ABSTRACT
This chapter discusses the role of the policy in the Community. A policy of high prices and rigorous protection from Third country competition enabled the Community at once to ease the burden of high-cost producers in Germany and to ensure substantial balance-of-payments benefits to France. The Community was founded on the principle of a pooling of sovereignty in economic affairs. Perhaps the most serious challenge to the Common Agricultural Policy arises from the changed European economic environment since the oil crisis and the commodity boom of the mid-1970s. Technical progress has condemned a Community saddled with so inflexible a price policy to growing problems of surplus. The expansion of butter production may seem a means of exploiting the natural advantages of Ireland and the West of the UK at common prices; for the Community it spells growing financial burdens in relation to dairy policy.
