A Comparative Study of EU and US Trade Policies for Developing Countries: The Case of Agri-Food Products

Trade relations between developed and developing countries are one of the hot topics of the ongoing World Trade Organization (WTO) negotiations. The conclusion of the Cotonou Agreement between EU and African, Caribbean and Pacific countries, the introduction of the EU’s Everything But Arms initiative for the least developed countries and the United States’ African Growth and Opportunity Act for 39 African Countries, represents tangible incentives for many developing countries to continue their efforts to open their economies and build free markets. This paper analyzes the trade creating effects of EU and US trade policies as total effect, for agri-food products of developing countries in a gravity model framework. Data refer to a 10 year period: 1996-2005. The findings show larger trade creating effects of EU trade policies, especially for upper-middle income countries. Variation in trade creation, across the years, is not statistically significant, except for the low-income countries