International Trade Classifications
The major implementation tools of CAP are:
1. Border measures: protection of domestic EU prices with import tariffs/quotas and minimum import price requirements.
2. Domestic price support recent years by direct payments. Features target prices, internal intervention if the market price of a good falls below the intervention level, quantities of the affected good are bought by the EU, so that the price is raised to the intervention level; if the market price rises above the target price then storage reserves are used to reduce the market price.
3. Direct payments to farmers: the most important tool (after the 2003 reforms). Today, nearly 70%
of CAP’s budget is dedicated to direct payments.
4. Supply control: production quotas discourage overproduction and oversupply. Up to 2008 the supply control measures featured a paid ‘set - aside’ program which required farmers to remove a specified percentage of their production capacity.
5. Special measures: a safeguard tool introduced by the 2013 reforms and designed to enable the EU Commission to take emergency measures in response to market disturbances/shocks.
CAP mechanisms is far from perfect problems overproduction, excess reserves, market inefficiencies
1992. This reform initiated the shift from price support
CAP - ‘Agenda 2000’ - divided the CAP into two pillars: production support and rural development. price support to direct payments environmental stewardship, social development and economic development
CAP, initiated in 2003 Single Farm Payments (SFP). farmers have to comply with EU regulations/standards on food quality and safety, animal welfare, and environmental aspects.
Food for the most deprived persons By 2011 nearly 18 million EU citizens In 2014 MDP was replaced by the ‘Fund for European Aid to the most Deprived’ (FEAD).
One of the key objectives of developing countries is to reduce domestic support for farm products in developed countries. This support falls into 3 categories:
1) Amber box: measures that distort production and trade; they include price support and subsidies directly related to production quantities. minimal supports are allowed 5% of agricultural production for developed countries, 10% for developing countries
2) Blue box: Any support that would normally be in the amber box, is placed in the blue box if the support also requires farmers to limit production. No spending limits are established on blue box subsidies
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