Last chance for better agreement between Caribbean and Europe

Huntington News (USA) | Nov. 2, 2007

COMMENTARY: Last Chance for Better Agreement Between Caribbean and Europe

By Sir Ronald Sanders

I am more privileged than over 99 percent of the people of the Caribbean Community and Common Market (CARICOM). I have seen and read a copy of the draft Economic Partnership Agreement (EPA) between the Cariforum States and the European Union (EU) which is not a secret document but has, nonetheless, not been made public.

Alarm bells about the real benefit of this EPA to Caribbean countries started ringing in my head months ago when I learned that there was deep concern by some Caribbean ministers about the development dimension in the agreement. It was clear that the EU Commissioners had a completely different view from the Caribbean ministers about the scope of the development commitment and the firmness of language to tie it down in the text. The language appeared to reflect vague promises rather than implementable pledges.

Having read the draft EPA, I can now confirm that in much of the document, the development dimension is referenced more in shadow than substance. Real and practical development measures remain, in the words of Shakespeare, “a consummation devoutly to be wished”.

The reported demands by the EU for the Caribbean to severely reduce tariffs on imported European goods, despite the crucial importance of tariffs to the government revenues of countries such as Antigua and Barbuda, St Kitts-Nevis and Grenada, were also worrying.

There also seemed to be little interest in the capacity of small companies in Caribbean states to survive against competition from European companies whose similar products would be able to enter Caribbean markets at a lower price than before. Equally, the effect on employment as a consequence of the shrinkage, if not the collapse, of such Caribbean companies appeared to be brushed aside.

The Caribbean, we were told, must learn not only to live without preferential access to the EU market, but their businesses must become competitive in their own domestic jurisdictions against larger and richer European firms.

And, all of this is to happen overnight even though European companies were given protection from external competition by their governments for decades. It was that protection that allowed them to grow and develop the international reach they now enjoy. As their products enter Caribbean markets creating dislocation and unemployment, they will increase employment in their home countries.

It appears that a huge double standard is at play here and what is sauce for the goose is not sauce for the gander.

Lest it be said that I am preaching protectionism with my head in the sand about the reality of the world’s political economy, I would remind that the fortunes of Europe’s rich were made on the plantations and other resources of Caribbean states. Those states owe a duty of development to the Caribbean that was not fulfilled by preferential access to their markets for the narrow range of products such as sugar and bananas upon which they made the Caribbean dependent.

And while I do not support governments propping up inefficient companies, at the same time I recognise that even the most efficient of Caribbean companies, except in the service industries such as banking, would be hard pressed to compete with the much larger and richer companies of Europe. It is not so much a matter of giving Caribbean companies protection as it is a matter of giving dwarfs space and time to develop sufficiently to withstand the onslaught of giants.

Note should be taken that in the service industries, such as banking and, for that matter Internet gaming, where small Caribbean countries have proved beyond doubt that, with the aid of modern technology, they have the capacity to compete successfully in the global market, industrialised countries have been in the vanguard of initiating measures to strangle them. That was precisely what the OECD’s “harmful tax competition initiative” was about, and so too were elements of the Financial Action Task Force’s (FATF) anti-money laundering criteria which, to this day, are ignored with impunity in many OECD countries while they are used to penalise developing states.

Incidentally, the FATF criteria is listed as one of the “international standards” that the EU wants the Caribbean to accept in addition to agreeing to “exchange information” in “illegal financing activity” which is not defined. This section was in square brackets in the draft EPA I saw, so at least, for now, it is not yet agreed.

In previous commentaries on the subject of the EPA negotiations, I have raised the issue that “competition” and “government procurement” have been introduced into the EPA by the EU even though these two matters were hotly resisted in the wider trade negotiations under the World Trade Organisation (WTO).

Caribbean countries were among those in the WTO who resisted any right being given to companies in industrialised countries competing with firms in developing countries for government contracts including construction. Yet, in the draft EPA that is being negotiated Caribbean countries have conceded to the EU this principle that they stoutly resisted in the WTO.

If other developing countries now accused the Caribbean of disloyalty in their concession of this vital point, they would not be without some justification. In time, Caribbean companies that have to face the offensive of large European companies might similarly feel that their interests were overlooked.

Then there is the question of additional development assistance. Reports had led me to believe that additional EU funding, while not earth shattering, would be forthcoming, but the draft EPA makes no such commitment. The absence of a commitment suggests that any additionality will only come from bilateral programmes of EU member states. Yet, a recent conversation with one EU minister indicated that such bilateral assistance, if forthcoming at all, would be miniscule.

It has been stated publicly that the Caribbean and the EU will have their “final” round of negotiations on the EPA in the first week of November.

But, there is to be a meeting between EU ministers and ministers of the African, Caribbean and Pacific group of countries in Brussels from 7 to 9 November. That meeting provides a chance - perhaps the last chance - to get the ACP countries to coalesce, and to work out a way in which these six separate negotiations in which they have been involved with the EU could be collapsed into one grand play off in which the ACP plays as a single team using its collective strength to bargain a good result from the EU.

The writer is a business consultant and former Caribbean diplomat. Responses to: ronaldsanders29@hotmail.com

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source: Huntington News