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MFAFT gets anxious as Caricom/Canada FTA deadline nears

The Gleaner, Jamaica

MFAFT gets anxious as Caricom/Canada FTA deadline nears

By Avia Collinder

6 April 2014

The waiver which facilitates duty-free access to Canada’s market expired three months ago, but Canada is still according duty-free treatment to goods from Caricom under the Caribbean/Canada Trade Agreement, CaribCan, officials attached to the Ministry of Foreign Affairs and Foreign Trade (MFAFT) say.

As far back as 2001, Caricom and Canada started exploring the possibility of a reciprocal free-trade agreement. Jamaica’s foreign ministry said the agreement would supersede the non-reciprocal arrangement in CaribCan which has existed since 1986.

A fifth round of negotiations was held in Barbados in January, while part one of the sixth round was held in Kingston on March 3-7. Part two is being held in Ottawa, Canada and was slated to end on April 4, having started on March 31.

CaribCan facilitates duty-free access to the Canadian market for exports from the Commonwealth Caribbean through exemption under the Most Favoured Nation (MFN) non-discrimination principle of the WTO.

It differs from a free-trade agreement which would receive a permanent waiver under the General Agreements on Tariffs and Trade (GATT) - the multilateral agreement which regulates international trade.

The last waiver for CaribCan expired on December 31, with Canada previously declaring its intention not to request an extension from the WTO.

In a release issued also in the last week of March, the foreign ministry said, "there is little time remaining in which Caricom and Canada can seek to bridge the gaps in the negotiations."

It noted that if negotiations falter Caricom countries would, potentially, face the "prospect of trading with Canada on very different terms, including the possibility of having to compete in the Canadian market on WTO global terms, that is, at the Most Favoured Nation tariff level."

MFN status would involve trading under a new duty regime.

An official of Jamaica’s foreign ministry said Jamaica and other Caribbean countries stand to benefit from a reciprocal agreement which allows trading in services as well as goods, and also includes development support from Canada.

Canada itself, the official pointed out, would also get duty-free access to Caribbean markets. In past negotiations, Canada has also requested improved access to the financial services sector in the Caribbean.

Jamaica has been involved in-regional preferential trading regimes with Canada since 1925. The balance of trade is in the island’s favour (see insert).

The surplus is due mainly to exports of alumina which enters Canada duty free but outside the CaribCan arrangement, the foreign ministry said.

Major Jamaican exports to Canada are alumina, beverages (mainly alcoholic) and non-traditional food; while major imports from the North American country are food - including meat, dairy and vegetables, as well as machinery and transport equipment, and manufactured goods, according to Statin data.

For Jamaica, a new agreement would address trade in both goods services, and facilitate investment, said the foreign ministry official. An FTA, she said, would generally mean increased trade as well as investment in new areas of trade.

Actual negotiations for such an agreement started in 2009 but have lagged because of the global economic crisis. Caricom technocrats have got the go head from the regional heads of government to continue negotiations with Canada until June 2014.


Imports Exports Re-Exports Balance of Trade

2009 - 106.64 125.526.1124.99

2010 - 91.72163.491.4373.21

2011 - 117.81262.370.999 145.56

2012 - 100.95 120.37 2.21 21.63

2013- 100.72 220.38 1.39 121.06

Source: Statin