nified market in which products move freely between nations, community preference, in which EU products are always given preference, price advantage over imported products, and financial solidarity in which all expenses by the CAP are covered by the Community budget.
The CAP is largely funded by the European Agricultural Guidance and Guarantee Fund (EAGGF), which accounts for a substantial part of the Community budget. This fund is divided into two distinct sections, the Guidance section and the Guarantee section. The Guidance section is one of the structural funds, which contributes to the structural reforms in agriculture and the development of rural areas; the Guarantee section, the more integral section, funds expenditures concerning the common organization of the markets. Further financing of the CAP comes from storage levies, manufacture levies, and portions of each member state's GNP.
The CAP has had a long history of reform, and is nowhere near perfect. The first attempt at reform came just ten years after its implementation. In 1968, the Mansholt Plan was put into effect in an attempt to reduce the number of people in the agriculture business and to promote more efficient means of agricultural production. In 1972, the extensive food surpluses were targeted through the creation of structural measures designed to modernize European agriculture. This attempt at reform is generally regarded as a failure because many of the problems it tried to fix were still left unchecked. In 1983, a publication was released entitled, The Green Paper, which sought to balance the ongoing disparities between supply and demand through improvements in production. In 1988, the European Council agreed on various reform measures. The most important was the "agricultural expenditure guideline," which limited the percentage of CAP expenditure in the overall budget. In 1991-92!,the future of the CAP was addressed through what has been called, "the MacSharry Reforms." The key aspects of the reforms included the cutback of agricultural prices to make the products more competitive, compensation for farmers that incurred a loss in income, and environmental protection. "The reform of 1992 was generally regarded as successful, with positive effects on European agriculture. However, international trends, the enlargement towards Central and Eastern Europe, the preparation of the single currency causing budget constraints, the increasing competitiveness of products from non-member countries, and a new round of World Trade Organization negotiations forced further adaptation of the CAP" (europa.eu.int). In July 1997, "Agenda 2000" was created to address many of the important issues facing the EU and the CAP. The key focuses of this new agenda are the reinforcement of the competitiveness of agricultural commodities in domestic and world markets, the promotion of a fair standard of living, the creation of extra sources of income for farmers, a new rural development policy, revamped environmental considerations, better food quality and safety, and the simplification of CAP legislation.
The European Union's common agricultural policy protects and subsidizes agriculture so heavily as to bring serious social losses to the Economic Union. The policy creates inefficiencies in the agriculture sector as well as other sectors of society such as manufacturing, textiles, and service industries. Furthermore, "there have been many economic consequences of the CAP, including the high level of protection, the burdens on consumers, taxpayers, and the EU budget, environmental damage,
