10. 3. 77 Official  Journal  of the European  Communities No C 61/1 
II 
(Preparatory  Acts) 
ECONOMIC  AND  SOCIAL  COMMITTEE 
Opinion  on the  common  agricultural  policy  in the  international  context  (possible 
consequences  and  improvements) 
The opinion  of the Committee  is not based  on any  text. 
At its 133rd  plenary  session  held  on 24 and  25 September  1975  the Committee,  acting 
on a proposal  from  the Bureau,  decided  to deliver  an opinion  on the abovementioned 
subject  on its own  initiative. 
B. OPINION  OF THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the above  matter  at its 
145th  plenary  session,  held  in Brussels  on 26 and  27 January  1977. 
The full  text  of the opinion  is as follows: A. LEGAL  BASIS  FOR  THE  OPINION 
Having  regard  to the fourth  paragraph  of Article  20 
of the Committee's  Rules  of Procedure, THE  ECONOMIC  AND  SOCIAL  COMMITTEE, Having  regard  to the draft  opinion  submitted  by the 
rapporteur-general  Mr Berns, 
Having  regard  to the decision  taken  by the plenary 
session  on 24 and 25 September  1975,  at the proposal 
of the Bureau  that  an opinion  be drawn  up on the 
common  agricultural  policy  in the  international 
context  (possible  consequences  and improvements), Having  regard  to its discussions  at the plenary  session 
on 26 and  27 January  1977  (meeting  of 27 January 
1977), 
Having  regard  to its earlier  work  on the agricultural 
sector  and,  in particular,  the Section  for Agriculture's 
opinion  of 4 November  1976  on the same  subject  and 
the Committee  opinion  of 17 July  1975  on the 
stocktaking  of the common  agricultural  policy  (x), 
(!) OJ No C 270,  26. 11. 1975. Whereas  one of the passages  in the opinion  of 17 July 
1975  stipulates  that:  'It is now  essential  to take  such 
an international  view  of agriculture  and,  in any event 
to press  on with  the drive  to conclude  world  agri-
cultural  agreements.  Efforts  must  be made  to analyse 
in detail  the effects  of the international  situation  and 
the pressures  which  it exerts  on the  agricultural 
policy....  Politically  unavoidable  concessions  must 
be assessed  and  points  of resistance  identified.  If this 
is not  done,  there  is a risk  that  the  Community's 
agricultural  policy  will  be watered  down  until  it 
No C 61/2 Official  Journal  of the European  Communities 10.3.77 
results  in a vast  free-trade  area  which  would  herald 
the end of a single  European  agricultural  market  and 
the financial  solidarity  which  underpins  it'; 
Whereas  a judicious  analysis  of all  aspects  of 
agricultural  policy  in the  international  context  is 
likely  to help  strengthen  the  common  agricultural 
policy,  and  indeed  the Community  itself, 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 29 votes  to 8, with  19 abstentions: 
I. INTRODUCTORY  REMARKS 
1. The  international  politico-economic  context  in 
which  the Community  and  the common  agricultural 
policy  operate  is determined  by two  categories  of 
factors: 
— the first  group  are external  to the EEC,  and  the 
Community  has little  control  over  them;  they  are 
the results  of the  interplay  of the  diplomatic 
moves,  stategic  decisions  and  economic  policies 
of other  countries  and groups  of countries; 
— the second  group  comprises  the internal  situations 
and decisions  that  spring  from  Community 
policies  themselves,  and  from  the  common 
agricultural  policy  in particular.  These  internal 
decisions,  and the changes  in Community  policies 
that follow,  can have  a significant  effect  on the 
world  economy  and  on world  trade  in farm 
produce. 
2. Of  the external  factors  which  go to make  up the 
international  context  and over  which  the Community 
has little  control,  the economic,  monetary,  trade  and 
agricultural  policies  of the main  countries  and groups 
of countries  outside  the EEC  deserve  to be mentioned. 
One must  also  take  into  account  the extent  to which 
these  policies  reinforce  or weaken  each  other  and the 
way they  influence  prices,  markets  and  currencies 
in general.  The  interplay  of policies  in these  various 
areas  influence  international  economic  and  social 
trends. 
3. Of  the internal  situations  and decisions  affecting 
the world  economic  situation  and  over  which  the 
Community  has direct  influence,  we would  single  out 
first of all the international  arrangements  that  the Community  has  made  with  the various  classes  of 
non-member  countries,  viz.  the  association  agree-
ments,  conventions  and  various  commitments  which 
the EEC  has  already  entered  into  (or is currently 
preparing)  on the diplomatic  and  trade  fronts.  The 
general  economic  policy  evolved  by the  Member 
States  (measures  to combat  inflation,  maintain  full 
employment,  get trade  back  into  balance,  etc.)  — 
as well  as the trade  policy  that  might  be developed 
in the agro-food  sector  — constitute  factors  which, 
while  having  a direct  influence  on economic  and 
social  trends  in the Community,  also  have  an effect 
on the international  context. 
4. The  first  of the  present  opinion  outlines  the 
factors  making  up the  international  context  and 
influencing  more  or less  directly  the development  of 
the common  agricultural  policy  i(irrespective  of 
whether  these  factors  are  open  to Community 
control).  The  second  part  seeks  to show  the 
contribution  that  the  common  agricultural  policy 
can make  to economic  and social  balance  within  the 
Community  and to the international  agro-food  sector. 
The third  part  considers  the new  direction  which 
might  be given  to the common  agricultural  policy  in 
the light  of external  and internal  requirements. 
5. The  opinion  will  also  examine  the role  that  is 
or should  be played  by international  bodies  concerned 
with economic,  monetary  and  trade  cooperation  — 
in so far as these  bodies  are able  to reconcile  the 
conflicting  policies  pursued  by the various  economic 
units  of the  world.  In this  context,  it must  be 
remembered  that  external  factors  likely  to influence 
the common  policies  of the Communities  to a certain 
extent  must  not  be allowed  to lead  to an unduly 
rapid  change  in the  EEC's  internal  economic 
structures,  otherwise  there  will  be a risk  of a grave 
crisis.  This  remark  applies  particularly  to agriculture. 
The quest  for  a certain  international  division  of 
labour  in agriculture  must  not be looked  upon  in an 
academic,  abstract  way;  account  should  be taken  of 
the way  in which  the EEC's  trading  partners  them-
selves  use this division  of labour.  The  logic  inherent 
in the various  economic  structures  of the Community, 
be they  industrial  or agricultural,  calls  for harmonious 
overall  development,  and  relations  with  the outside 
world  will  have  to be considered  with  a view  to 
establishing  economic  and  social  balance  within  the 
Community. 
10.3.77 Official  Journal  of the European  Communities No C 61/3 
II. THE  INTERNATIONAL  CONTEXT 
1. External  constraints  on the Community diplomatic,  military  and  economic  decisions  made 
by the  US administration.  The  repercussions  of these 
decisions  still  influence  world  economic  and  monetary 
equilibrium  to a considerable  extent. 
l.'l. The  present  international  economic  situation 
1.1.1.  1974  saw  a radical  change  in the  balance 
of power  between  rich  and  industrialized  countries 
on the  one  hand,  and  the  developing  and  less-
industrialized  countries  on the  other.  The  quadrupling 
of the  price  of crude  oil  in late  1973  was  one  of 
a series  of shocks  to the  economic  balances  of the 
importing  industrialized  countries,  and  marked  the 
culmination  of a gradual  redressing  of the  balance, 
which  had  been  going  on  relatively  imperceptibly 
since  the  end  of the  1960's.  The  sudden  jump  in 
the price  of crude  oil  also  happened  by  chance 
to coincide  with  a substantial  rise  in the  price  of 
the staple  agricultural  foodstuffs  which  account  for 
the bulk  of world  trade  in farm  produce  (cereals, 
soya  beans,  sugar,  oil seeds,  etc.). 
1.1.2.  The  Community  has  been  particularly  hard 
hit because  of its dependence  on the  world  market 
for various  agricultural  and  industrial  raw  materials. 
These  difficulties  were  compounded  from  1973 
onwards  by a new  upsurge  in inflation  of multiple 
origin,  which  in 1975  reached  spectacular  levels  of 
between  7-4  °/o and  26-2  % in the  Member  States. 
The price  of agricultural  inputs  rose  by an average 
of 20-5  °/o in 1974  (as  against  16-8  °/o in 1973), 
though  the  rate  of increase  dropped  to  10  6 °/o 
in 1975.  At  the  same  time,  balance-of-payments 
disequilibrium  worsened  in most  EEC  Member  States. 
This  had  a profound  effect  on several  EEC  currencies 
and made  it uncertain  when  exchange  rates  in the 
Community  could  be  brought  within  narrower 
fluctuation  margins. 
1.1.3.  The  radical  disturbance  of the  economic 
situation  has  manifested  itself  particularly  in the 
progressive  breakdown  of the  international  monetary 
system.  The  breakdown  became  evident  in 1971, 
when  the  United  States  administration  decided  that 
the dollar  should  no  longer  be  convertible.  The 
resulting  loss  of confidence  in the  two  principal 
reserve  currencies  caused  many  countries  to use  their 
liquid  assets  to build  up stocks  of commodities  (wool, 
copper,  etc.)  which  in consequence  increased  sharply 
in price. 1.1.5.  The  EEC,  and  the  common  agricultural 
policy  in particular,  were  set  up between  1959  and 
1969,  a period  of relative  monetary  stability  both 
within  and  outside  the  Community.  During  these 
years,  it was  hoped  that  the  common  policy  decisions 
taken  by the  Six,  particularly  on agriculture,  would 
promote  the  achievement  of a genuine  economic  and 
monetary  union.  It can  be argued  that  if the  present 
climate  (i.e.  disorganization  of the  monetary  system, 
etc.)  had  prevailed  in the  early  60's  instead  of 
relative  stability,  the  Community  would  not  have 
been  able  to develop  the  common  agricultural  policy 
in the way  it has  succeeded  in doing. 
1.1.6.  To  the  factors  that  go  to make  up  the 
present  state  of the  world  economy  must  be added 
rising  unemployment  in the  industrialized  countries, 
the relative  contraction  of industrial  output,  the 
immense  debts  of many  countries,  especially  in the 
developing  world,  and  a worsening  of world  food 
deficit.  Some  of the  disruptive  factors  are  perhaps 
cyclical  and  capable  of being  rapidly  eradicated  by 
judicious  economic  policy  decisions  (e.g.  industrial 
production).  However,  other  factors  — some  of 
which  would  appear  to be new  — may  turn  out  to 
be much  more  permanent  and  bring  lasting  changes 
to the  face  of the  world  economy  as we have  known 
it since  the  end  of the  Second  World  War  (e.g. 
emergence  of new  economic  and  political  forces). 
1.1.7.  The  food  situation  in many  regions  of the 
world  is critical,  Tables  3 and  3a and  the  comments 
thereon  show  that,  over  a 15-year  period,  food  output 
per capita  has  been  on the  decline  in all developing 
countries  (especially  in Africa  and  the  Middle  East) 
and has  been  growing  but  slightly  in South  East  Asia. 
The uncertainty  about  harvests  in temperate  zones 
on account  of freak  weather  makes  the  general 
picture  very  disquieting.  In actual  fact,  the  United 
States  and  —  to a considerably  lesser  degree  — 
Canada,  Australia,  New  Zealand  and  the  EEC  are 
the only  areas  where  major  food  reserves  can  be 
mobilized.  This  increases  both  the  political  influence 
and the  responsibility  of these  countries  towards  the 
deprived  nations. 
1.1.4.  The  wide  fluctuations  in the  exchange  rate 
of the  US  dollar,  which  reached  its lowest  levels  in 
late 1973  and  early  1974,  are  partly  the  outcome  of 1.1.8.  Present  employment  difficulties  would  soon 
be overcome  if the  developed  countries,  despite 
No C 61/4 Official  Journal  of the European  Communities 10. 3.77 
higher  commodity  prices,  were  able  to revive  their 
industrial  production.  Nevertheless,  one  wonders 
whether  the present  unemployment  rate  will  not  in 
fact become  a permanent  feature  in the rich  countries, 
as it already  has in most  developing  countries  (though 
in a more  insidious  and  hidden  form).  The  success  of 
the developed  countries  in eradicating  the  most 
serious  social  effects  of the present  crisis  will  depend 
largely  on their  ability  to adjust  to circumstances 
different  from  those  prevailing  before  the  advent 
of the crisis. actual  figure  for  1975  being  11 7 % as compared 
with  10 7 °/o in 1968  and  8-7 °/o in 1974  (when  there 
was a rise in the price  of commodities).  The  Comecon 
countries  are  also  in debt  and  in 1975  the  USSR 
was overall  in debt  to the  tune  of 13 000 million 
dollars.  Commercial  banks  have  now  been  made 
more  cautious  by the deterioration  in most  debtors' 
economic  situation.  The  question  of granting  the 
poorest  countries  a moratorium  on their  debts  was 
raised  at the  Conference  of 77 in Manila  at the 
beginning  of 1976,  and  re-emerged  at the UNCTAD 
Conference  in Nairobi. 
1.2. The  continuation  of monetary  disorder 
1.2.1.  There  are  complex  links  between  (a) the 
monetary  system  in force  until  1971,  (b)  credit 
policies,  (c) indebtedness,  (d) inflation  and  (e) the 
behaviour  of various  currencies.  Leaving  aside  an 
analysis  of cause  and  effect,  it should  be noted  that 
disturbances  in the  monetary  system  have  plunged 
the world  economy  into  a very  grave  crisis  affecting 
all operators  and  factors.  The  most  seriously 
disrupted  economic  regions  are those  which  depend 
most  heavily  on foreign  trade.  Since  any  decision 
relating  to monetary  instruments  is basically  a 
political  one,  we must  face  up to the fact  that  it is 
going  to be difficult  to pull  out of this  crisis. 
1.2.2.  To  succeed,  we shall  have  to restore  stability 
to exchange  rates  once  a new  economic  balance  of 
power  has  been  established  between  industrialized 
and developing  countries.  The  latter  should  be 
assured  an improvement  in revenue,  by means  of a 
permanent  readjustment  of the  terms  of trade  in 
their  favour,  i.e. by boosting  the prices  they  receive 
for their  exports  in relation  to the  prices  they  pay 
for their  imports.  Increasing  the  earnings  of the 
developing  countries  would  also  help  to revive 
industrial  production  in general. 
1.2.3.  The  catastrophic  debts  run  up by a good 
number  of countries  is another  characteristic  feature 
of the international  economic  scene.  It is one  of the 
gravest  consequences  of the disorder  in the monetary 
system,  of the  unfair  terms  of trade  for developing 
countries  and  — probably  — of an inordinately 
capital-intensive  type  of development  ill-suited  to 
essentially  rural  economies  with  an abundance  of 
labour.  At the end  of 1975  the developing  countries 
had run  up external  debts  totalling  about  150  000 
million  dollars.  More  than  10 °/o of these  countries' 
export  receipts  go towards  servicing  these  debts,  the 1.2.4.  Two  things  are  manifest:  firstly,  the  very 
great  extent  to which  the  developing  countries  are 
at the  mercy  of fluctuations  in the  prices  of 
commodities  (which  are only  partly  due  to monetary 
disruption),  and  secondly,  the  inordinately  high 
debt-servicing  burden  of these  countries  in relation 
to their  GNP  and  the  aid  they  receive  from  rich 
countries.  Since  the continuation  of monetary  anarchy 
contributes  to an aggravation  of price  fluctuations 
and external  indebtedness,  the  reasons  for  the 
demands  made  in Nairobi  are  understandable. 
Overall,  the developed  countries  have  not responded 
favourably  to the request  for a general  moratorium 
on debts. 
1.3. The  economic  and  agricultural  policies  of the 
main  countries  and  groups  of countries 
1.3.1.  The  United  States,  the  number  one  world 
economic  power  has  exerted  and  will  continue  to 
exert,  a preponderant  influence  on world  economic 
and commercial  trends.  Over  the  past  two  decades 
the US  balance  of payments  has  been  almost 
permanently  in deficit,  as a result  of military 
commitments  and  considerable  exports  of capital  for 
direct  investment  in most  countries  of the world. 
1.3.2.  At  the same  time,  the USA  has been  at pains 
to remedy  the disequilibrium  in its trade  balance  by 
maintaining  exports,  especially  in the  agricultural 
sector.  Here  the Community  has remained  the USA's 
main  trading  partner.  Whilst  engaged  in this  effort  to 
increase  its agricultural  exports,  the  USA  has  been 
faced  by strong  competition  in industrial  goods  from 
Japan,  and  to a lesser  extent  from  the  European 
Community.  The  US trade  balance,  which  was  in the 
red in 1971  and  1972,  came  back  into  surplus  in a 
small  way  in 1973  and  more  substantially  in 1975. 
There  is an obvious  link  between  the efforts  to get 
trade  and  payments  back  into  balance  and  US 
acceptance  of a temporary  weakening  of the  dollar, 
which  made  a good  many  US  industrial  products 
10. 3. 77 Official  Journal  of the European  Communities No C 61/5 
more  competitive  with  goods  from  Europe  and 
Japan. 
1.3.3.  As  for agriculture,  the USA  pursued  during 
the 1960's  a policy  of stockpiling  its main  export 
products,  while  concurrently  cutting  back  domestic 
output  (frozen  earth  policy  of 1963).  This  stockpile 
enabled  the  USA  to export  on preferential  terms 
(PL 480),  to be the poorest  countries'  main  source  of 
food  aid and  to have  access  to prosperous  markets. 
But the existence  of large  stocks  has had some  impact 
on prices  paid  to American  cereal  producers  and  on 
prices  paid  to producers  in the other  grain-growing 
areas  of the world.  The  result  has been  a cutback  in 
cereal  production  in Australia,  Argentina  and  even 
in the USA  and Canada. 
1.3.4.  The  present  trend  does  not look  as if it is 
going  to change  the basic  attitude  of the USA  in its 
controlling  role  on the  world's  markets.  The  run-
down  of cereal  stocks  as a result  of massive 
purchasing  by the Soviet  Union  and  the increase  in 
the world  food  deficit  led the US administration  to 
encourage  farmers  to bring  vast  areas  back  into 
cereal  cultivation. 
Generally  speaking,  stocks  are  being  replenished 
(wheat  + 40%,  maize  + 129%,  other  cereals 
+ 77%).  Soya  is an exception  (— 39%). 
1.3.5.  American  farmers  are striving  to control  a 
larger  part  of their  cereals  sales  in order  to reduce  the 
dominance  of the large  dealers,  whose  influence  on 
price  inside  and  outside  the USA  in recent  years  is 
now the subject  of parliamentary  investigations. 
1.3.6.  The  United  States'  agricultural  policy  seems 
to be becoming  increasingly  geared  to the export  of 
cereals  and oilcake,  for which  foreign  demand  is very 
likely  to remain  high.  As regards  other  products 
(tobacco,  canned  fruit,  various  processed  products) 
the United  States  will  probably  continue  to press 
strongly  for continued  access  to the EEC  market. 
1.3.7.  Under  the  given  circumstances,  it is 
questionable  whether  the United  States  will  be any 
keener  in the future  than  it has been  in the past  to 
conclude  agreements  in  connection  with  the 
organization  of world  markets  (commodity  agree-ments,  stockpiling  policy,  etc.).  Rightly  or wrongly, 
the United  States  feels  that  it can remain  in control 
and to a very  large  extent  determine  prices  that  suit 
it. This  being  so, the USA  will  not be anxious  to tie 
its hands  with  agreements  containing  price  guidelines. 
1.3.8.  The  American  'agro-food  strategy'  does  not 
please  everyone  in the United  States,  as some  of the 
criticism  of the diplomatic  use,of  'agro-power'  goes 
to show.  Nevertheless,  radical  changes  in trade  policy 
are hardly  likely  since  the  existing  policy  is 
supported  by the majority  of farmers  and  also  by 
the huge  agro-food  sector  of industry  and  commerce 
as a whole,  which  employs  a large  proportion  of the 
labour  force  (20 %, of which  4%  are  in agriculture 
proper).  This  sector  accounts  for a massive  part  of 
the goods  sold  on domestic  and  foreign  markets, 
and is backed  up by the  biggest  research  and 
innovation  capacity  in the  world. 
1.3.9.  Canada  — Canada's  economic  and  trade 
policies  are aligned  to a fairly  large  extent  on those 
of the USA  and Canada  itself  is unable  to wield  any 
really  significant  influence  in this  respect.  It would 
seem  that  Canada  has no intention  of expanding  its 
agricultural  output  (and  hence  its cereal  and  milk-
powder  exports)  substantially. 
1.3.10.  New  Zealand  and  Australia  — In New 
Zealand  and  Australia  dairy  produce  and  meat  enjoy 
the benefits  of pool  funds.  Exports  of agricultural 
products  are weighty  factors  in the trade  balances  of 
these  two  countries.  It is therefore  to be expected 
that they  will  endeavour  to obtain  the largest  possible 
share  of any  new  markets  that  may  be created  as a 
result  of (a) certain  developing  countries  having  more 
funds  at their  disposal  and (b) the general  population 
increases  in India,  the Far  East,  etc.  The  EEC  will 
remain  a major  market  for New  Zealand,  and  New 
Zealand  will  endeavour  to hold  on to this  market  by 
every  available  means. 
1.3.11.  Japan  — Of all the developed  countries, 
Japan  is the most  dependent  on external  markets  for 
its supply  of energy  and  food  products.  Japan  also 
pursues  the  most  original  strategy  for  ensuring 
reliable,  regular  supplies  of industrial  and agricultural 
commodities  —  namely,  investment  in  the 
commodity  producing  countries,  and  especially  in 
Australia,  Africa  and  South  America.  Even  though 
Japan  will  continue  to take  advantage  of favourable 
opportunities  afforded  by the world  market,  it will 
No C 61/6 Official  Journal  of the European  Communities 10. 3. 77 
be increasingly  keen  to conclude  long-term  trading 
agreements  in  order  to  safeguard  its  supplies. 
However,  it is not  clear  whether  this  readiness  to 
conclude  bilateral  trading  agreements  will  induce 
Japan  to follow  the Community's  lead  and  work  for 
multilateral,  world-wide  agreements.  It is even 
possible  that  Japan's  position  will  be diametrically 
opposed  to that  of the  Community. 
1.3.12.  The  EEC  — The  basic  concepts  underlying 
the common  agricultural  policy  were  examined  and 
evaluated  in the  Committee's  study  of 28 November 
1974  'Progress  report  on the  common  agricultural 
policy'.  The  implication  of the  common  agricultural 
policy  as far as the international  context  is concerned 
will be discussed  in more  detail  in the  parts  that 
follow.  From  the  outset,  however,  it should  be noted 
that the CAP: 
— has  not prevented  the Community  from  remaining 
the world's  biggest  importer  of  agricultural 
produce  (this  is in accordance  with  Article  110 
of the EEC  Treaty,  which  pledges  the Community 
to the  liberalization  of international  trade); 
— has,  however,  sometimes  placed  restrictions  on the 
EEC's  trading  partners  (safeguard  clauses,  etc.); 
— has  sometimes  disturbed  certain  trade  flows  by 
leading  to the  payment  of export  refunds. 
The Community  has  always  believed  in the  need  for 
an organization  of world  markets  as a complement  to 
national  agricultural  policies;  it has  tried  and  is 
continuing  its efforts  to convince  its trading  partners 
of this  need. 
1.3.13.  Comecon  —  Because  the  climate  is a 
difficult  and  variable  one,  forecasting  Soviet  harvests 
is subject  to a margin  of error  of 20 to 25 °/o. It has 
to be accepted,  however,  that  the  cereals  deficit  will 
remain  between  4 and  8 million  tonnes  per  annum. 
The recent  rundown  of livestock  has  already  brought 
about  a major  meat  and  dairy-products  deficit. 
Farming  in the Comecon  countries  is largely  oriented 
towards  the  satisfaction  of the  needs  of the  USSR, 
on account  of the  complementarity  which  character-
izes the  economies  of the  Comecon  countries.  It 
follows  that  part  of the  USSR's  deficit  will  be 
covered  by  its  Comecon  partners.  In return,  the 
USSR  will  provide  these  partners  with  a variety  of 
industrial  products,  and  perhaps  even  cereals  bought 
on the  world  market  and  shipped  through  Russian 
ports. 
1.3.14.  The  Comecon  countries'  practice  of trading 
mostly  with  each  other  is gradually  giving  way  to a 
quest  for  increased  trade  with  the  rest  of the  world. These  countries  will  have  to pay  for  the  Western 
technology  and  certain  agricultural  products  they  need 
by exporting  agricultural  and  industrial  products, 
particularly  to the  Community.  It is also  to be 
expected  that  the  Eastern  bloc  countries  will  make 
even  bigger  efforts  to increase  their  commercial  and 
technological  penetration  of the  developing  countries 
that have  recently  acquired  additional  buying  power 
thanks  to the  increased  prices  of oil  (or  other 
commodities). 
1.3.15.  The  Comecon  countries  have  never  shown 
any great  interest  in world  commodity  agreements  in 
which  price  brackets  are  laid  down;  traditionally 
they have  had  little  contact  with  the  world  market, 
preferring  simply  to take  advantage  of its low  prices 
from  time  to time. 
1.3.16.  China  — One  might  tend  to think  that  a 
country  of this  enormous  size  could  provide  a major 
outlet  for exports  from  other  areas.  However,  China 
does  not  offer  very  interesting  market  prospects,  at 
least  not  in the  medium  term.  China  has  regularly 
been  importing  3 to 5 million  tonnes  of cereals  per 
annum  and  it looks  as though  she  will  continue  to 
import  similar  amounts  in the  years  ahead.  China 
will probably  continue  to export  rice  and  certain 
other  farm  products  (pigmeat,  soya),  and  import 
wheat.  The  progress  being  made  in  Chinese 
agriculture  suggests  that  in the  longer  term  the 
country  could  become  self-sufficient.  China  therefore 
should  not  be regarded  either  as a potential  major 
outlet  for agricultural  produce  or as a potential  major 
source  of supply  of these  products. 
1.3.17.  Developing  countries  —  There  are 
numerous  categories  of developing  countries.  The 
main  distinction  between  them  lies  in whether  or not 
they possess  the  new  buying  power  conferred  by 
increased  primary-product  prices.  The  oil-producing 
countries  seem  likely  initially  to concentrate  on 
building  up industrial  infrastructure  and  carrying  out 
vast programmes  of agricultural  expansion.  They  are 
already  making  very  considerable  calls  on technology 
fromi  the industrialized  countries  for this  development. 
But there  are  a large  number  of bottlenecks  in this 
development  process,  due  to the fact  that  the various 
infrastructures  are  not  being  built  up concurrently 
with  one  another  (for  example,  port  facilities  and 
communication  links  are at present  a major  constraint 
on general  development).  The  lack  of  skilled 
manpower  constitutes  a further  fundamental  obstacle. 
Satisfaction  of the needs  of these  countries  will  hinge 
in part  on the industrialized  countries'  ability  to make 
fairly  considerable  numbers  of men  available  to them. 
For numerous  reasons,  it is doubtful,  however, 
whether  the  Community  will  be able  to satisfy  all 
these  needs. 
10. 3. 77 Official  Journal  of the European  Communities No C 61/7 
1.3.18.  The  relative  position  of the  developing 
countries  whose  buying  power  has  not  increased, 
but whose  food  requirements  are  mounting  in step 
with  their  growing  populations,  is deteriorating 
rapidly.  India  and  its  immediate  neighbours  are 
cases  in point,  as  are  many  African  countries. 
The development  of  these  countries  makes  it 
imperative  to have  a genuine  international  policy  on 
development.  No  industrialized  country,  indeed  no 
single  group  of industrialized  countries,  seems  capable 
alone  of meeting  their  needs.  In these  developing 
countries,  priority  will  inevitably  have  to be given 
to increased  production  of the  crops  that  they  need 
in order  to satisfy  their  basic  food  requirements. 
But it is probable  that  some  of these  countries  will 
continue  to  develop  the  large-scale  'industrial' 
production  (oil  seeds,  cocoa,  coffee,  tropical  fruit 
and, in some  cases,  beef  and  veal)  which  they  have 
initiated  with  the aid of western  technology. 
These  'industrial'  crops  will  increasingly  constitute 
these  countries'  source  of the  foreign  currency  they 
need  for  overall  economic  expansion.  There  are 
reasons  for  thinking  that  the  countries  associated 
with  the  Community  under  the  Lome  Convention 
will tend  to look  to the  Community  as the  main 
outlet  for their  products.  This  will  set the Community 
some  knotty  problems. 
1.3.19.  To  sum  up,  it seems  fair  to say  that 
international  monetary  disorder,  coupled  with  high 
inflation  and  heavy  debts,  is going  to remain  a 
permanent  and  disruptive  feature  of the  world 
economy.  The  consequence  is likely  to be that  the 
industrialized  countries  with  existing  or prospective 
trade  deficits,  and  those  countries  with  particularly 
difficult  development  problems  will  be forced  to 
engage  in cut-throat  competition  in order  to obtain 
export  earnings.  By developing  their  economies  and 
their  mutual  relations,  these  developing  countries 
will be in a position  to counterbalance  the influence 
of Europe  and  the USA,  and  this  will  inevitably  affect 
trade  flows.  It is to be hoped  that  intra-regional  trade 
flows  will  develop  within  the  major  world  regions 
and that  there  will  be a certain  division  of labour 
among  the developing  countries,  as is already  the case 
with  the  industrialized  countries.  It seems  fair  to 
assume  that  in future  the  developed  countries  will 
not be able  to dictate  to the  LDCs  the  pattern  of 
economic  growth  that  suits  their  own  particular 
interests. 
1.4. The  world  market  for  agricultural  products 
1.4.1.  The  world  market  for  agricultural  products 
is, in a sense,  the  place  where  national  agricultural policies  meet  head-on.  However,  these  policies 
generally  aim  to secure  a degree  of stability  and  a 
certain  level  of farm  incomes,  while  seeking  to avoid 
erratic  fluctuations  in the  prices  and  volume  of 
commodities  traded  at the market  place. 
1.4.2.  In  contrast  to this  almost  universal  trend 
in national  agricultural  policies,  policies  on inter-
national  trade  —  despite  certain  endeavours  in 
connection  with  commodity  agreements,  etc.  — have 
never  succeeded  in really  making  themselves  felt. 
1.4.3.  The  economic  significance  of international 
trade  varies  considerably  from  one  product  to 
another,  according  to what  percentage  of world 
production  is sold  on the  international  market.  For 
example,  international  trade  in wheat  accounts  for 
approximately  20 %> of world  production  (which  is 
a considerable  proportion),  whilst  for feed  grains  the 
proportion  is 15 %. 
1.4.4.  Another  category  of products  is made  up 
of those  — such  as meat  and  milk  — which  form 
part of the  staple  diet  in numerous  regions  and 
whose  production  is maintained  and  developed  at a 
high  level  to ensure  security  of food  supplies.  The 
world  market  in these  commodities  is very  small,  and 
accounts  for  only  a few  percent  of production. 
However,  certain  countries  (New  Zealand,  Argentina, 
EEC)  normally  export  a substantial  part  of their 
production  of these  goods. 
1.4.5.  The  final  category  of commodities  comprises 
those  which  are  mainly  sold  on the  world  market. 
These  commodities  are  in many  cases  of  key 
importance  to the  economies  of the  countries  where 
they are  grown.  Examples  are  coffee,  cocoa,  tea, 
sugar,  fibres  and  oils.  More  often  than  not,  these 
commodities  are  produced  in developing  countries 
which  are  dependent  on international  trade  but  are 
far from  controlling  the  market  in the  way  the  US, 
for instance,  controls  the soya  market. 
1.4.6.  The  long-term  price  trend  to the  world 
market  was  generally  unfavourable  to producers  over 
a long  period  of time  until  1972,  when  prices  for 
sugar,  rice  and  other  cereals  recovered.  This  adverse 
trend  occurred  because  world  production  expanded 
faster  than  demand  in the  developed  countries.  In 
many  developing  countries  there  were  serious  food 
deficits  during  the period  in question. 
No C 61/8 Official  Journal  of the European  Communities 10. 3. 77 
1.4.7.  The  US stockpiling  capability  did  not  prevent 
cereal  prices  from  fluctuating  and  declining  in real 
terms  up to 1972.  Products  for  which  the  world 
market  is of marginal  importance  (meat,  butter) 
experienced  a much  smaller  fall  in prices. established,  bilateralism  will  tend  to win  the  day 
over  multilateralism.  This  is the  reason  for  the 
considerable  difficulties  encountered  in the  Tokyo 
Round. 
1.4.8.  Practices  in international  trade  in agricultural 
products  have  had  an adverse  effect  on (a)  world 
production  of certain  key  agro-commodities  and  (b) 
the rate  of income  growth  in the poorest  countries. 
1.4.9.  The  anarchy  on world  markets  has  for  a 
long  time  been  a stimulus  to the  GATT  countries  to 
seek  agreements  for  stabilizing  the  prices  of some 
commodities.  Although  results  have  generally  been 
rather  disappointing  (e.g.  the wheat  agreements),  the 
Community  has  made  the  conclusion  of world 
•agreements  one  of its guiding  principles,  and  taken 
the stabilization  of prices  on the  world  markets  to 
be the logical  sequel  to the  stabilization  of prices  on 
the Community's  own  market.  At the Tokyo  Round, 
which  opened  in 1973,  the  Community  renewed  its 
proposals  for  the  negotiation  of world  agreements, 
backed  by buffer-stocks  (wheat,  sugar,  dried  milk). 
These  proposals  have  still  not  been  discussed 
seriously. 1.5.2.  Under  these  circumstances  it is reasonable  to 
suppose  that  the  influence  of GATT  is going  to 
decrease.  The  Community  has  entered  into  clear-cut 
commitments  vis-a-vis  the  international  organizations 
and,  as far as possible,  it has  always  respected  these 
commitments.  The  Community  is not  going  to start 
to try to overturn  the  rules  of these  organizations, 
although  it has  always  regarded  the  GATT  rules  for 
agricultural  commodities  as inadequate. 
1.5.3.  The  United  States  and  the  Community  have 
different  rights  and  obligations  for  agricultural 
commodities  under  GATT.  When  GATT  was  framed 
after  the Second  World  War,  the  United  States  only 
accepted  it after  obtaining  a waiver  for  agricultural 
products.  At the  time,  world  prices  were  lower  than 
the prices  on the  American  market,  and  abolition 
of quantitative  restrictions  as required  by  GATT 
would  have  resulted  in the collapse  of the Americans 
agricultural  policy.  The  waiver,  which  is still  in force, 
allows  the  US  to retain  or  restore  quantitative 
restrictions  whenever  this  is necessary  to avert  a 
threat  to an American  agriculture  programme. 
1.5. International  bodies 
1.5.1.  International  bodies  for  politico-economic 
cooperation  — such  as GATT,  FAO,  UNCTAD  and 
the OECD  — have  had  a very  significant  influence 
in recent  decades  on the  development  of trade.  But 
they have  generally  imposed  the  rules  which  are 
most  in line  with  the  dominant  economic  theory. 
This  is particularly  true  in the  case  of GATT.  After 
Bretton  Woods,  the multilateral  development  of trade 
was linked  with  the  stability  of exchange  rates.  Until 
the late  60's  this  stability  was  a key  factor  in the 
unprecedented  trade  and  economic  expansion  of the 
period. 
The present  monetary  upheaval  is tending  in practice 
to undermine  the  multilateral  principles  on which 
GATT  agreements  are  based.  There  is,  in effect, 
little  point  in binding  customs  tariffs,  when  the 
impact  on the competitiveness  of a country's  products 
of a single  change  in exchange  rates  can  be three  or 
four  times  as great.  For  some  years  now  multi-
lateralism  appears  to have  been  giving  way  to the 
quest  for bilateral  agreements  which  guarantee  price 
advantages  and  access  to markets.  All  the  signs  are 
that until  such  time  as common  monetary  rules  are 1.5.4.  The  EEC  never  asked  for a waiver.  It devised 
the system  of levies.  To  operate  the  levy  system, 
however,  it was  necessary  to rescind  the  bindings 
adopted  by the  original  EEC  Member  States  and  by 
the three  countries  which  joined  in 1973,  and  replace 
them  by  equivalent  bindings  of CCT  duties.  This 
explains,  for  example,  why  the  EEC  today  has  to 
allow  in a number  of animal  feed  products  duty-free, 
even  if this  puts  its farm  policy  in difficulties. 
1.5.5.  Thus,  the  EEC  has  forfeited  part  of its 
freedom  of manoeuvre  in return  for  the  right  to 
operate  the levy  system  on some  agricultural  imports, 
whilst  the  United  States  has  obtained  a totally  free 
hand  without  making  any  reciprocal  concessions.  The 
result  is that  if the  Community  does  not  keep  its 
commitments  under  GATT,  retaliatory  measures  may 
be decided  upon  against  it, whereas  the  Community 
does  not  have  a similar  right  vis-a-vis  the  United 
States. 
1.5.6.  This  relative  failure  of the  international 
organizations  to adapt  to the  new  economic  and 
monetary  situation  has  led to the  creation  of bodies 
10.3.77 Official  Journal  of the European  Communities No C 61/9 
that have  become  'forums'  (e.g.  the  North-South 
dialogue)  where  the  search  for  new  solutions  is in 
progress.  We should,  however,  remain  sceptical  about 
the possibility  of introducing  any  economic  order 
without  first  re-establishing  monetary  stability  based 
on a general  consensus. looking  nature  of the Community's  external  relations 
and trade  policies  lie partly  in the  historical  ties 
linking  many  of these  countries  with  one  or other  of 
the Member  States,  and  partly  in the Community's 
desire  to have  relatively  privileged  access  to outlets 
for its own  industrial,  capital  and consumer  goods. 
2. Factors  stemming  from  the Community  itself 
2.1. An  outward-looking  Community 
2.1.1.  The  implementation  of  the  Common 
Customs  Tariff,  the progressive  bringing  under  the 
Community  umbrella  of commercial  policies,  and 
above  all the setting  up of the common  agricultural 
policy,  have  had  a highly  significant  effect  on the 
Community's  economy  and  have  also  influenced  the 
development  of the  world  economy  as a whole.  In 
the various  progress  reports  drawn  up  in 1974 
and 1975,  the Community  authorities  recognized  that 
the extremely  rapid  economic  development  of the 
Community  countries  in the  60's  was  partly  due 
to the setting  up of the common  market  (an example 
of successful  multilateralism).  This  economic 
development  had  had  a very  healthy  effect  on the 
level  of trade  between  the  EEC  and  the  rest  of 
the world.  Within  the  Community  itself  trade  in 
industrial  products  increased  between  1958  and  1972 
by a factor  of 8 4 and  trade  in agricultural  products 
by a factor  of 7-5,  whilst  the Community's  industrial 
and agricultural  imports  from  non-member  countries 
went  up by factors  of 4 4 and 1*8 respectively. 
2.1.2.  On  the  diplomatic  front  the  Community 
has wanted  to avoid  turning  in on itself  and  has 
received  applications  from  a very  large  number  of 
countries  desirous  of links  with  it (some  neigh-
bouring,  some  not).  Agreements  and  conventions 
have  thus  been  concluded  with  (a)  most  of the 
European  countries  on  the  periphery  of  the 
Community,  (b) the Mediterranean  countries,  and  (c) 
former  colonial  territories,  to which  must  be added 
today  the numerous  countries  covered  by the Lome 
Convention.  These  agreements  have  established  — 
and will  increasingly  establish  — preferential  trade 
relations,  although,  as far as is possible,  a balance 
must  be  maintained.  In  other  words,  if the 
Community  gives  preferential  treatment  to imports 
from  non-member  countries,  then  its own  industrial 
and agricultural  products  should  have  relatively  easy 
access  to the  markets  of these  privileged  trading 
partners.  The  fundamental  reasons  for the outward-2.1.3.  Another  important  factor  led to the  Lome 
Agreement  being  concluded.  This  was  the  absence 
of properly  organized  world  markets  for  primary 
commodities  (especially  agricultural  commodities). 
This  meant  that  the Community  had  the responsibility 
of trying  to set  up,  for  certain  commodities  and 
certain  privileged  trading  partners,  a valid  system 
that,  among  other  things,  would  guarantee  developing 
countries  a minimum  income  from  their  exports  to 
the EEC.  Such  diplomatic  and  economic  initiatives 
of the  Community  have  come  about  gradually 
without  any  guiding  principle  having  been  properly 
worked  out for the Community's  trade  policy. 
2.1.4.  The  absence  of a real  guiding  principle 
stands  out  in the case  of trade  policy  for agro-food 
products.  The  Community  has  complex  machinery 
for regulating  agricultural  imports  and  exports 
without  infringing  GATT.  But  the operation  of this 
machinery  is not guided  by medium-term  production 
goals  that  allow  for  the  trade  implications  of 
agreements  with  associated  and  other  non-member 
countries,  and  are  geared  to  maintaining  a 
permanent  foothold  in certain  external  markets. 
2.1.5.  This  paradox  has  already  created  serious 
difficulties  in the Community,  and  is liable  to do so 
even  more  in the future.  A case  in point  is that  of 
imports  from  the  Mediterranean  area  which  are  in 
direct  competition  with  products  from  similar 
Community  areas,  products  in respect  of which  there 
is no provision  for adequate  protection  or substitution 
(in so far as substitution  is possible).  The  problem 
is all the  more  intractable  because  in the  present 
economic  situation  it is particularly  difficult  to find 
jobs for  those  leaving  the land  — this  quite  apart 
from  the  question  of whether  accelerated  rural 
depopulation  creates  intolerable  sociological  and  even 
ecological  stresses  in the areas  affected. 
2.1.6.  Uncertainty  about  the  way  things  will 
develop  in the  medium  term  considerably  reduces 
the benefits  of the CAP  for certain  EEC  regions  and 
for the whole  agro-food  sector.  Even  the impact  of 
Community  diplomacy  is affected. 
No C 61/10 Official  Journal  of the European  Communities 10. 3. 77 
2.2. Weaknesses  of  trade  policy  in the  agro-food 
sector 
2.2.1.  As  far  as trade  policy  is concerned,  the 
Treaty  of Rome  is based  on liberal  principles:  free 
trading  has  to be introduced  and  the  expansion  of 
trade  promoted.  The  freedom  of undertakings  is 
guaranteed  and  protected,  and  unfair  competition  is 
outlawed  (ban  on  restrictive  practices,  anti-trust 
rules,  etc.).  The  Member  States  are  not  allowed  to 
interfere  with-  the  free  play  of  economic  and 
commercial  forces  (ban  on certain  aids).  The  CAP 
Regulations  exempt  agricultural  products  from  the 
common  rules  in certain  respects.  They  also  entrust 
the Commission  with  management  responsibilities 
which  are  hard  to reconcile  with  the  principle  of 
non-intervention  by public  authorities  in the market. 
2.2.2.  The  Commission  is the  executive  body 
responsible  for  ensuring  the  smooth  implementation 
of the  CAP  rules  drawn  up by the  Council.  It often 
finds,  however,  that,  as far  as the  consequences  of 
the CAP  on trade  are  concerned,  it has  to act  as 
arbiter  between  action  and  inaction,  between  the 
brake  and  the  accelerator.  But,  the  rules  governing 
its behaviour  in this  respect  have  not  been  set down 
in writing.  Indeed,  they  are not genuinely  desired  and 
they  have  not  been  developed  with  any  consistency 
by the  Council  and  the  Commission. 
2.2.3.  Apart  from  efforts  to control  Community 
production  of a number  of products  (price  levels, 
conversion  premiums,  grubbing-up  grants,  etc.,  all 
of which  can  have  an  effect  on  trade),  the 
Commission  and  the  Member  States  have  tended  to 
be passive,  letting  events  happen  rather  than 
mastering  and  controlling  them. 
2.2.4.  Any  trade  policy  consists  of  a set  of 
decisions  regarding  products  to be  exported  and 
imported,  markets  to be secured  or preserved  and 
appropriate  resources  to  be  deployed.  The 
Community  still  has no overall  trade  policy.  It retains 
a relative  laissez-faire  attitude  which  fits  in with  the 
ideas  embodied  in the  Treaty.  But  what  is needed 
for the  gradual  implementation  of  agricultural 
markets  is a genuine  trade  policy  for  the  products 
governed  by CAP  rules. 
2.2.5.  Without  such  a trade  policy,  Community 
surpluses  and  deficits  will  be drawn  increasingly  into 
the orbit  of  the  commercial  strategy  of  our 
competitors  (USA,  Canada,  countries  of the  Pacific, 
Eastern-bloc  countries),  and  it is these  countries 
which  will  impose  their  own  policies  (as in the  case 
of malt  and  protein,  etc.).  What  is more,  the  trade 
of the  European  Community  will  be  dominated more  and  more  by the  multinationals,  since  smaller 
EEC  firms  do not  benefit  to the  same  extent  from 
the system  for  awarding  refunds. 
But with  such  a policy,  the Community  as such  must 
take decisions  and  its  administrative  bodies  must 
have  the  political  power  to carry  them  out. 
2.2.6.  Following  this  survey  of the  international 
economic  scene,  the  Committee  can  say  that, 
although  the  Community  is subject  to a number  of 
powerful  constraints  which  it can  do very  little  about, 
it nevertheless  has  the  means  to  significantly 
influence  its own  development,  and  to a certain 
extent  the development  of world  markets  in so far as 
the political  will  exists. 
Of all  the  means  available  to  the  European 
Community,  the  common  agricultural  policy  is 
undoubtedly  the  most  sophisticated  and  the  most 
effective.  The  effects  of this  common  agricultural 
policy  on  European  and  world  socio-economic 
equilibrium  will  be  discussed  in  the  following 
chapter. 
III. THE  CAP'S  CONTRIBUTION  TO  ECONOMIC 
AND  SOCIAL  EQUILIBRIUM  IN THE  EEC  AND  TO 
EQUILIBRIUM  IN  THE  ACRO-FOOD  SECTOR 
THROUGHOUT  THE  WORLD 
3. The  CAP  as a force  for  equilibrium  in the 
Community 
3.1. A  great  deal  of work  has  recently  been  carried 
out on  the  economic  and  social  aspects  of the 
common  agricultural  policy  (the  'Stocktaking  of the 
common  agricultural  policy',  a document  submitted 
by the Commission  to the Council;  the Economic  and 
Social  Committee's  study  entitled  'Progress  report  on 
the common  agricultural  policy';  and  a number  of 
studies  carried  out  at national  level,  etc.).  Generally 
speaking,  all these  studies  have  reached  the conclusion 
that the  balance-sheet  is a healthy  one  in so fat-
as the  common  agricultural  policy  has  made  it 
possible  to achieve  three  aims  simultaneously:  (a) a 
progressive,  acceptable  redeployment  of that  part 
of the  population  engaged  in agriculture  that  found 
itself  redundant  at the  inception  of the  common 
marker;  (b)  security  of essential  food  supplied  at 
prices  that  have  been  relatively  advantageous  in 
recent  years  and  (c)  a level  of productivity  on 
Community  farms  which  puts  agriculture  in the 
forefront  of productive  activities  in the  EEC. 
10.3.77 Official  Journal  of the European  Communities No C 61/11 
3.2. Although  the  EEC  has  been  slowly  becoming 
more  self-sufficient  in major  products,  deficits  have 
arisen  for  other  products  obtained  on  the  world 
market.  The  main  traditional  flows  of trade  with 
foreign  suppliers  have  not,  therefore,  been  disturbed 
and the balance  of trade  in agricultural  produce  with 
the United  States  in particular  has  on  aggregate 
swung  in favour  of the  latter. 
3.3. The  maintenance  of family-type  agricultural 
units  gives  a certain  flexibility  and  solidarity  to the 
social  fabric,  the  value  of which  has  not  been 
questioned  by any  of the Member  States.  The  common 
agricultural  policy  — and  in particular  agricultural 
production  —  has  scarcely  developed  along  the 
lines  anticipated  when  the  common  market  first 
came  into  existence.  In particular,  it has  become 
clear  that  the  division  of  labour  and  a more 
appropriate  location  of production  are  far  from 
having  been  achieved;  this  is because  sociological 
and economic  contingencies  have  often  made  it 
necessary  to maintain  an extremely  wide  range  of 
farm  output  in almost  all areas  of the  Community. 
Moreover,  every  time  competition  has  forced  a certain 
division  of labour  (in  the  case  of cereal  crops, 
the threat  of a crisis  in Germany;  in the  case  of 
wine-growing,  the  crisis  in  France),  corrective 
mechanisms  have  had  to be introduced  and  these 
have  in fact  impeded  progress  towards  a better 
division  of labour.  This  is the  price  that  has  had 
to the  paid  for  maintaining  social  and  political 
equilibrium  within  the  Community.  Any  further 
division  of labour  would  have  to flow  from  far-
reaching  economic  and  political  integration  based  on 
a single  and  stable  monetary  system. 
3.4. One  of the questions  that  has  been  the subject 
of most  controversy  and  a priori  objections  is how 
much  the  CAP  costs  the  Community.  Recent  studies 
have  thrown  some  light  on this  question.  In 1975 
the gross  expenditure  of the  Guarantee  Section  of 
EAGGF  (which  includes  expenditure  incurred  as a 
result  of the  monetary  upheavals)  was  equivalent 
to 0-4  °/o of the  Community's  GDP,  2-5%  of 
expenditure  of food  and  5-6  °/o of the  value  of final 
agricultural  production.  In 1975,  expenditure  on 
agriculture  by the Community  (4 800  million  units  of 
account)  and  national  authorities  together  totalled 
14 300  million  units  of account  or 5 % of  the 
Member  States'  total  budgetary  expenditure.  Less 
than  one-third  of this  sum  is used  for  supporting 
markets  and  prices.  Large  amounts  are  spent  on 
measures  for  restructuring  production,  and  as  a 
result  of the  population  structure  in the  farming sector.  Thus,  in 1975  28-4  °/o of all national  expen-
diture  on agriculture  went  on social  measures,  24 4 %> 
on structural  measures,  10 8 °/o on rural  development, 
administrative  expenditure,  etc.,  and  only  21 °/o on 
market-support  measures  not  eligible  for EAGGF  aid. 
Public  expenditure  per person  employed  in agriculture 
amounted  to 1 433  units  of account  in 1975,  which 
is 50 °/o less  than  the  sum  spent  on  farmers  in 
the USA.  Over  quite  a long  period  of time  (1967 
of 1974),  the  ratio  in the  Community  of the  'Six' 
between  the  three  main  categories  of expenditure 
(market,  social  and  structural)  remained  relatively 
constant,  each  category  accounting  for  about  one-
third  of total  spending.  During  this  same  period, 
total  public  spending  on agriculture  grew  by 9 % 
each  year,  whereas  the GDP  rose  by about  11 °/o. 
3.5. In  addition  to the  relatively  low  cost  of the 
CAP  at national  and  Community  level,  we must  not 
forget  that  the  movement  of food  prices  has  been  a 
worry  for consumers,  although  since  1972  these  prices 
have  been  at a favourable  level,  because  the  sharp 
rises  in world  prices  have  not  been  passed  on to 
consumers  in the Community.  The  average  yearly  rise 
in wages  between  1968  and  1974  was  12-7  °/o and 
food  and  drink  only  went  up  by  an  average  of 
8-16%  per  year. 
3.6. It  is wrong  to assume  that  the  difference 
between  EEC  and  world  prices  constitutes  a transfer 
payment  to the  farming  industry.  The  world  prices 
apply  to a very  small  proportion  of the  quantities 
produced  and  consumed.  It is vital  for the Community 
to be self-sufficient  in staple  products,  since  world 
prices  rise  steeply  as soon  as there  are  signs  of a 
deficit  in the Community,  in Comecon  or elsewhere. 
However,  the  Community  has  agreed  to purchase 
almost  all  of its  supplies  of certain  agricultural 
commodities  (e.g.  protein  products  and  oilseeds) 
on the  world  market.  The  risks  involved  in 
this decision  are  considerable.  Thus,  the  onset  of a 
drought  sufficed  to increase  soya  cake  prices  by 
50 °/o between  April  and  the  end  of September  1976. 
Consumers  and  the  Community's  trade  balance  are 
going  to feel  the  effects  of the  spate  of freak 
weather  in a large  part  of the  Community. 
3.7. In  spite  of an  exceptionally  high  rise  in 
productivity  between  1968  and  1972  (7-6  °/o per 
year),  a 2 °/o annual  increase  in the volume  of output, 
and a decrease  of 4-7%  per  annum  in the  working 
No C 61/12 Official  Journal  of the  European  Communities 10. 3.77 
population  engaged  in agriculture  between  1969 
and 1974,  farmgate  earnings  (despite  the  very  fine 
harvest  in 1973)  failed  to keep  pace  with  the  rise  in 
input  costs  over  the  period  1968  to 1975.  In 1974, 
farm  incomes  fell  back  in real  terms  to the  levels  of 
1971  (i.e.  to an  index  of 107  on  the  basis  of 
1968  = 100).  The  value  of  final  agricultural 
production  went  up by 9 2 °/o annually  between  1968 
and 1974,  whilst  input  costs  increased  by 12-4  °/o. 4. The  CAP  and  the  world  economic  and  agro-food 
balance 
4.1. The  place  of agricultural  exports 
3.8. The  persistence  and  even  widening  of 
disparities  in farm  incomes  is still  one  of  the 
objections  raised  against  the  effects  of the  CAP.  The 
1975  report  on  the  agricultural  situation  in the 
Community  stated  (page  122)  that  farm  incomes  in 
the four  largest  Community  countries,  these  differences 
fall between  the  following  extremes  (national  average 
= 100): 4.1.1.  An  investigation  into  the  causes  and  real 
nature  of farm  surpluses  inevitably  means  having 
to bring  up the  question  of the  trade  policy  for agro-
food  products  (a problem  raised  in Chapter  II).  In 
the event  of a surplus  (often  temporary,  occasionally 
permanent),  should  one  automatically  conclude  that 
production  must  be cut  back?  Or should  one  accept 
that the  Community  —  like  other  countries  and 
geographical  areas  — can  be a structural  exporter 
of certain  agricultural  products?  This  is a funda-
mental  issue. 
— 89 to  112  in  Germany  as  between  Lander 
(1973/74); 
— 47 to 338  in France  as between  planning  regions 
(provisional  figures  for  1974); 
— 54 to 165  in Italy  as between  Regioni  (1971); 
— 73 to 112  in England  and  Wales  as between  major 
statistical  regions  (1972/73)  (Figures  are  not 
available  for Scotland  and  Northern  Ireland). 
These  differences  are  due  partly  to natural  factors 
(topography,  climate),  structural  factors  (size  of farms 
and the  way  they  are  run),  and  production  patterns 
at regional  level.  The  corrective  measures  introduced 
under  the  CAP  or as a complement  to the  CAP 
(regional  measures)  have  been  inadequate  so far. 
This  problem  cannot  be solved  by the  agricultural 
policy  alone;  a balanced  development  of all  the 
various  regions  of the  Community  is what  is needed. 
3.9. The  problem  of the  volume  of agricultural 
production  in relation  to internal  demand  arouses 
controversy  that  is not  always  disinterested.  It is well 
known  that  no one  in the  agricultural  sector  has  yet 
found  a way  of producing  enough  without  over-
producing.  The  level  of  self-sufficiency  in the 
Community  indicates  that  security  of supply  by and 
large  exists  and  that  occasional  surpluses  should  be 
regarded  as the  price  to be  paid  for  security  of 
supply. 4.1.2.  The  common  agricultural  policy  developed 
satisfactorily  up to the  early  70's  and  has  managed 
to weather  the  subsequent  monetary  upheavals.  But 
the EEC  partners  have  somewhat  differing  interests. 
There  have  already  been  clashes  (and  there  will  be 
clashes  in the  future  too)  because  of their  differing 
conceptions  of the  agricultural  policy  and  its place 
in the  EEC  and  in the  Community's  trade  policy. 
4.1.3.  For  the  most  industrialized  countries  in the 
Community  (Germany  and  the  United  Kingdom), 
agriculture  is at most  a factor  making  for  socio-
political  equilibrium  and  offering  a guarantee  of 
food  supplies.  It is not  considered  that  agriculture 
should  be  the  backbone  of export  policy.  This 
attitude  is not  shared  by  France,  Denmark,  the 
Netherlands  or Ireland,  which  believe  that  agriculture 
must  be one  of the  mainstays  of their  trade  balance. 
In the  case  of Italy,  an increase  in the  export  of 
certain  types  of agricultural  produce  could  be  of 
further  help  in achieving  a trade  balance.  One  of 
the major  tasks  facing  the  Community  therefore,  is 
the reconciliation  of interests  which,  in so far  as 
the development  of the  common  agricultural  policy 
and its place  in the  Community  are  concerned,  are 
not immediately  convergent. 
4.1.4.  Tables  15 and  15A  show  the  general  trend 
of the  Nine's  external  trade  and  agro-food  trade 
between  1968  and  1973.  Agro-food  products'  share 
of total  imports  dropped  steadily  from  32-9  °/o in 
1968  to 28 9 °/o in 1973,  whereas  the  proportion  of 
agro-food  products  in total  exports  rose  from  8-7  % 
in 1968  to 9-4 % in 1973. 
10. 3. 77 Official  Journal  of the European  Communities No C 61/13 
4.1.5.  Processed  products  with  a high  added  value 
play a much  more  important  role  in exports  than  in 
imports.  Imports  chiefly  consist  of non-processed 
products,  viz.  wheat,  maize,  oilseeds,  live  cattle  and 
sheep,  quarters  of beef,  veal,  lamb  and  mutton,  fresh 
fruit  and vegetables,  raw  tobacco,  etc. In cases  where 
the Community  has maintained  or improved  its export 
figures,  the products  involved  have  for the most  part 
been  products  processed  on farms  or in factories: 
cereal-based  products  (meat  and  pigmeat  prepara-
tions,  poultry  products,  flour,  malt,  starch,  meal, 
concentrated  foodstuffs),  dairy  products  (one  of the 
surplus  items),  sugar,  fish-based  preparations,  etc. 
4.1.6.  The  bulk  of the  Community's  agro-food 
exports  therefore  consists  of industrial  products 
which  directly  and  indirectly  involve  a work  force 
far in excess  of that  engaged  in agriculture.  With 
certain  exceptions,  this  enormous  food-processing 
apparatus  is closely  dependent  on  Community 
farming  for  a major  part  of its supplies.  In this 
respect  agricultural  interests  and  industrial  interests 
are obviously  the  same.  It must  be added  that,  for 
many  branches  of the  agro-food  industry,  exports 
form  a necessary  complement  to domestic  sales. 
4.1.7.  Basic  agreement  might  be reached  on the 
purpose  of the  common  agricultural  policy  and  its 
role in Community  exports  if it were  given: 
— a role  in stabilizing  a labour  force  that  at present 
is in excess  of requirements  in a large  number 
of sectors; 
— a role  as guarantor  of food  supplies  to Community 
consumers;  and 
— a significant  role  in a world  economic  strategy 
designed  to achieve  a balance  in the  agro-food 
sector  — something  that  presupposes  the existence 
of a common  commercial  policy  assigning 
agricultural  products  their  rightful  place  in both 
exports  and  imports. 
4.1.8.  Finally,  an EEC  policy  of exporting  many 
primary  and  processed  agricultural  products  is a 
natural  concomitant  of the policy  of opening  up its 
markets  under  the  conventions.  Such  an exporting 
policy  should  be regular  and  sustained. agricultural  products.  In 1973  the EEC's  share  in total 
world  imports  of agricultural  goods  amounted  to 
33 09 °/o (and  to more  than  80 °/o for  fruit  and 
vegetables  and  products  intended  for  animal  feed). 
The Community's  agricultural  imports  represent 
between  32-9%  (1968)  and  28-9%  (1973)  of its 
total  imports  and  in value  terms  are  three  to four 
times  greater  than  its agricultural  exports.  In order 
to ensure  security  of supplies  the Community  must, 
in fact,  diversify  its sources. 
4.2.2.  In  1973,  417  % by  value  of the  EEC's 
agricultural  imports  originated  from  industrialized 
countries,  10 4 °/o from  state-trading  nations,  and 
39-5 °/o from  developing  countries  (including  10 9 °/o 
from  ACP  countries). 
4.2.3.  In  future  the developing  countries,  and  in 
particular  the signatory  countries  of the Convention 
of Lome,  should  account  for  a significantly  larger 
proportion  of Community  imports.  The  entry  into 
force  of this  Convention,  and  of the  agreements 
concluded  with  a number  of Mediterranean  countries, 
is therefore  going  to have  an effect  on the  volume 
of trade  with  the EEC  in certain  products  (oil  seeds, 
various  types  of fodder  other  than  soya,  fresh  and 
canned  vegetables,  perhaps  even  beef  and  veal). 
4.2.4.  Besides  opening  up its frontiers  to exports 
from  the developing  countries,  the  Community  has 
also undertaken  to guarantee  them  a certain  degree 
of stability  in their  export  earnings.  These  concessions 
to the associated  countries  must  not,  however,  lead 
to disruption  of the  EEC  agricultural  markets  on a 
scale  liable  to seriously  harm  producers. 
4.2.5.  For  a large  number  of countries  (with  a total 
population  of  approximately  450  million)  the 
Community  offers  exceptional  development  possi-
bilities.  Let it be said,  however,  that  this  is no way 
prevents  the Community  from  continuing  to import 
from  other  traditional  suppliers  or from  maintaining 
its own  exports.  The  Community  has  concluded 
special  agreements  with  countries  which  wish  to 
protect  themselves  from  the  anarchy  of world 
markets.  But  beyond  these  special  agreements  the 
Community  must  help  establish  a genuine,  world-
market  organization  — which,  in the final  analysis, 
is needed  by all countries. 
4.2. The  place  of the  Community's  agricultural 
imports 
4.2.1.  The  Community  plays  a considerable  and 
in some  cases  a preponderant  role  in world  trade  in 4.3. The  organization  of the world  markets 
4.3.1.  The  Community  is for the signing  of price 
stabilization  agreements  on  a product-by-product 
basis  and is for the creation  of stocks  of commodities. 
The stability  and  size  of the  EEC  output  of certain 
products  (wheat,  dried  milk,  sugar)  would  enable  it 
No C 61/14 Official  Journal  of the European  Communities 10. 3. 77 
to play  a significant  role  in the  implementation  of 
relevant  agreements  entailing  the  establishment  of 
buffer  stocks.  A global  approach  to the  market 
organization  would  be preferable,  but failing  this  the 
matter  can  be dealt  with  piecemeal,  and  here  Stabex 
and medium-term  bilateral  trade  agreements  might 
provide  a basis. 
4.3.2.  In  so far  as the  EEC  is able  to guarantee 
both  stability  of imports  and  a steady  flow  of exports, 
it is already  helping  to stabilize  prices  and  organize 
markets. 
4.3.3.  The  ideas  of the  EEC  in this  field  have 
traditionally  met  with  some  hostility  in GATT.  But 
they  are gaining  ground.  It has  even  been  realized  in 
the United  States  that  the  very  sharp  fluctuations 
caused  by the  free  play  of the  market  harmed  the 
American  economy  during  its period  of inflation  and 
several  people  demanded  the  introduction  of 
machinery  to reduce  these  fluctuations. 
4.4. Food  aid 4.4.3.  The  Community  must  not,  however,  neglect 
that other  form  of food  aid which  consists  in helping 
the developing  countries  (in  really  appropriate  and 
disinterested  ways)  to build  up  their  own  food 
production.  EDF  funds  should  be set aside  for  this 
purpose  (the  World  Bank  is also  earmarking  some 
of its resources  for  such  measures).  The  part  played 
by outside  aid  will  be marginal  compared  to the 
efforts  the  developing  countries  will  have  to make 
themselves  to bring  about  their  economic,  social  and 
human  development  in general. 
4.5. Towards  a new  world  debate 
4.5.1.  Given  its  human,  cultural  and  economic 
potential,  the role  it plays  in the agro-food  economy, 
and the  responsibilities  it has  assumed  under  the 
various  agreements  it has  signed,  the  EEC  cannot 
remain  passive  in the  face  of the  mediocre  results 
obtained  in practice  following  the  1974  World 
Conference.  The  North-South  dialogue  offers  a more 
concrete  debating  framework  than  the  FAO  and 
makes  it possible,  in particular,  for  the  question  of 
agricultural  markets  to be placed  in the  context  of 
overall  economic  strategies. 
4.4.1.  Substantial  though  the  Community's 
contribution  may  be,  it is still  inadequate  quantita-
tively  and  above  all qualitatively.  By 'qualitatively'  we 
mean  regularity,  speed  and  monitoring  of efficient 
utilization.  Come  what  may,  farmers  in the developed 
world  cannot  produce  enough  to feed  the population 
of the  poor  countries  in the  future.  The  growing 
needs  of these  peoples,  and  particularly  the  periodic 
occurrences  of freak  weather,  mean  that  food  aid that 
is adjustable  (within  certain  limits)  each  year  in terms 
of place,  time  and  volume  is going  to be needed  for 
a considerable  number  of years  to come.  Such  a food 
aid capability  is inconceivable  without  buffer  stocks 
included  as part  of a scheme  for  organizing  world 
markets. 
4.4.2.  This  therefore  raises  the  question  of what 
line is to be taken  in the  Community's  own  agro-
food  export  policy,  a policy  which  must  embrace  the 
buffer  stocks  that  are necessary  for the Community's 
contribution  to general  food  aid.  The  Community 
should  give  priority  to the  creation  of stocks  which 
should  be administered  and  financed  in a concerted 
fashion  at international  level.  If this  cannot  be 
achieved  at international  level,  the  Community  will 
have  to shoulder  its own  responsibility  in the matter. IV. CONCLUSIONS 
5. Findings 
5.1. The  Committee  has  examined  the  current 
international  context  and  observed  how  the  influence 
exerted  on the  Community  by this  context  can  have 
effects  on the  CAP.  It examined  how,  and  in what 
areas,  the  CAP  itself  is capable  of affecting  this 
international  context.  In the  process  attention  was 
drawn  to the  CAP's  positive  contribution  to the 
Community  and  to the  world  economy  as a whole. 
It has  been  noted  that  the  CAP  is designed,  among 
other  things,  to regulate  prices,  stabilize  the  internal 
markets*  and  ensure  security  of supplies.  It was  set 
up to resolve  the  agricultural  and  food  problems  of 
a common  domestic  market.  On  a complementary 
level,  the  CAP  may  be regarded  — in the  inter-
national  context  — as an instrument  capable  of 
helping  to solve  the problems  of other  countries.  It is 
obvious  that  in a world  economic  context  all 
decisions  proper  to one  country  or one  specific 
10. 3. 77 Official  Journal  of the European  Communities No C 61/15 
geographical  area  are  to some  extent  conditioned  by 6.  The  major  principles  of the  CAP 
that context. 
5.2. Hard  realities  and  the  developments  which 
had taken  place  in the  Community  and  the  inter-
national  context  made  changes  to the CAP  necessary. 
That  is why,  when  putting  forward  proposals  on 
ways  of improving  the  CAP  in the  light  of the 
Community's  internal  needs,  one  must  also  take  into 
consideration  a large  number  of factors  stemming 
from,  the policies  and  situations  of other  countries. 
At the same  time,  one  must  keep  clearly  in mind  the 
legal  and  powerstructure  relationships  between  the 
various  component  parts  of  our  international 
economy. 6.1. It  is not  intended  to take  stock  of the  CAP 
again  in this  opinion.  It is, however,  pointed  out  (i) 
that to date  the CAP  has  been  chiefly  concerned  with 
providing  farmers  with  certain  income  guarantees  via 
prices,  and  (ii)  that  the  pattern  of production,  in 
principle  a matter  for  individual  farmers,  has  been 
strongly  influenced  by the prices  structure  established 
by the  Council.  But  this  policy  has  not  had  a satis-
factory  effect  on the  incomes  of EEC  farmers  as a 
whole. 
5.3. By  way  of conclusion,  the Committee  therefore 
proposes  to suggest  technical  and  policy  changes  for 
improving  not  only  the  CAP,  but  also  the 
Community's  external  policy  to make  them  better 
equipped  to satisfy  the  various  needs.  It therefore 
proposes  to examine  in turn: 
— The  changes  to be made  to the  major  principles 
of the CAP. 
This  involves  assessing  the relative  importance  of 
price  policy,  structural  policy  and  market  policy. 
An examination  must  also  be  made  of the 
conditions  under  which  genuine  guidance  of 
agricultural  production  could  be  implemented. 
Guidance  of production,  however  modest  the 
means  may  be,  is the  logical  follow-up  to the 
comments  made  in the  preceding  sections  of this 
document  and  the  conclusions  reached  by  the 
Commission,  the  Council,  the  European  Parlia-
ment  and  the  ESC  itself  in taking  stock  of the 
CAP; 
— The  adjustments  to  be made  to the  day-to-day 
management  of  market  organizations  covered  by 
the CAP,  with  the  aim  of gearing  management  to 
the objectives  of  a  genuine  Community 
commercial  policy.  This  could  also  involve 
adapting  commercial  policy  instruments  in the 
agro-food  sector  and  other  sectors; 
— The  new  or  increased  contribution  which  the 
Community  should  be able  to make  via the  CAP 
towards  establishing  a new  world  economic  and 
food order  and  a world  agricultural  and  food 
policy  as part  of such  an order, 6.2. The  impact  which  price  policy  (and  its support 
mechanisms)  has  had  on  the  development  of 
production  and  trade  has  led  to  doubts  being 
expressed  in various  bodies,  inside  and  outside  the 
Community,  about  the  relative  competitiveness  of 
Community  agriculture.  The  yardsticks  proposed  are 
varied:  the  United  States,  Eastern  bloc  countries, 
certain  developing  countries.  Although  such  question-
ing is perfectly  justified  in the  interests  of the 
efficiency  of the  Community  economy  as a whole, 
it must  be recognized  that  what  seems  to be scientific 
impartiality  can  sometimes  be  a cloak  for  fierce 
competition. 
6.3. Agriculture  is a productive  sector  of enormous 
social,  structural  and  technical  complexity  and 
cannot  be compared  with  industry,  since  competition 
does  not  have  the  same  intensity  in the  agricultural 
sector.  In  assessing  agricultural  competitiveness, 
account  must  be taken  of the  social  and  structural 
handicaps  which  have  to be  overcome  or offset. 
Moreover,  it is essential  that  this  kind  of examination 
and comparison  should  take  into  consideration  the 
degree  of self-sufficiency  of the  EEC.  This  makes  for 
a rational  development  of agriculture,  fair  incomes 
for producers,  security  of supply  at reasonable  prices 
for consumers,  a contribution  to the  world's  food 
supply  and  a reasonable  role  in the  development  of 
world  trade.  One  cannot  ignore  the  political 
considerations  which  also  determine  the  agricultural 
policies  of all other  nations  and  which  influence  to 
a greater  or lesser  degree  the  relationship  between 
supply  and  demand  on the  world  market,  whose 
prices  are  (often  wrongly)  used  as reference  prices. 
Accordingly,  the  Community  would  not  generally 
be justified  in substantially  departing  from  a cautious 
policy  of supporting  and  stabilizing  prices.  This 
policy  has,  on the  whole,  provided  it with  stability, 
No C 61/16 Official  Journal  of the European  Communities 10. 3. 77 
security  and  continuity  in its supplies  and  trading 
patterns. 
6.4. However,  the  CAP  would  be better  balanced 
if the  dominant  role  of the  price  support  policy  was 
complemented  by strengthening  policy  on developing 
and modernizing  production  and  market  structures, 
and by taking  more  direct  action  to guide  production. 
6.5. Current  measures  must  be expanded  and  be 
more  closely  linked  up  with  regional  economic 
development.  The  importance  of  technical  and 
scientific  assistance  structures  must  be emphasized 
here.  In the  field  of research,  coordination  of the 
programmes  and  resources  of the  various  public  and 
possibly  private  research  institutions  in  the 
Community  and  an  increase  in their  resources  is 
essential  to ensure  that  Community  agriculture  is 
not overly  dependent  in this  area  on certain  non-
member  countries  and  can  make  a significant 
contribution  here  to  developing  countries  in 
particular. 
6.6. As  regards  market  structures,  i.e. the  various 
channels  by which  agricultural  produce  reaches  the 
consumer,  the  most  significant  feature  of  the 
situation  inherited  by the  Community,  is the role  — 
whose  importance  varies  incidentally  according  to 
the product  and  regions  concerned  — played  by 
cooperative  organizations  in collecting,  processing 
and selling  farm  products.  The  cooperative  tradition 
in agriculture  sprang  from  the  need  to offset  the 
weakness  inherent  in the  dispersion  of production 
and decision-making  centres.  The  growth,  which 
has incidentally  been  slow,  in the size  of farms,  does 
not in any  way  detract  from  the virtues  of association 
or cooperation.  Without  losing  sight  of the  rather 
important  role  which  the  marketing  and  processing 
organizations  have  played  and  continue  to play,  it is 
fair to say  that  cooperative  structures  sometimes  play 
a decisive  role  in the  practical  operation  of market 
organizations.  These  structures,  which  are  effective 
farm  income  support  instruments,  contribute  to the 
development  of the  regions  with  which  they  are 
linked  by their  very  nature. 
6.7. In  the  field  of production  guidance,  the  need 
for instruments  is less  evident  than  the  need  for 
reflection  and  willingness  to make  quantitative  and 
qualitative  choices  which  take  account  of trends  in consumption  and  the  external  relations  of  the 
Community.  These  trends  must  be included  among 
the parameters  to be  taken  into  account  when 
guiding  agricultural  production.  To this  end,  there  is 
a need  for  Community-level  machinery  for  study 
and consultation  capable  of assisting  the  official 
bodies  in taking  decisions. 
6.8. Accordingly,  an  ad  hoc  body  to  study 
guidance  should  be  set  up  at Community  level 
comprising  officials  and  representatives  of  the 
relevant  branches  of activity.  Available  and  accessible 
information  on  products,  markets,  requirements 
(both  those  which  are  backed  by  the  necessary 
purchasing  power  and  those  which  are  not),  prices 
and costs  should  be channelled  to this  body,  whose 
task would  be to collate  data  for  the  drafting  of 
a kind  of medium-term  programme  for  Community 
agriculture. 
This  guidance  body  would  also,  as and  when 
necessary,  evaluate  the  impact  of  agreements, 
conventions  and  associations  with  non-member 
countries  on the  CAP. 
6.9. The  medium-term  programme  for Community 
agriculture  should  make  recommendations  on  (a) 
actual  production  policy,  (b)  research  policy,  (c) 
structural  policy  and  (d)  international  cooperation 
in the  food  sector. 
7. Administration  of the  CAP  and  its instruments 
7.1. The  daily  administration  of the CAP,  complex 
by its very  nature,  must: 
— be based  on  and  follow  the  broad  guidelines 
laid down  in the  manner  proposed  above; 
— take  account  of the  needs  of trade,  or better  still, 
gradually  become  part  and  parcel  of a genuine 
Community  commercial  policy  applied  to the 
agro-food  sector,  and  complementary  to general 
commercial  policy; 
— encourage  the  conclusion,  where  possible,  of 
multi-annual  outline  agreements  on the  sale  of 
farm  produce  between  agricultural  producers  and 
their  trade  organizations,  on the  one  hand,  and 
the marketing  or processing  industries  or their 
trade  organizations,  on the  other.  This  would 
make  for a steady  and  more  orderly  development 
of trade. 
10. 3. 77 Official  Journal  of the European  Communities No C 61/17 
7.2. The  refunds  and  levies  system  is of course 
one of the crucial  instruments  of marked  management, 
but first  and  foremost,  it is a question  here  of 
financial  measures  with  an impact  on trade  (and  not 
vice versa).  This  preoccupation  with  finance  has  so 
far impeded  or  even  rendered  impossible  the 
development  of genuine  commercial  administration 
which  would  offer  a choice  of permanent  trade 
patterns,  make  it possible  to explore  new  markets 
and above  all provide  additional  commercial  policy 
instruments  (credit,  long-term  contracts,  exporter 
groups,  etc.).  It is this  type  of management  which  is 
commensurate  with  the Community's  long-term  needs 
and interests  and  the  wishes  of the  industry. 
7.3. The  Commission  was  assigned  responsibility 
for the  day-to-day  running  of the  CAP  by the 
Council.  The  Member  States  are  directly  involved 
in the  administration  of the  CAP  through  the 
management  committees.  The  effects  on trade  of 
management  instruments  very  often  mean  that  the 
Commission  has  to take  decisions  on  its own, 
working  on the basis  of very  disparate  factors  which 
are not part  of a medium-term  plan.  This  'financial' 
management  coupled  with  the  decisions  of the 
Commission  takes  on its own  inevitable  momentum 
leading  to a lack  of continuity  in exports,  a lack  of 
farsightedness  and  frequently  inability  to take  the 
rapid,  bold  decisions  (with  effects  on trade)  which 
the market  situation  sometimes  calls  for. 
7.4. If  the  Community  is to have  a commercial 
policy  for  agriculture  commensurate  with  its 
production  potential  and  allowing  it the  autonomy 
in decision-making  which  it requires  at world  trade 
level,  the very  concept  of the  administration  of the 
CAP  will  have  to be radically  revised  and  the 
administrative  instruments  will  have  to be improved 
and supplemented. 
7.5. A  distinction  should  be drawn  between  CAP 
administrative  instruments  proper  (refunds,  levies, 
intervention,  safeguard  clauses,  etc.)  and  genuine 
trade  policy  instruments  (agreements,  contracts, 
credit,  quotas,  etc.).  These  two  kinds  of instrument 
are complementary  and  the main  thing  is that  there 
should  be a policy  guiding  their  use.  Improvements 
should  therefore  be made  primarily  in the preparation 
of the decisions  applying  these  instruments. 
7.6. In  the  context  of  world  markets,  the 
Community  must  be able  to react  very  rapidly  to 
events  and  to  commercial  opportunities.  The 
Community  must  also  be able  to rely  on regular 
trade  patterns  and  agreements  commensurate  with 
its import  requirements  and  export  capacity. In concluding  association  treaties  and  agreements 
the Community  will  have  to pursue  a genuine 
agricultural  trade  policy  vis-a-vis  those  countries  to 
whom  it gives  access  to its markets.  This  is necessary 
to prevent  the  drawbacks  of certain  aspects  of 
Community  external  policy  from  piling  up in the 
agricultural  sector. 
The countries  in question  import  a certain  number 
of agricultural  products  which  the  Community  can 
supply.  The  Community  must,  therefore,  show 
sufficient  commercial  dynamism  to enable  it to 
become  these  countries'  supplier  of the  relevant 
products.  Without  thinking  in terms  of agri-power, 
it would  simply  be a question  of the  Community 
ensuring  its own  security  and  the  fulfilment  of its 
international  commitments  with  a commercial 
dynamism  in keeping  with  its economic  interests. 
8. The  CAP's  contribution  to a world  economic  and 
food  order 
8.1. It  is clearly  to the Community's  advantage  to 
support  those  international  institutions  set  up to 
ensure  that  universally  applicable  rules  are observed 
(GATT  in  particular,  but  also  IMF,  IF  AD, 
international  commodity  agreements)  even  though 
the Community  now  hopes  that  some  of the  rules 
will be changed.  No world  economic  and  food  order 
can get  off  the  ground,  however,  without  rules 
demarcating  the  powers,  rights  and  responsibilities 
of everyone. 
This  concern  for an equitable  distribution  of power 
and responsibilities  must  hold  sway  when 
international  commodity  agreements  are  being 
negotiated.  The  power  of the  strongest  must  be 
restricted  in the interests  of the  common  good.  The 
technical  side  of the agreement  is of course  important 
but it is secondary  to the  fundamental  problem  of 
power-sharing  and  the  sincere  acceptance  of 
universally  applicable  rules. 
8.2. The  Community's  commitments  to commodity 
agreements  providing  for  reference  prices  (or  price 
brackets),  stockpiling  programmes  and,  possibly, 
price  compensation  or stabilization  funds  (recent 
example:  UNCTAD),  are justified,  not from  idealist 
or charitable  considerations  but  on the  basis  of a 
clear-sighted  conception  of the  evolution  of the 
world  economy. 
No C 61/18 Official  Journal  of the European  Communities 10. 3. 77 
8.3. The  recent  trend  in relations  between  the rich 
and the  poor  countries  is not unlike  that  in relations 
between  the  social  classes  at the  end  of the  first 
industrial  revolution,  when,  as the  result  of pressure 
from  the  least-favoured  sections  of the  population 
and the  crisis  of 1929—1930,  certain  restrictions 
were  placed  on economic  freedom  at national  level. 
At present  extremely  strong  pressures  are  being 
exerted  to  subject  the  free  market  to  certain 
limitations  and  rules  imposing  discipline  at 
international  level.  Hardly  anyone  can  dispute  the 
need  to introduce  rules  or 'codes  of conduct',  if the 
aim is to be a balanced  development  of the  various 
parts  of the  world.  For  while  one  can  rightly  cite 
the advantages  of free  price  formation  for  the 
strongest  trading  partners,  one  must  also  bear  in 
mind,  and  this  must  be the  constant  position  of the 
Community,  the  positive  economic  effects  of grants 
and of guaranteeing  a minimum  income  for the most 
vulnerable  trading  partners. 
8.4. Accordingly,  the first  consequence  of the  CAP 
at international  level  must  be that  the  Community 
considers  to be good  for  others,  especially  the  poor 
countries,  those  things  that  are  good  for  itself 
(protection  of incomes,  stabilization  of farm  prices, 
security  of supply).  Certain  provisions  of the  Lome 
Convention  (the  Stabex  scheme)  do  apply  this 
principle.  Similarly,  the  Community's  acceptance  in 
principle  at UNCTAD  of commodity  agreements 
should  be confirmed  by an unrestricted  commitment 
by all  member  countries.  In  this  field,  where 
fundamental  questions  are being  posed  on the  future 
of relations  between  the rich  countries  and  the others, 
the Community's  interest  lies  in being  an arbitrating 
force  and  in speaking  out  in favour  of rules  that 
apply  to all. 
8.5. The  monetary  disturbances  that  are  so 
harmful  to the  CAP,  and  which  might  destroy  it, 
are making  measures  to stabilize  commodity  prices 
both  more  difficult  and  more  ineffective.  The 
Community  should  take  the  initiative  for  a study  of 
these  two  problems  together  in  appropriate 
international  forums.  Improvement  of the  monetray 
situation  would  make  it easier  to stabilize  prices; 
at the same  time  commodity  stockpiles,  administered 
under  world  agreements  aimed  a stabilizing  prices 
and thus  strengthening  the  economies  of  the 
countries  concerned,  could  help  stabilize  their 
currencies. 
8.6. In  the  monetary  field,  as in the  case  of 
markets,  order  is possible  only  if all the  Member 
States  agree  to their  currencies  being  bound  by 
common  rules  drawn  up  in accordance  with  the interests  of all  the  parties  concerned.  Both  the 
Member  States  and  the  Community  as such  should 
commit  themselves  resolutely  to the  introduction  of 
new rules  ensuring,  among  other  things,  a return  to 
a measure  of discipline  with  respect  to exchange 
rates. 
8.7. Some  very  powerful  obstacles  will  be 
encountered  in  setting  up  a new  international 
economic  order.  One  of these  obstacles  is the 
interests  of the  multinational  companies,  and  the 
Commission  has  shown  in a recent  study  how  much 
some  countries'  policies  in all economic  spheres  may 
be influenced  by the  concentrated  powers  of the 
multinationals.  The  OECD  code  of conduct  for 
supervision  of multinational  companies  should  be 
effectively  applied.  The  Community  should  adopt 
an approach  here  in keeping  with  its commitments 
in favour  of an international  organization  of markets. 
There  can  be no question  of dispensing  with  the 
dynamism  and  the  investment  capacity  of  the 
multinationals,  but  it now  seems  essential  that  the 
strategies  of these  companies  should  in some  way 
also be  placed  under  international  political 
supervision. 
9. Final  remarks 
9.1. One  thing  is quite  clear  from  this  examination 
of the  CAP  in the  international  context:  when  one 
looks  at the  Community  in its international  setting, 
it is clear  that  the  CAP  is the most  effective  tangible 
expression  of Community  solidarity  and  personifies 
the political  and  geographical  entity  of  the 
Community  vis-a-vis  the  rest  of the  world.  Adjusting 
the CAP  and  the  EEC's  external  policy  is both 
in the  Community's  interest  and  essential  if the 
Community  is to make  an  effective  contribution 
towards  the economic  and  food  order  that  the world 
needs.  These  adjustments,  some  of which  may  be 
substantial,  concern  certain  aspects  of the functioning 
and management  of the  CAP.  But,  above  all,  they 
apply  to the positions  and  action  that  the Community 
and the  Member  States  must  take  within  numerous 
international  bodies  in order  to defend  the  benefits 
that the  CAP  has  brought  for  the  Community  and 
help bring  comparable  advantages  (stability,  security 
and continuity)  to other  countries.  But  the  burdens 
and obligations  implicit  in this  role  must  be shared 
fairly  by everyone  in the  Community,  and  not  rest 
solely  on those  engaged  in farming.  Accordingly,  the 
Committee  considers  that  the  Commission  should 
call an ad hoc  conference  at Community  level  of the 
various  interested  socio-professional  groups.  Such  a 
conference  would  certainly  help  to  clarify  the 
options,  and  assist  the  decision-making  process  with 
10. 3. 77 Official  Journal  of the European  Communities No C 61/19 
respect  to the  improvements  to be made  to the  CAP 
in order  to strengthen  the  Community. 
9.2. For  the  time  being,  as regards  adjusting  the 
CAP,  the  Committee  proposes: 
— adapting  price  policy  in keeping  with  the need  to 
contribute,  in this  way  too,  to the  utilization  of 
all resources  and  general  development  of the 
entire  agricultural  sector  in the  Community; 
— strengthening  the  instruments  for  implementing 
policy  on production  structures  and  making  an 
effort  in the  field  of research  (coordination  of 
national  policies),  in liaison  with  regional  policy; 
— strengthening  policy  with  respect  to marketing 
structures,  with  particular  emphasis  where 
appropriate  on cooperatives  and  like  bodies; 
— the  setting  up of an ad hoc  body  to consider  how 
production  should  be guided  with  a view  to a 
medium-term  plan  for  agriculture; 
— working  out  a genuine  Community  trading 
strategy  for  the  agro-food  sector,  giving  the 
European  Community  the  decision-making 
freedom  it needs  in this  field; 
— the  Commission  should  prepare  a medium-term 
programme  for Community  agriculture  based  on, 
among  other  things,  the  recommendations  of the 
abovementioned  ad  hoc  body  and  setting  out 
guidelines  for  production  and  also  the  general 
pattern  to be  followed  in research,  structural 
policy  and  international  cooperation.  The  farming 
community  should  be associated  in drawing  up 
this programme. 
9.3. The  Committee  proposes  the  following  as 
regards  adjusting  or confirming  the  Community's 
positions  on world  economic  problems: 
— the  Community  should  commit  itself  explicitly 
to a new  world  economic  and  food  order  founded on a voluntary  restraint  of power  by the strongest 
countries  and  compliance  with  common  rules 
that take  account  of  everyone's  rights  and 
responsibilities; 
— there  should  be a commitment  to a new  world 
monetary  order,  based  on a return  to a measure 
of discipline  with  respect  to exchange  rates; 
— there  should  be  a commitment  to  political 
supervision  of industrial  and  commercial  power 
structures  capable  of being  used  to pursue  goals 
incompatible  with  the  policies  of the  Member 
States  and  the  international  agreements  signed 
by them. 
9.4. The  Community  represents  a unique  example 
of a vast  and  free  domestic  market  being  created  by 
the association  of countries  with  widely  differing 
economic  structures  and  traditions.  The  CAP  is the 
most  elaborate,  and  therefore  the  most  fragile, 
instrument  of integration,  and  can  be  considered 
as both  the symbol  and  weak  point  of the Community. 
9.5. The  Community,  through  the  CAP,  has 
already  advanced  a long  way  towards  unifying  the 
economies  of its  Member  States  while  respecting 
and, basically,  preserving  the  freedom  of individuals 
and undertakings.  Because  of this,  it offers  a practical 
example  of the gradual  establishment  of an economic 
order,  whose  importance  is recognized  by  non-
member  countries.  The  agreements  and  conventions 
that the  Community  has  signed  with  a large  number 
of non-member  countries  are  in some  way  an 
extension  and  an  enlargement  of  the  difficult 
experiment  going  within  the  Community. 
9.6. The  attraction  exerted  by the Community  and 
the power  it could  have  as political  arbitrator  at 
international  level  lie in the  economic  potential  of 
its members  and,  in particular,  in the  principles  on 
which  their  cooperation  rests.  It therefore  follows 
that the  Community  must  complete  its  internal 
unification  on the  basis  of these  principles  in order 
to play  the international  role  expected  of it. 
Done  at Brussels,  27 January  1977. 
The Chairman  of  the 
Economic  and  Social  Committee 
Basil  de FERRANTI 
No C 61/20 Official  Journal  of the European  Communities 10. 3. 77 
ANNEX 
to the opinion  of the  Economic  and  Social  Committee 
Rejected  amendments 
The following  amendments,  were  rejected  during  the discussion: 
Turn  Chapter  I (Introductory  remarks),  Chapter  II (International  context),  and  Section  3 of 
Chapter  III (The  CAP's  contribution  to economic  and  social  equilibrium  in the EEC  and  to 
equilibrium  in the agro-food  sector  throughout  the world)  into  a report  or an appendix.  Start 
the opinion  proper  at Section  4 of Chapter  III. The  wording  of Section  4 et seq.  would  have 
to be changed  accordingly. 
Reasons 
The extensive  information  in the introduction  and  Chapters  I and  II is out  of place  in an 
opinion.  A long  opinion  will  not  be read  by outsiders.  The  analysis  is incomplete  and  pays 
inadequate  attention  to the major  issues:  its treatment  of the CAP  is one-sided. 
Voting: 
for: 25, 
against:  41, 
abstentions:  13. 
Item  4.4.1 
Amend  the third  sentence  of item  4.4.1  to read: 
'In line  with  the pretty  well  universally  accepted  strategy  of self-reliance  and  provision  for 
basic  needs,  it is of great  importance  that  agricultural  production  in the developing  countries 
should  be vigorously  expanded.  In view  of the  need  to provide  the poor  countries  with 
food,  food  aid will  have  to be continued  for the time  being  through  as broad  programmes 
as possible.  If necessary,  food  production  must  be expanded  in all developed  countries, 
account  being  taken  of all production,  food  and  social  problems.' 
Voting: 
for: 31, 
against:  36, 
abstentions:  11. 
Item  6.3 
Insert  the following  at the end  of item  6.3: 
'Farm  prices  have  been  generally  set too  high.  Nevertheless  they  have  not  corrected  the 
inequalities  between  the incomes  of small  farmers  and  large  farmers.' 
Voting: 
for: 33, 
against: 36, 
abstentions: 5. 
Item  6.7 
Amend  the last sentence  of item  6.7 to read 
'These  trends  should  in future  largely  determine  the adjustment  of price  policy  and  the 
various  quantitative  and  qualitative  measures  for guiding  production.  Production  targets 
must  be set under  a medium-term  plan  and  as part  of a process  in which  the  entire 
agricultural  population  should  be  involved.  Measures  to regulate  production  are 
indispensable  to the achievement  of production  targets.' 
Voting: 
for: 34, 
against:  40, 
abstentions:  5. 
10. 3. 77 Official  Journal  of the  European  Communities No C 61/21 
Item  6.8 
Delete  6.8 and  substitute  the following: 
'Accordingly,  an ad hoc  guidance  body  should  be set up at Community  level.  It should  be 
an independent  body,  analogous  to the  European  Community  Institute  for  Economic 
Analysis  and  Research,  but  more  operationally  oriented  to give  short-  and  medium-term 
guidance  to the  Commission  and  other  Community  bodies.  It should  consist  of economic 
and agricultural  experts  with  power  to consult  internationally,  e.g.  with  FAO  or the 
World  Food  Council,  and  to take  evidence  from  market  and  producer  organizations  on 
special  commodities  as required.  It should  command  all relevant  information  on production, 
markets,  demand  and  prices,  and  projections,  in order  to carry  out  its advisory  role.' 
Reasons 
The Economic  and  Social  Committee  already  exists  to represent  employers,  trade  unions  and 
other  social  interests,  and  the  Council  of Ministers  to give  overall  political  decisions.  The 
proposed  body  should,  therefore,  be a highly  objective  and  expert  group,  to present  to 
Community  organizations  an objective  analysis  of facts  and  of feasible  courses  of action. 
Voting: 
for: 32, 
against:  40, 
abstentions:  12. 
Item  7.3 
After  the words  '...  the  Commission  has to take  decisions  on its own,  working  on the basis  of 
very disparate  factors...',  delete  the rest  of the paragraph. 
Reasons 
These  'own-initiative'  decisions  simply  come  from  the  supranational  powers  that  the 
Commission  obtained  in 1962  after  heated  debates  in the Council. 
This  point  should  be read  in conjunction  with  item  7.6 where  it is stated  that  these  powers 
must  be exercised  jointly  with  a 'special  group'  made  up equally  of officials  and  appropriate 
industrial  representatives.  It is better  to try and  make  better  use  of existing  bodies  than  to 
try and  create  new  ones. 
Because  economic  interests  in the  agricultural  sector  often  conflict,  the  Commission's  role 
should  be that  of an independent  arbiter. 
Voting: 
for: 13, 
against:  16, 
abstentions:  19. 
The following  sections  of the draft  opinion  submitted  by the Rapporteur-General  were  amended 
as a result  of amendments  accepted  during  discussions: 
Item  3.5 
In addition  to the relatively  low  cost  of the  CAP  at national  and  Community  level,  we must 
not forget  that  the  movement  of food  prices  has  been  acceptable  to consumers.  Since  1972 
these  prices  have  kept  at a favourable  level. 
Voting: 
for: large  majority, 
abstentions:  23. 
No C 61/22 Official  Journal  of the  European  Communities 10. 3. 77 
Item  5.3 — third  indent 
— the  new  or increased  contribution  which  the  Community  should  be able  to make  via  the 
CAP  towards  establishing  a 'world  economic  and  food  order'  and  a world  agricultural  and 
food  policy  as part  of such  an order. 
Voting: 
for: unanimous. 
Item  6.6 
6.6. As  regards  market  structures,  i.e.  the  various  channels  by which  agricultural  produce 
reaches  the consumer,  the most  significant  feature  of the  situation  inherited  by the  Community, 
is the important  role  played  by cooperative  organizations  in collecting,  processing  and  selling 
farm  products.  The  cooperative  tradition  in agriculture  sprang  from  the  need  to offset  the 
weakness  inherent  in the  dispersion  of production  and  decision-making  centres.  The  growth, 
which  has  incidentally  been  slow,  in the  size  of farms,  does  not  in any  way  detract  from  the 
virtues  of association  or cooperation.  Cooperative  structures  frequently  play  a decisive  role  in 
the practical  operation  of market  organizations.  These  structures,  which  are  effective  farm 
income  support  instruments,  contribute  to the  development  of the  regions  with  which  they 
are linked  by their  very  nature.  The  value  of such  cooperative  structures  is evident  from  the 
contrast  with  areas  where  they  have  not  yet  been  established.  The  Community  must  therefore 
give greater  encouragement  to the  development  of such  structures  from  which  the  entire 
agro-food  economy  can  benefit. 
Voting: 
for: unanimous. 
Item  7.1 — third  indent 
— encourage  the conclusion,  where  possible,  of multiannual  outline  agreements  on the  sale  of 
farm  produce  between  agricultural  producers  and  their  trade  organizations,  on the  one 
hand,  and  the  organizations  representing  the  processing  industries,  on the  other.  This 
would  make  for  a steady  and  more  orderly  development  of trade. 
Voting: 
for: unanimous. 
Item  8.1 
No world  economic  and  food  order  can  get  off the  ground,  however,  without  rules  fixing  the 
powers,  rights  and  responsibilities  of everyone. 
Voting: 
for: unanimous. 
Item  9.2  — third  indent 
— strengthening  policy  with  respect  to marketing  structures,  with  particular  emphasis  on 
cooperatives  and  like  bodies; 
Voting: 
for: unanimous. 
The following  section  of the  draft  opinion  submitted  by the Rapporteur-General  was  withdrawn 
following  the adoption  of an amendment  during  discussion: 
10. 3. 77 Official  Journal  of the European  Communities No C 61/23 
Item  7.6 
7.6. The  relevant  economic  operators  now  clearly  want  to take  a share  of responsibility 
in the decision-making  processes  in question. 
In liaison  with  the  ad hoc  guidance  body  (see  above  6.7  and  6.8)  a special  group  for  each 
product  should  be assigned  the task  of thinking  out the trade  and  market  management  policies 
which  might  be applied  in the case  of the  product  in question.  The  groups'  task  of looking 
into the future  would  be distinct  from  that  of the product  advisory  committees  set up by the 
Commission.  The  groups  would  be small  and  would  comprise  officials  and  representatives  of 
the industry  in equal  numbers. 
Voting: 
for: 
against: 
abstentions 18, 
15, 
20.