Due to the size of the European Union’s agricultural production and its market, the impact of the EU’s Common Agricultural Policy (CAP) reaches far beyond Europe and has major implications for trade in agricultural goods all over the world including the ESA region. Since the 1950s, the CAP has undergone several reforms which have not only changed EU’s agricultural support system drastically but has also impacted global agricultural markets. For developing countries including the ESA ones, these reforms have serious implications since they are particularly locked into the EU’s complicated system of protectionist regulations and subsidies on the one hand and preferential market access on the other hand. The high degree of dependency and vulnerability of ESA agricultural industries thus created makes it well worth having a closer look at the changing patterns of the CAP and their impact on ESA agricultural markets. Moreover, the impact of the CAP reform on ESA markets is likely to be complicated by the introduction of free trade arrangement with the EU through the Economic Partnership Agreements (EPAs) which are to become effective on January 1 2008. A free trade agreement will reduce the scope for the development of local value added food product industries serving national, regional and EU markets and thus worsen ESA countries’ overall terms of trade with the EU. It is this process of trade liberalization in food and agricultural products in parallel with external effects of CAP reform which raises concerns as ESA countries strive to structurally transform their economies