The EU Budget Battle: Assessing the Trade and Welfare Impacts of CAP Budgetary Reform
Boulanger, P. and Philippidis, G. (2015) The EU Budget Battle: Assessing the Trade and Welfare Impacts of CAP Budgetary Reform, Food Policy, 51, pp119-130.
There is a paucity of quantitative impact assessments of the sectorial and macroeconomic impacts of CAP
budget reform for EU member states. To fill this gap, the current study employs a sophisticated agricultural
variant of the GTAP model to evaluate the recently agreed CAP spending limits for the financial period
2014–2020 as well as a more radical 50% cut to the CAP budget proposed by the UK government. The
study incorporates methodological innovation in terms of the modelling of CAP budgetary mechanisms.
Furthermore, official EU auditing statistics are employed to (i) greatly improve the existing representation
of agricultural support payments in the GTAP benchmark data and (ii) implement a detailed contemporary
CAP baseline for member states to capture both the decoupled/coupled split of support payments
and the distribution of support across both ‘pillars’.
In general, CAP expenditure cuts have muted impacts on EU and world agricultural markets; whereas
changes in net transfer payments have implications for real income and macro trade balances in EU
member states. This observation is particularly pertinent when assessing conciliatory reductions in the
UK rebate in exchange for deeper CAP budget cuts.
There is a paucity of quantitative impact assessments of the sectorial and macroeconomic impacts of CAP
budget reform for EU member states. To fill this gap, the current study employs a sophisticated agricultural
variant of the GTAP model to evaluate the recently agreed CAP spending limits for the financial period
2014–2020 as well as a more radical 50% cut to the CAP budget proposed by the UK government. The
study incorporates methodological innovation in terms of the modelling of CAP budgetary mechanisms.
Furthermore, official EU auditing statistics are employed to (i) greatly improve the existing representation
of agricultural support payments in the GTAP benchmark data and (ii) implement a detailed contemporary
CAP baseline for member states to capture both the decoupled/coupled split of support payments
and the distribution of support across both ‘pillars’.
In general, CAP expenditure cuts have muted impacts on EU and world agricultural markets; whereas
changes in net transfer payments have implications for real income and macro trade balances in EU
member states. This observation is particularly pertinent when assessing conciliatory reductions in the
UK rebate in exchange for deeper CAP budget cuts.