Agricultural Policy and Free Trade Agreements: Stumbling Block or Adaptable to Change?

The multilateral trade system based on international cooperation and provision of global public goods through institutions like the World Trade Organization (WTO) is in crisis. Bilateral free trade agreements (FTAs) between countries or groups of countries are therefore the only options for countries who want to create new market opportunities for domestic industries. Although there is no formal competition between countries when it comes to signing new free trade agreements both prestige and economic benefits are important driving forces behind recent initiatives. One such ‘competition’ is between the European Free Trade Association (EFTA), representing Iceland, Lichtenstein, Norway, and Switzerland and the European Union, representing 27 member states. Surprisingly, EFTA is currently ‘leading’ this informal competition with ambitious agreements with both India and Mercosur (Argentina, Brazil, Paraguay and Uruguay) while the EU has been struggling to gain internal acceptance for agreements with both these actors. The interests of EU’s agricultural industries are seen as an important obstacle in this regard. The fact that agriculture is a greater barrier in the EU than in EFTA, is a puzzle, since the four EFTA members have traditionally treated agriculture as a more exceptional industry than even the EU has done (based on OECD indicators). However, the opposite may be through, since trade agreements (including in the WTO agreement) has meant reforms and changes in agricultural policies in the EU while EFTA-countries to a larger extent have shielded its industry from effects of major trade policy reforms. This paper will explore whether and how agricultural policies are influenced by recent trade negotiations and agreements. By this the paper will seek to provide some answers to the call: How can we explain elements of continuity and change? And how do experiences with previous policies (here trade agreements) feed back into current reform dynamics?