Domestic agricultural subsidy policies, both in the U.S. and in the European Union, underwent modest liberal reforms early in the decade of the 1990s. Such reforms had been one key objective sought by negotiators (especially U.S. negotiators) in the 1986–93 Uruguay Round of GATT negotiations. Two-level game theory suggests that a prior agreement abroad can speed the pace of reform at home. Yet a close examination of the timing and content of the 1993 GATT agreement on agriculture indicates that the international negotiation added little to the pace or content of reform, and in the U.S. may have even slowed reform. In the EU, internal policy reform was triggered more by the binding effects of a much earlier (Dillon Round) international agreement, than by the two–level game dynamic of the Uruguay Round. U.S. and EU farm sector reform policies were little altered by the Uruguay Round, while the Round itself was slowed down by agriculture, with adverse effects for other sectors.
Working Paper 96–01, Weatherhead Center for International Affairs, Harvard University, January 30, 1996.