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EPA signing fiasco: a high-stakes gamble

Jamaica Gleaner | September 7, 2008

EPA signing fiasco: a high-stakes gamble

David Jessop

WHAT SHOULD one make of the fiasco over the date of the signing of the economic partnership agreement (EPA) with Europe? The event, meant to take place in Barbados on September 2, has been postponed and the new date hangs on a meeting there of Caribbean heads of government on September 11.

Barbados Prime Minister David Thompson has made clear that in his view, this meeting is not about renegotiating the agreement but is aimed at forging a common position on the EPA, which he feels can be made to work despite its shortcomings. Whether this latest meeting to discuss the EPA will bring to an end present divisions or result in further dissent, delay or new uncertainties still seems to be in the balance.

As matters stand, Trinidad, Jamaica, Barbados, the Dominican Republic, Belize, The Bahamas and St Vincent have said that they want to sign; St Lucia says it will not; Guyana is holding a public consultation; Grenada wants more time; and there is silence from almost all other Cariforum states.

Meanwhile, some opposition parties have publicly disassociated themselves, most notably, in Jamaica and Antigua.

All of which makes what happens next fraught with difficulty.

Trade coverage

This is because the EPA was crafted in such a way that achieving the trade coverage in percentage terms necessary for the agreement to be World Trade Organisation (WTO)-compatible requires the majority of states, and the larger ones in particular, to sign. Failure to do so (or a state like the Dominican Republic deciding to go it alone) would result in new uncertainties.

Would the EU impose on those nations that did not sign by October 31, the EU’s GSP tariff regime on products that currently enter duty free? Alternatively, if the EU failed to impose the GSP, would it be challenged at the WTO on the basis that the waiver for the trade provisions of Cotonou expired at the start of the year? How will those nations and industries within Caricom that will have duty, and quota-free access under the EPA relate to those that do not?

What happens practically if more than one trade regime exists between Europe and the countries of Caricom? How would EPA development funds flow to a region where only some had signed?

There are, it seems, no clear answers to these and many other basic questions.

Legal cover

Paradoxically, the absence of any public high-level political statement on Europe’s position is being seen in the region by those who do not want an EPA as a signal that in the final analysis, Europe will not wish to be seen disadvantaging small nations. This view is also seen as giving weight to a school of thought that suggests that having initialled the EPA as an intent to sign, this provides sufficient legal cover at the WTO for Europe and the Caribbean to renegotiate a new deal.

To make matters more complicated still, there is a widespread belief that because one of the French president’s advisers has written a report critical of the EPA, this is now French government thinking. In fact, sources suggest that the French presidency was deeply irritated by the Caribbean’s decision to postpone at very short notice the September signing date.

What all of this suggests is that in delay, the region is involved in a high-stakes gamble, with an uncertain economic outcome.

Fierce debate

In parallel, throughout August and into September, Caribbean academics, trade experts and others have been engaged in a fierce electronic debate over the rights and wrongs of the EPA.

These private exchanges reflect a wide variety of opinion, but largely boil down to whether the region is ceding its sovereignty to Europe; dissatisfaction with the development dimension; anger over the alleged lack of consultation during the negotiating process; doubts about whether the Caribbean has a large enough corporate base to ever compete; the fear that European business will ’take over the Caribbean’; and the degree of economic and commercial opportunity that the EPA presents.

At its heart, those involved in the debate either require more time for the Caribbean to complete the integration process, or believe that the moment has come for the region or individual nations to move, over a period of time, to making their own way in the world based on developing their ability to compete.

Irrespective of which side of the fence one stands, these are fundamental issues that one cannot help feeling should have been fully debated two and a half years ago when the EPA process began.

In all of this, what seems to go largely ignored is that the EPA is a part of a European strategic objective aimed at levelling its special trade relationships, irrespective of the accompanying honeyed language of development.

The reality is that even if the EPA did not exist, all preferential arrangements the Caribbean has with Europe are fast eroding as is the EU’s long-term interest in the region.

Very soon, the trade aspects of the association agreements now under negotiation with Latin nations will enable Central American, Mercosur and Andean nations to compete directly with the Caribbean. In return, Europe will have levels of access to its markets similar to those envisaged by the EPA.

At the same time, the other liberalisation processes involving the region and especially those at the WTO, will require other nations and eventually all nations being given similar or greater levels of trade access to that being considered for Europe.

If the Caribbean cannot respond by rapidly making regional integration work in order to both resist and take advantage of all market openings, the future would seem to lie between states either seeking new forms of economic dependence on wealthy energy-rich neighbours, or seeking stand-alone economic independence within a globally competitive environment.

As regular readers of this column will know, I believe that Europe has precipitated much of the EPA-related crisis by forcing artificial relationships on a regional process that is far from even or mature; by failing to understand that the Caribbean’s desire to retain national sovereignty has a deep moral and psychological dimension running from slavery through emancipation to independence and beyond; and that factionalism, for want of a better word to describe a peculiarly Caribbean version of nationalism, is endemic.

But in all of this, the Caribbean has been its own worst enemy for decades by not finding answers as to why it is so hard to implement the measures that might make the dream of a fully functioning integrated region a reality.

David Jessop is the Director of the Caribbean Council. Email: [email protected]

 source: Jamaica Gleaner