IPS | 17 August 2005
Trade Winds Gusting as Region Faces WTO Meet
Dionne Jackson Miller
KINGSTON, Aug 17 (IPS) - Recent developments in international trade highlight the difficulties facing the 15-member Caribbean Community (Caricom) as it prepares for a key World Trade Organisation (WTO) ministerial meeting in Hong Kong this December.
The continued floundering of the Free Trade Area of the Americas (FTAA), coupled with the United States’ recent passage of the Central American Free Trade Agreement (CAFTA) and ongoing concerns about the European Union’s banana and sugar pricing regimes are some of the major challenges facing this grouping of small developing countries.
The FTAA would unite the economies of the Americas (except Cuba) into a single free trade area, while CAFTA lifts barriers between the United States and Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua and the Dominican Republic.
Negotiations on the FTAA were supposed to have been completed by Jan. 1 this year, but disputes over intellectual property rights and farm subsidies, combined with vehement opposition from civil society groups throughout the hemisphere, have stalled consensus.
The contentious issue of subsidies by developed countries is likely to be high on the agenda at the Hong Kong meeting, as well.
"In Hong Kong, what we need to do is to press for defensive and offensive objectives," said Richard Bernal, the head of Caricom’s Regional Negotiating Machinery. "On the defensive end, we want to keep the preferences as long as possible and get special and differential treatment."
"On the offensive side, we want to be sure that the goods and services we can produce competitively now and in the future, that we secure the best possible terms and conditions for those."
Bernal acknowledged the pessimism many feel about the upcoming WTO meeting, but believes there is room for hope.
"Remember that each round of trade liberalisation gets more difficult because you have done the easier things before, and you are now into areas which are very sensitive or very complex," he said.
"You shouldn’t be discouraged by the fact that this is taking longer than was anticipated when the Doha developmental agenda was decided on. These things take a while — for example, the last round of negotiations went for nearly 10 years but it produced a useful result, so while the outlook for the Hong Kong ministerial is not very encouraging, we shouldn’t lose confidence in the process," he said.
"It simply means that it will go on longer than we expected, but it is better to take the extra time to ensure that we get a good agreement, rather than get any agreement by a particular date."
In the meantime, Caricom is continuing to lobby for favourable treatment for its exports to the EU, and charting the best way to proceed in the absence of progress on the FTAA.
This need for simultaneous engagement in critical negotiations has always been a challenge for the resource-strapped countries of Caricom. It is compounded by the fact that many believe the FTAA is now dead in the water, increasing the focus on negotiating new bilateral deals.
Regional trade consultant Rosalea Hamilton says it is important to determine the extent to which United States trade agreements such as CAFTA will create special conditions of market access that exclude Caricom countries.
"The question for all countries that are not part of these special arrangements, including Caricom, is whether those special terms will negatively impact our trade relations with the U.S.," she said, noting the "the experience of NAFTA with respect to textile and clothing is a case in point".
NAFTA, the predecessor to deals like CAFTA and the FTAA, groups Canada, the United States and Mexico.
"We saw very actively the flight of a lot of (manufacturing) activity into Mexico because of that arrangement, so it begs those questions," she told Radio Jamaica.
Bernal says that while the new CAFTA agreement will not in itself place Caricom at a significant disadvantage, the controversy surrounding the agreement in the U.S. Congress was cause for concern.
"The agreement passed by just two votes — if an agreement that involves such a minute share of U.S. trade had such a difficult passage, what would be the prospects of an agreement that involves a substantial amount of U.S. trade, such as the Free Trade Area of the Americas, if and when those negotiations are completed, or the WTO Doha development agenda ?" he asked.
Caricom is already involved in several bilateral agreements with countries like Colombia, Venezuela, Costa Rica, the Dominican Republic and Cuba, and is preparing for negotiations for an enhanced bilateral agreement with Canada, and the South American trade bloc Mercosur, he notes.
Although the possibility of a bilateral agreement between Caricom and the United States is being mooted now in the region, there has been no decision at the level of the heads of government in the Caribbean.
Bilateral arrangements have advantages and disadvantages that wider, multilateral agreements like the FTAA do not have, says University of the West Indies lecturer Patsy Lewis.
"Bilateral arrangements tend to zero in on areas of specific interest to the people negotiating, so if the U.S. is interested in getting access to a particular sector of the economy, they’re in a stronger position to do so," Lewis told IPS.
"On the positive side, they may be more willing to offer you concessions on a bilateral level than they’re willing to do on a multilateral level or a broader regional level," she added.
Whatever course of action is taken, it is important that a decisions be taken soon, says Rosalea Hamilton.
"At the last Caricom heads of government meeting, the heads decided that we ought to study having a bilateral arrangement with the U.S., so already the question is ’what would such a bilateral arrangement look like ?’. Part of my concern, my anxiety, is that we’re moving much too slow," she said.
"It’s not clear whether we are truly ready as a region, (or) as individual countries to take on this challenge, and my fear is if we don’t wake up very quickly we’re going to be overwhelmed," Hamilton warned.