The Trade Effects of EU Integration on Developing countries: The Case of Agricultural Exports

Abstract: Agriculture and agricultural trade play a key role in developing countries’ economies, however, the EU integration process in the 90s also affects the trade in agricultural products of the EU, developing countries and the rest of the world. This paper analysis the trade effect of the EU integration process on Developing Countries’ Agricultural exports. Using changes in the source of supply model, it shows that there has been a significant increase of EU15 consumption stemming from the EU15 over the period 1990-2002 (i.e the EU15 increased its trade with themselves not with the CEECs, DCs and ROW). The trade diversion could be due to the series of CAP reforms taken during this period. The period 2002-2003, shows a tendency a trade creation with the EU15 trading more with the CEECs, DCs and the ROW. The trade creation could be because of the conquest of domestic agricultural production by foreign producer. Also, most of the integration arrangements were already concretized and CEECs had to be included in the reallocation of resources and the EU15 had developed more confidence in the institutions of the CEEC in 2003 a year to the finalization of the EU enlargement.