Introduction

From its inception in the 1960s through to the early 1990s, the European Union's common agricultural policy (CAP) was little changed. The archetypal CAP tried to raise farm incomes through market price support mechanisms – involving variable import levies, intervention buying, export subsidies, etc. – as described in Harris, Swinbank and Wilkinson (1983). Structural policy was barely developed: in 1988 it amounted to only 5.1 per cent of budgeted spend on market price support, for example (Commission, 1989: T/83). For most Member States the purpose of ‘structural policy’ was to aid the modernisation of European agriculture, or to provide additional support in marginal areas. Paying farmers to produce (or manage) countryside was a relatively novel idea when in 1985 – largely on UK urging – Member States were authorised to grant EU subsidies to farmers in environmentally sensitive areas ‘in order to contribute towards the introduction or continued use of agricultural practices compatible with the requirements of conserving the natural habitat and ensuring an adequate income for farmers’ (Potter, 1998: 84, directly quoting the EU regulation).

Two decades later, the CAP is rather different. In the context of this chapter, exploring the EU's use of the WTO's green box, there have been two changes. First, there has been a significant decoupling of the support designed to sustain farm incomes and, second, there has been an attempt to switch support from agriculture to the wider rural economy and to protection and enhancement of the environment (from the so-called Pillar 1 to Pillar 2, to use the EU's jargon).