Trade Activity Between the EU and Its Neighbouring Countries: Trends and Potential

The objective of the paper is to examine whether trade activity intensifies over time as the outcome of signed bilateral trade agreements. Focusing on (the trade component of) the European Neighbourhood Policy, the paper conducts a study of trade activity between the EU and its neighbouring countries, attempting to offer a detailed analysis in terms of trade patterns and to investigate whether proximity is combined with higher trade flows, within the framework of a free trade agreement. The analysis utilises data derived from BACI database and covers the period from 1995 to 2011. The findings of the paper indicate that there is a lot of potential for the expansion of trade activity between the EU and its neighbouring countries.