focus on the issue of tariffs made it difficult for Japan to “extract the kind of compromises from other countries that it sought in other areas” . Overall, the US granted the EC more than the mere “clarification” it claimed it was requesting. These concessions by the US were likely motivated by the fact that it wanted to conclude the negotiations before the Congressional Fast Track Authority expired in 1993 . For agreeing to the revised Accord, France was able to extract additional concessions within the EU, including an agreement that no further land would be taken out of production to meet GATT requirements. In the end, the major goals of the GATT UR for agriculture were either defeated entirely or so watered down that farmers felt little to no effect . Most significantly, direct payments, even if not fully decoupled, were exempt from reduction or even challenges under GATT rules. Indeed, the rules were essentially constructed in order to define the EC payment system as permissible. Ultimately, the EC traded CAP reforms it had already made, designed to safeguard European farmers’ bottom lines and to protect the operation of the CAP itself from foreign meddling,drainage pot to the US for an agreement on agriculture in the GATT. As is often the case in CAP reform, farmers were not subjected to cuts; rather their support payments were directed to them through different or new channels. The fact remains, whether the negotiations take place at the EU or at the GATT, about trade policy or about agricultural policy, it is incredibly difficult to actually impose cuts on farmers.Beyond issues of agricultural in trade negotiations and in the domestic politics of countries , the theoretical ideas in this dissertation can speak to scholars and policymakers working on a range of issues. Disruptive politics and politics as usual help uncover conditions that favor reform. This information is particularly relevant for scholars studying inertial or difficult to reform institutions, such as the EU. Similarly, the factors that contribute to the out sized influence of farmer power can help explain why some areas of policy are harder to reform than others. Finally, the story of the decline of farmers speaks to the politics of managing major social transformations and provides lessons for how such a transition can be executed with minimal social upheaval. A first set of implications of my research is relevant for European Union scholars and policymakers. My dissertation identifies conditions that favor EU reform. As discussed in the CAP cases, reforms can be categorized as undertaken at a time of “disruptive politics” or under “politics as usual”. Disruptive politics, like concurrent trade negotiations or looming enlargement, provide policymakers the opening to propose farther reaching and more fundamental reforms to the operation of policies than would be considered under politics as usual. Disruptive politics thus provide the most favorable conditions for reform.
These lessons about exploiting conditions that facilitate reform have implications for the European Union beyond just the CAP. Indeed, they can cast light on reforms in other policy arenas, such as the EU’s other common policies, namely Common Fisheries Policy and Cohesion Policy. The EU adopted a major fisheries reform in 1976. Prior to then, the Common Fisheries Policy had been dealing with several persistent issues, the most fundamental of which was overfishing. There was no clear plan in place to manage fishing stocks, and as the Union continued to expand, more and more pressure was placed on Community waters. Previous efforts to address the overfishing problem had failed, driven in part by reluctance to place constraints on an industry that was already suffering. Left unaddressed, the problems of overfishing compounded over time. Reformers had hoped to design a system that ensured Europe’s fishing stocks for the long term while not making it impossible for fishermen to earn a living. As was the case with the CAP, reform only occurred once the proposals were linked to disruptive politics. A signal disruptive politics event, looming Iberian accession to the EU, finally opened space for reform of the CFP in the 1980s. As both Spain and Portugal had major fishing industries, the existing member states wanted fishing management policies in place before the accession negotiations had proceeded too far. Indeed, EU officials thought it best for the reforms to be adopted before accession negotiations got into full swing. Reforming the fisheries policies in the middle of Iberian accession negotiations ran the risk of derailing those discussions. If reformers were forced to wait until after accession, member states feared these reforms would never be adopted as Spain and Portugal would make every effort to block them. The pressure of Iberian accession created the disruptive politics necessary to facilitate reform of the CFP. To finally address the systemic problem of overfishing a “total allowed catch” system for the main fish stocks in community waters was adopted. Under this system member states were given a quota, which would ensure stability for the domestic fishing industry while also protecting Community waters from overfishing . In short, like with the CAP, once a disruptive politics opening occurred, CFP reform was possible. When no such disruptive event occurred, as was the case in past efforts to reform the CFP, major reform did not happen. A second set of implications of my research speaks to scholars of the welfare state, suggesting why some areas of social policy are much harder to retrench than others. Within the domain of welfare state policy, scholars of retrenchment may want to give added attention to the role played by expert knowledge and control over policy implementation. The context of agricultural policy reform is influenced in significant ways by the fact that farmers and the vast range of institutions that support them have a monopoly of expert knowledge. Farmers’ monopoly of knowledge means the government is often forced to rely on the very group whose program it seeks to cut for both expert advice and implementation. Many policy domains of the social welfare state, especially medical and health policy, entail a similar dependence. The beneficiaries of the policies and their representative organizations typically have a knowledge advantage that allows them to shape the course of negotiations and even the implementation of the policy. Control of implementation is often delegated to the targeted group for highly technical policy reforms in order to make use of its expertise. For example, it is typically left to medical professionals and health care providers to roll out and implement systems that govern patient care and treatment options. These systems are technical, depend on the expert opinion of highly-trained actors, and involve confidential information. For all these reasons, healthcare professionals can challenge policy maker’s positions and resist government efforts. There are at least three potential strategies retrenchment-minded reformers can use to manage the challenges posed by social groups that possess a monopoly on expert knowledge. The first and most direct strategy is to break that monopoly of expertise by utilizing their own experts. One way to begin to achieve this goal would be to stop relying on the social group itself to provide information and analysis. For example, in debates over how to revise environmental standards or adjust crop prices, policymakers rely on agricultural experts. More often than not, those experts are employed by farmer organizations, rendering their advice and opinion biased. To counter this problem, governments can employ in-house experts to close the information gap. Alternatively, governments can, and indeed already do in some domains, employ business consulting companies. A second strategy for countering the expertise imbalance is to reduce the target group’s control over implementation of policies. While leaving the task of implementation to another actor reduces government costs, both economic and manpower, it also increases the risk that the policy will not be implemented or enforced as intended.