Interventionism Vs. Free-Trade In The European Agricultural Market

Interventionism vs. Free-trade in the European Agricultural Market

Impact of the Common Agricultural Policy on the Citizens, Governments and Third Party Countries





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Diego Fernández Mendieta

Hemis Number 435482

BA (Hons) European Busimess Program

(2011)



Statement of Originality





I, the undersigned, declare that this dissertation is my own originalwork.














Signature














Date

Abstract


Since the sixteenth century there has been a dilemma about the agricultural sector, liberalism or free trade in Europe. This study attempts to give a different point of view from what we have learned in European universities. What the researcher pretends is give their own vision in a critical way aboutthis issue.

The researcher's point of view is very slanted to Friedrich Hayek from the Austrian School and more particularly slanted to his disciple Milton Friedman from Chicago School of Economics.

As can be deduced, this work is a criticism of the European Union protectionism in agriculture, and more specifically to the Common Agricultural Policy. The researcher has attempted to give thebest views and explain the impact that this policy has over the citizens, governments of the European Union and the third world countries.
List of Figures


Figure 1 EU Budget with the CAP Budget 5

Figure 2 Employments in Agriculture in the European Union 6

Figure 3 European Union Agricultural Pricing 10

Figure 4 Surplus Explanation 12







List of TablesTable 1 Reforms of the Common Agricultural Policy 4

Table 2 CAP’s payments and their estimated wealth in United Kingdom 8

Table 3 Principle Mechanisms of Action on Agricultural Markets 11


Key to Abbreviations


$ Dollar

€ Euro

£ Pound

CAP Common Agricultural Policy

EC European Community

ECSC European Coal and Steel CommunityEEC European Economic Community

EU European Union

FAO Food and Agriculture Organization

GATT General Agreement on Tariffs and Trade

GDP Gross Domestic Product

Ha Hectare

Hl Hectolitre

OECD Organisation for Economic Co-operation and Development

WTO World Trade Organization

Contents

Statement of Originality I
AbstractII
List of Figures III
List of Tables III
Key to Abbreviations IV
Contents V

Chapter 1: Interventionism vs. Free-trade 1



1 Introduction 1


Chapter 2: The Common Agricultural Policy 3


2.1) Common Agricultural Policy 3
2.2) CAP importance in our lives 5
2.2.1) Is the Common Agricultural Policy a dooHniboR policy? 7

Chapter 3: Main impacts of the Common Agricultural Policy 9


3.1) Introduction 9
3.2) Artificial High Food Prices 9
3.3) Over surplus 11
3.3.1) Dumping 13
3.4) Unfair Competition with the third world 15
3.4.1) Borders Policy 16

Chapter 4: Analysis 18


4.1) Analysis 18

Chapter 5: Conclusionsand Recommendation 22


5.1) Conclusions 22
5.2) Recommendation 23
Bibliography 25


Chapter 1

Interventionism vs. Free-trade

1) Introduction

We already know that some governments exist in the world that are more protectionist (interventionist) than others. The protectionist governments take measures in order to protect "the domestic industry" or" the national companies" or protect the population from the globalization. The liberal governments try to give freedom to the markets with the aim of promoting economic welfare to the nation and promote national and international exchange.

The purposes of both types of government are always to promote the welfare of the population, in particular the national population. The difference...