July deadline for Carib/Europe economic negotiations

Jamaica Gleaner | February 18, 2007

July deadline for Carib/Europe economic negotiations

David Jessop

Setting deadlines makes sense. It is good practice. It sharpens the mind, providing a target against which delivery can be measured. It encourages creative solutions.

Over the last 10 days, first trade ministers and then Caribbean heads of government have had the opportunity to debate first in Jamaica and then in St. Vincent how best to address some of the inter-regional problems that face the Caribbean in its negotiations with Europe for an economic partnership agreement (EPA).

Towards the end of 2006, it had become apparent that a number of fundamental issues central to reaching agreement with Europe remained unresolved, including the geometry of the region (the nations to be included in an EPA); the nature of the tariff reduction commitments that would have to be made; the position of sugar and bananas in an EPA, and, the negotiating deadline. This in turn had led to exchanges between ministers about issues as fundamental as the institutional structure for the negotiations and the extent to which the negotiations were responding to the political will of the region.

Move forward

What is now apparent - although hard for anyone to judge from the opaque section on EPAs in the communiqué issued after last week’s CARICOM heads of government meeting in St. Vincent - is that the region has agreed to move forward largely on the basis of the existing positions developed by the Caribbean Regional Negotiating Mechanism under the continuing authority of Barbados’ Minister of Foreign Affairs, Dame Billie Miller, the CARICOM minister who coordinates politically the region’s external trade negotiations.

In confirmation of this, Caribbean heads of government have decided that every effort should be made to comply with the agreed schedule "as long as the Region’s interests were fully addressed". They also noted that when considering the matter of tariff liberalisation in the negotiations, "ministers responsible for trade and finance, respectively, would collaborate closely, particularly in relation to the revenue implications." The meeting also reaffirmed that ’inclusion of appropriate development components in an EPA was critical to a successful conclusion of the negotiations with the European Union."

What this means is that the existing timetable for completion of the negotiations by the end of 2007 remains. Sources suggest that in reaching this decision, ministers were mindful of the need to retain the region’s credibility despite the huge logistical challenge the timetable will impose on the region’s still far from mature integration process.

More prosaically, this means that all unresolved aspects of the negotiations have to be completed at least in outline by the end of July 2007 if the final political compromises and legal requirements necessary to achieve a text for approval by the World Trade Organisation are to be in place by the end of December. In terms of detail, this means agreement on national tariff reduction schedules in the region; establishing a form of variable geometry that legally incorporates the economic particularities of the Dominican Republic, The Bahamas, Haiti and the states of the Eastern Caribbean; resolving the question of whether and how new arrangements for sugar and bananas will be incorporated into an EPA; and, achieving a consensus on services liberalisation.

Commenting on the outcome of the discussions in Jamaica, a senior regional trade official privately confirmed that the region would complete the negotiation on the basis of its existing positions, through agreed institutional arrangements.

While recognising the negotiating challenge of incorporating into a final agreement market access schedules on a country by country basis, the bigger challenge was, he noted, to achieve greater realism about the coverage an EPA.

Little local industry

As there was little local industry to protect, Governments have to realise, he said, that tariff schedules that exclude 50 per cent or more of a nation’s trade is as unrealistic as the granting of permanent special and differential treatment. In this, the most hopeful sign was, he observed, the acceleration by some nations of the implementation of value-added tax regimes. This would begin to remove the fiscal pressure from those governments that continue to rely on revenue from import duties.

He also welcomed the decision to maintain the momentum of the negotiations despite its punishing timetable and stressed the vital importance of ministers, ambassadors, and officials, especially those from the region’s less developed nations, attending and participating fully in all relevant meetings if agreement is to be reached by the agreed deadlines and inter-regional unity is to be maintained.

On sugar, he noted that there is agreement on the way CARICOM sugar producers wish to move forward. This includes space for the Dominican Republic to have its own additional quota.

What all of this means is that there is regional political agreement, albeit fragile, on a strategy that links negotiations with the completion of the CARICOM Single Market and Economy. This does not mean that the Caribbean’s negotiating position will be easy to execute, but it does send a clear signal to Brussels and Europe’s member states that it is now up to the European Commission to show realism and flexibility.

Central to this will be Europe recognising that it is not its role to force the pace of regional integration.

Late last year, a senior Caribbean minister circulated a letter to ministers and officials involved in the trade negotiations. In it the minister noted that variable geometry is a central plank in Cariforum’s position. This was "in contrast to the EC position" which "sought to force a deeper economic integration on the region." I do not believe, the minister noted, that the EC understands our configuration: "it does not wish to accept it."

These are views that Europe does not seem to want to understand, but which now have the full endorsement of Caribbean heads of government.

What happens next, therefore, has much to do with the European Commission’s willingness to recognise that the best outcome for the Caribbean would be a negotiation guided by how an EPA can facilitate Caribbean integration over the 25 years that the agreement is expected to last.

Put rather more bluntly, this means that the present mindset in some parts of the EC that sees the EPA as just another trade negotiation should cease, and the political and economic reality of the Caribbean be recognised.

Speaking about this to a number of Caribbean ministers, it is clear that while the negotiating deadline will be observed, they continue to reserve their final judgment. If what is on offer from Europe is not acceptable to CARICOM or their governments then, they say, there is unlikely to be any EPA with Europe.

David Jessop is the Director of the Caribbean Council and can be contacted at david. jessop@caribbean-council.org

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source: Jamaica Gleaner