Common Agricultural Policy
Agriculture accounts for only 2.5 per cent of EU GDP and 5.5 per cent of employment, and yet alone it accounts for between 40 and 50 per cent of the EU's annual spending.
There are a number of reasons for the enormous attention paid to agriculture by the EU.
Historically, protection for agriculture was part of the deal brokered by France and Germany at the founding of the EU, in which France secured guarantees for its large agricultural sector in exchange for the creation of a common market in industrial goods.
Agriculture is deemed to require special protection, because agricultural prices are subject to far greater fluctuations than other goods. Agricultural price instability is a major source of inflation.
The protection of the food supply is another historical factor favouring protection for agriculture.
Social and environmental arguments are increasingly invoked as reasons for preventing farmers driven out of business by overseas competition from abandoning the land.
The common agricultural policy (Cap) itself has insulated and separated domestic decision-making about agriculture from 'normal' political procedures – the fact that it is the most integrated area of policy perpetuates its special status, and is also regarded as a totem in many areas of how EU integration can be made to work.
The agricultural vote in member states remains disproportionately powerful to its size. In most member states, agricultural interests are highly organised, articulate and influential – and in some member states, militant. There are also many other vested interests dedicated to protecting the Cap – banks, businesses, investors and private landlords all benefit from the inflation of land values it has brought about.
The Cap brings about within the EU a single market in agricultural goods, with a common price system set by the council. With countries outside the EU generally able to produce agricultural products at far lower prices than member states – either on account of their enormous size and the scale of their industries (eg the USA, Canada) or on account of low standards (eg the developing world) – the EU is virtually permanently dedicated to keeping prices up.
The price support system dominates the Cap, because it is so expensive to maintain. It comprises:
A target price – a price at which it is hoped farmers will be able to obtain on the open market
A threshold price – the price to which imports are raised when world prices are lower than EU prices
A guaranteed or intervention price – the price at which the commission will take surplus product off the market by stepping in and buying it up
Some 90 per cent of EU produce is protected in some way by the Cap, with some 70 per cent in receipt of support prices.
Common Fisheries Policy
The Common fisheries policy (CFP) was adopted in 1983, with the objective of ensuring that declining fish stocks are exploited responsibly – protecting the environment, and the interests of the fishing industry and consumers.
The CFP imposes a regime of equal access for vessels from all member states in the EU's exclusive fishing zone – 200 nautical miles from its coastline. Within this, member states have a 12-mile zone from their own coastlines within which their own fishing vessels have exclusive rights.
Atlantic and North Sea fish stocks are sustained by means of a system of total allowable catches (TACs), which are divided into national quotas. However, these systems are notoriously difficult to enforce.
The CFP also includes a market organisation for the control of prices, marketing arrangements and external trade policy.