The view from Europe: Central America, Europe and the Caribbean

Dominican Today - Opinion - 14 October 2011

The View from Europe: Central America, Europe and the Caribbean

By David Jessop

Sometime early next year the association agreement reached in May between Central America and Europe will come into force. It will open quickly the EU market to agricultural products and manufactured items from Panama, Honduras, Guatemala, El Salvador, Nicaragua and Costa Rica. In many cases access will be for products for which the Caribbean has had long term preferential access.

Read what the European Commissioner for Trade, Karel de Gucht, said in June in Costa Rica and the message is clear: “I am drawn to your region by your creativity and dynamism. I have followed with interest how your economies and exports have rebounded after the global crisis. It is clear that you have not wavered in your determination to open up your economies and undertake the reforms needed. When Europeans think of Central America, the image that comes to mind is often that of vibrant markets: with ripe bananas, high quality rum, tropical fruits, and the smell of roasted coffee beans”.

In the region little has been said about this or how Central America and eventually almost all of Latin America will in a matter of years be competing directly in Europe.

What is apparent, talking to Central American Government and private sector interests, is that they are preparing to rapidly take the maximum advantage of the opportunity that the new arrangement will offer for trade, investment and development and there are many in Europe who will be excited to help interests that are responsive.

Even though the agreement still has to complete its ratification process, regional and national promotional events for Central America are about to take place in European capitals aimed at creating awareness of the opportunities for investment, trade and tourism.

This contrasts markedly with the slow pace of implementation of the Economic Partnership Agreement (EPA) that Cariforum states agreed with Europe in 2007, the apparent disinterest in some parts of the region in what is a legally binding agreement, and the virtual invisibility of much of the region in continental Europe in making known what the Caribbean has to offer.

While there were good reasons to have reservations about the EPA’s appropriateness for a region unable to make the Caribbean Single Market and Economy a reality, and where, to put it politely, creating greater economic equity between small and larger states has remained elusive, it now seems as if much of the region has disconnected.

There are of course exceptions. Some countries have fully engaged with the EPA (Jamaica, Trinidad, the Dominican Republic and to some extent Barbados) as have larger companies and national and regional private sector organisations in these nation. But most have yet to understand the challenge posed by bi-regional trade liberalisation or how rapidly what the region had with Europe is ebbing away.

The fact is that Caribbean Heads of Government signed the EPA, a Treaty, and while there are many good people in regional institutions and Governments who have been and are trying hard to deliver what has been agreed, many more are not.

Few would deny that the global economic recession, its negative economic impact and the consequent IMF programmes has made EPA delivery more difficult, but the region has lost time.

The Central American Association Agreement with Europe will be followed rapidly by similar arrangements with Andean nations and eventually one with Mercosur, a grouping able to out-compete the Caribbean in almost every respect. Europe’s Common Agricultural Policy is about to undergo further reform, probably bringing to an eventual end any special ACP arrangements for sugar, a European Free Trade Agreement is being negotiated with India, and Europe has given those countries that have concluded an EPA but not taken the necessary steps to ratify and implement it no longer than January 1, 2014 to do so after which date they will be denied EPA market access.

All of this is happening when, as has so often been pointed out, the EU’s interest in the ACP is fading, arguments about history and special relationships with the Caribbean no longer have any utility and the Caribbean is gradually being sidelined by EU states with which it enjoyed a previously close or special relationship.

Clearly it is the Caribbean’s choice as to how it wishes to integrate or position itself economically, who its future economic and political partners may be and how it determines its future, but in Europe and in North America there is a sense that the region no longer has a narrative, is not moving at the pace of the rest of the world and security apart, has ceased to matter; so much so that their emphasis is now on relating to those nations and institutions that are best able to implement and respond.

As Sir Shridath Ramphal suggested in his G Arthur Brown Memorial lecture in July of this year in the context of regionalism, this is not the moment to slow down the pace as some Caricom Heads have suggested. Rather it is as the UWI’s Institute of International Relations suggested in a study on Caribbean Regional Integration: ‘failure to act immediately, decisively and coherently at the regional level could quite conceivably herald the effective decline of Caribbean society as a ‘perfect storm’ of problems gathers on the horizon’.

What seems to be little understood is the practical impact of what is happening.

The association agreement with Central America although covering political, economic, development and trade issues is also a bi-regional free trade agreement. It reflects Central American governments desire to obtain permanent preferential access to the European market for Central American products in return for offering substantial access for European products to the Central American market. Unlike the EPA, the agreement covers virtually all trade and involves the immediate removal of 91 per cent of tariff lines. It will before long see sugar bananas, rum, coffee, prawns, pineapple, melons and textiles, to say nothing of manufactured goods entering the EU market.

Common sense alone would suggest that this is not a matter to continue to complain about but an opportunity for companies and governments to seek new strategic relationships with Central America, utilise the Dominican Republic and Belize’s special ties, encourage air and shipping links, establish investments and joint ventures, and to deepen personal, political and economic relationships.

There are important steps being taken to embrace Central America by some Caribbean institutions, the OAS, the ACS and some Governments and companies, but so far not at a pace or with the drive that matches the challenge. It is time to act.

David Jessop is the Director of the Caribbean Council and can be contacted at [email protected]

Previous columns can be found at www.caribbean-council.org

source: Dominican Today