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Agriculture, Manufacturing and the terms of trade effect of European Integration 1

Published online by Cambridge University Press:  17 August 2016

Howard C. Petith
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Extract

The purpose of the present paper is to argue that terms of trade changes may have been one of the major causes of the disparate nature of agricultural and industrial integration in Western Europe. During the construction of Benelux, EFTA and the EEC, the integration of trade in manufactures was favourably greeted by all interested parties and the mutual lowering of tariffs proceeded smoothly and generally ahead of schedule. In striking contrast to this, the integration of agriculture was blocked in two projects out of three by the determined opposition of the farmers of the high tariff countries and only was accomplished by the EEC at the risk of destroying the entire customs union. The model presented here opposes the differentiated product character of manufactured goods to the standardized nature of most agricultural products. It shows that this distinction leads to the presumption that the integration of manufacturing will be mutually beneficial and that the integration of agriculture will be detrimental to the farmers of the high tariff country, a pattern which is in close harmony with the observed events.

Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 42 , Issue 2 , June 1976 , pp. 119 - 133
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1976 

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Footnotes

1

This paper was begun while the author was a visitor at the Universite Catholique de Louvain and finished while he was a visitor at the Institute for International Economic Studies, Stockholm. He would like to thank both institutions for financial support and the referees for helpful comments.

References

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