Since 1992, reform of the EU’s Common Agricultural Policy has involved several rounds that have gradually changed the method of support from market based intervention purchases to direct producer payments. The change in the method support provides less production incentives and is less trade distorting. The Single Farm Payment (SFP) is the latest policy instrument which is the most decoupled from production decisions. This study examines the SFP in terms of its production effects, its compliance with the Annex 2 of the WTO Agreement on Agriculture, and the implications for Canadian agricultural policy reform.