ABSTRACT
In 1995 the European Union (EU) launched a new political and economic partnership with its Mediterranean neighbours based on a three point programme of (i) policy and security, (ii) economy and finance, (iii) social, cultural and human affairs.1 In particular, the establishment of a free trade area (FTA) in 2010, gradually to encompass all sectors, has given rise to a lively debate among academics and policy makers about the impact that the liberalisation process can have on the economies of both shores.2 Many claim that both groups of countries, the EU and the Mediterranean countries that signed the agreement, will face difficulties in adapting to the new regime.3 Specifically, it has been pointed out that on the EU side, the agricultural sector will suffer most from liberalisation because of the comparative advantages enjoyed by the Mediterranean Partner countries (MPCs). On the MPCs’ side, the free entry of European industrial products in the MPCs’ markets will undermine the fragile but balanced manufacturing sector of MPCs.
