Political debate about agriculture has always been handicapped by the fact that the issues are at the same time dauntingly esoteric and highly sensitive for the interests concerned. The general reaction of most politicians outside the industry is to stifle a yawn.
But in most Western countries agriculture is one of the most important industries in terms of employment and output--more important, for instance, than steel. And questions of agricultural policy are becoming of growing importance both within the European Community and for relations between it and the United States. For political reasons, we are going to have to come to grips with these questions.
When the free world's open trading systems was set up in the late 1940s there was general agreement that agricultural trade should be left outside the system. After the U-boat battles in the Atlantic, every country recognized a basic strategic need to protect national production. All of them had farm lobbies whose demands could not be overridden. In the hungry post-war world, the Americans anticipated no difficulty in exporting their surpluses. And for many of the Europeans national self-sufficiency was a far-off dream, and they had hardly begun to think about a farm export trade.
By the mid-1950s, however, the picture was beginning to change. The recovery of French (and Dutch) agriculture on the one hand and of German industry on the other had created that balance of economic interests on which the European Community was to be built. The Common Market would remove intra-European barriers to German industrial exports, while in exchange French and Dutch farm exports within Europe would be freed by the operation of a Common Agricultural Policy (CAP) to manage the European farm policy in a single, protected, marketplace.
For the United States this deal marked a great step toward a fundamental American foreign policy goal: West European unity. Certainly, this positive political development dwarfed any economic costs in terms of the loss of American farm export opportunities in a European market that had in any case always been subject to intense protection. Moreover, there was a rapidly expanding market in Europe for American exports of farm products, such as soy, which were not available in the European Community.
So, throughout the 1950s, 1960s and 1970s, while the free world was setting its sights on increasingly open trade in manufactured goods and services, agricultural protection and subsidies survived and flourished, not only in Europe but also, be it said, in America.
However, as well as being a period of high prices, subsidies and protection on the farm, these decades have also seen dramatic science-based productivity increases in agriculture. During the 1970s, output in both the United States and Europe surged. Europe moved beyond the point of self-sufficiency to become an international food exporter, and the U.S. surplus on external trade in food and agriculture rose from $2 billion in 1965 to $26 billion in 1981. The political ramifications of these developments are profound.
First, within the European Community the cost of farm support has multiplied by a factor of three in money terms between 1973 and 1982 and export subsidies by a factor of five. The total now represents 65 percent of the European Community budget and is the source of much internal argument and friction.
Second, in terms of East-West relations, the availability of massive farm surpluses in the West seems likely to ensure that, almost whatever it gets up to, the Soviet Union will continue to be able to compensate for the perennial agricultural failures of the communist system with subsidized imports from the West. And this will happen, not in the calculated cause of East-West relations but because the United States wants to sell it surplus wheat and the European Community its butter.
Third, between the United States and Western Europe we face the prospect of increasingly bitter dispute about access to so- called "traditional" trade-country markets, of another strain on the already highly stretched fabric of free world multilateral trade, and of the further erosion of mutual good will among important constituencies on both sides of the Atlantic.
It is rarely helpful in politics to seek to apportion blame, except insofar as the knowledge of causes may help to define solutions. But two of the principal factors that underly our present difficulties are the high level of overt and covert farm subsidies both in the United States and European Community (roughly $30 billion each) and in particular the open-ended character of the European Community's system, which gives the same assured price to farmers for most of their products, be they sold for internal consumption or for export; and the absence of agreed rules for international farm trade. No lasting solution will be found that does not address these two factors.
Meanwhile, enlightened people on both sides of the Atlantic are making a big effort quite rightly to prevent this controversy from getting out of hand. But the danger, frankly, is that both sides could find the problem so intractable that it will simply be allowed to go on getting worse. That is what has happened in the past.
There are many other important issues that will need to be addressed at Williamsburg: exchange rate stabilization, the concertation of economic policies to fan the flickering flame of Western recovery. But the West's farm trade difficulties and differences cannot be conjured away. The pressures are mounting, and sooner or later our leaders will have to come to terms with them.