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Please find below the corrected version of the Week in Europe. 
Amanda




The Week in Europe

By David Jessop

 

On September 28th in St Lucia the third, detailed and near to final phase of negotiations for an Economic Partnership Agreement (EPA) between Europe and the Caribbean was launched. The objective is to create by January 1, 2008 a development-oriented new trade relationship between Europe and the Caribbean. 

 

In the first two phases much of the focus has been on trying to ensure that an EPA is much more than a trade agreement. The Caribbean has argued that any new arrangement must be developmental, provide the necessary support for adjustment, facilitate regional integration, involve the building of a regional market and require only the level of market liberalisation appropriate to present levels of development.

 

Although there has been convergence between European Commission (EC) and Caribbean negotiators on some of these issues during the second phase there remains broader political disquiet about the implications and costs of an EPA. 

 

Speaking about this in the Ministerial component of the St Lucia meeting, Barbados’ Foreign Minister, Dame Billie Miller, who is also the region’s ministerial spokesperson on EPAs, characterised the second phase as being only a qualified success. She noted the region’s concern about the pace and scope of the adjustment process. There was, she said “increasing apprehension as Governments contemplate the burden of financing economic restructuring and export diversification, while adjusting to the fiscal fallout from reduced tariffs” 

 

Fundamentalist free trade policies limited the development options open to small economies, she noted in a foretaste of language to come when trade Ministers meet at the World Trade Organisation (WTO) Ministerial in Hong Kong in December. Small nations suffering from capacity constraints would not, she said, be able to make full use of market access. The reduction of preferential market access to developing counties had far reaching and devastating consequences for Caribbean societies.

 

The EC’s Trade Commissioner, Peter Mandelson, spoke for Europe, but notably the Development Commissioner, Louis Michel, was absent. Caribbean participants characterised some parts of the Ministerial exchanges with the Commissioner as difficult, noting that the EC seemed more concerned about single issues and presentation than understanding the problems facing the region. EC anxiety about avoiding any public encounter with civil society was also observed. In contrast there were positive exchanges with private sector representatives.

 

The second component of the meeting involved principal trade negotiators.  At the meeting both the Caribbean and EC sides took stock of progress and began to prepare for the third and most difficult phase of the EPA negotiations. 

 

In this phase agreement will have to be reached on the nature of the Caribbean economic space and a mechanism that enables special provisions to be made for the different economic groups and customs relationships that exist within the region. Consensus will also have to be achieved on the scope and amount of the trade in goods and services between both parties that an EPA will cover. In this phase, there will also have to be a line-by-line negotiation on tariff reductions as well as agreement on the scheduling and sequencing of reciprocity, sensitive products, the length of transitional period, and the creation of asymmetrical safeguards. In phase three it is also expected that there will be a discussion on whether sugar and bananas should be within the scope of an EPA.

 

While none of these issues will be easy to resolve, the most immediate question is the nature of the Caribbean economic space that Europe is trying to dock with. This is potentially the single most contentious issue that negotiators now have address as it touches as much on inter-regional relations as it does a future trade relationship with Europe. 

 

In effect there are for trade purposes at least six Caribbean’s with which Europe is seeking to have a single trade agreement with. Best prepared for an EPA in this respect are the more developed members of Caricom – Trinidad, Barbados and Jamaica – that have completed their obligations to the Caribbean Single Market and Economy.  But paradoxically also within this ‘more developed’ group are Guyana, acknowledged internationally to be a heavily indebted poor country and Suriname. 

 

Far less ready still and requiring special and additional trade measures both within the region and externally, are the less developed nations of the Organisation of Eastern Caribbean States. Theses nations arguably comprise a separate unit in as much as they have a single Central Bank, currency, a single sub-regional institution and a unified judiciary. Also in this less developed group but apart in almost all other respects is Belize. 

 

In yet another category is the Dominican Republic, a large and more developed economy with a free trade agreement with Caricom that has yet to be fully implemented and differs in scope from the single market arrangements that exist between the members of Caricom. 

 

This mix is made more complex by the involvement of Haiti as a Caricom member while being one of the United Nations least developed countries and as such having special derogations, but because of its severe internal problems having for all practical purposes a relationship with Caricom that is ill-defined and lacks continuity. 

 

And finally also to be included in any EPA are the Bahamas which is not in the CSME but a member of Caricom and Montserrat that is a Caricom member, but a British Overseas territory. Both have to be placed within the scope of the agreement.

 

Caribbean negotiators solution is to argue that what will be required is variable geometry that recognises that the integration process requires differentiation because of the varying pace and depth of the regional integration process. 

 

For its part, the European Commission is concerned about this concept. They want to have an EPA with a Caribbean customs union that embraces the entire region. They argue that a single trade regime for the entire region would promote regional integration. If variable geometry fragmented Caribbean markets there was a danger that regional development would be stymied. The EC also pointed to its own experience but so far has said little about possible sources for a substantial regional fund of the kind that had enabled its own integration process. 

 

In response Caribbean negotiators indicated in St Lucia that there was no political mandate for a single customs union. All that could be hoped for was a single economic space within which free movement of goods and services were governed by prevailing and still adapting customs interrelationships. 

 

Agreement was however reached on four detailed negotiating groups plus sub groups to deal with agricultural and non agricultural goods; services and investment; trade related issues; and legal and institutional issues.

 

Little is now expected to happen until January or February of next year as both sides have agreed that it will be necessary to see the shape of any agreement that might be reached on multilateral trade liberalisation at the Hong Kong WTO Ministerial in December. However, all parties are acutely aware that they have just eighteen months in which to complete the process of negotiating of a Caribbean EPA with Europe. 

 

David Jessop is the Director of the Caribbean Council and can be contacted at [log in to unmask]

October7th, 2005

 

 



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