Caribbean Net News | July 10, 2008

Commentary: Stop the EU taking the Caribbean for a ride

By Sir Ronald Sanders

It has become patently evident that the European Union (EU) is taking the Caribbean for a ride over the Economic Partnership Agreement (EPA) initialled last December.

The Caribbean has to stop the ride and renegotiate the deeply troubling aspects of the EPA before any signing takes place.

There was a moment after the initialling of the EPA by Cariforum countries when I thought all was lost, and I urged the establishment of a Caribbean-wide task force to study the agreement carefully and to implement it in the region’s best interest. But, recent events indicate that the game is not over, and Cariforum countries have an opportunity to get a better agreement.

The French President Nicolas Sarkozy became EU President for six months starting July 1st. He commissioned a report on the EPA negotiations by Christiane Taubira, a member of the French national assembly who gave her name to 2001 law in France that recognises the slave trade and slavery as a crime against humanity.

Her report is a devastating indictment of the “tactics - pressure, paternalism and threats - employed by the (European) Commission to impose its point of view and interests”. Even some of the supporters of the EPA have admitted that Cariforum countries had “a gun at their heads”. Cutting aid and increasing taxes on exports through the application of a GSP were the ultimate threats that tipped the balance.

The smaller Caribbean countries - the members of the OECS - should be especially mindful of her criticisms of the EU over scrapping most of the taxes they levy on imports from Europe. She argues that in countries that depend on these revenues, their “national institutions” could be rendered “powerless”.

As for the “development” component of the EPA, Taubira says that the entire “basis for the negotiations should be re-thought so that there is a greater emphasis on social and economic development”. Senior Caribbean economists have been arguing for months that there are no legally binding protocols in support of the development of production sectors.

Consonant with the views of persons, including me, who have been involved in global trade negotiations at the World Trade Organisation (WTO), she urges the removal from the EPA agenda of the issues of “investment, competition policy and public procurement”. These are issues that remain controversial in the WTO and are not settled. Yet, the EU imposed them on Cariforum countries in the EPA. Their implementation, outside of a global framework in which special consideration is given to small, developing countries, will be a disaster for local companies and could lead to a re-colonisation of Caribbean economies.

Taubira also argues that the EU should “recognise the right of poor countries to feed themselves by allowing them to exclude agricultural goods from trade liberalisation”. Already, Caribbean farmers are being put out of business by the subsidies to farmers in the US and EU some of whose products are, therefore, cheaper than the produce of Caribbean farmers who have to import high-cost inputs for agriculture. The result is less food production and less food security in the area as whole.

The second recent development of significance is a statement made about the EPA in Ghana this week by the Nobel Economic laureate and former World Bank top economist, Joseph Stiglitz.

Stiglitz urged caution and told the Ghanaian government to “take a cold hard look” at the EPA and negotiate away its inimical aspects. He said: “EPAs do not give sufficient opportunities for the businesses in LDCs to develop levels where they can compete favourably with their counterparts in the EU and that is critical to the development of a country like Ghana”.

In talking about LDC’s, Stiglitz’s reference was to countries that are less developed than those of the EU which has a $12 trillion economy, 88 times larger that all Cariforum states. This is a particularly important observation in the context of those who have been arguing that Caribbean companies somehow have some competitive advantage in Europe in the area of services. Not even the largest Caribbean country has the size and resources of a medium size European competitor.

There are 39,000 EU trans-national companies; in Caricom there are ten Pan-Caribbean firms of any significance. The idea that Europe will be open under the EPA for Caribbean business is misleading. Open yes, but there are individual national obstacles to getting through the door, and once through the door, there are further impediments to doing business even if companies could raise the necessary funding to be competitive.

The market access in services granted by the EU in the EPA is worthless not only by the certification requirements but also because the EU has no authority to negotiate what is called Mode 4 - visa approval; this is left exclusively to individual EU states. Therefore, no Caribbean country - not even Barbados, Jamaica and the Bahamas would benefit from the EPA reference.

In the meantime, even small European companies could wipe out small Caribbean companies in their own markets.

Cariforum countries have to bear in mind that each of them will be an individual signatory with the EU to the EPA. In other words, while the EPA negotiations were conducted between a joint Cariforum group of negotiators and the European Commission, the EPA, once signed, is an agreement between the EU as a group and each Caribbean country individually. Any infractions of the EPA, after its signing, will force each small Caribbean country to take on the might of the EU on its own. The EU would roll over them like a juggernaut.

The delay in the signing of the EPA, occasioned by Guyana President Bharat Jagdeo’s reluctance to do so until he has had full stakeholder consultations, presents a golden opportunity to follow the advice given by Stiglitz to Africa: “Ensure an agreement that would favour local businessmen and the country’s economic development”.

All Caribbean countries should now stop the ride on which the EU is taking them.

Sir Ronald Sanders is a business
executive and former Caribbean
diplomat who publishes widely
on small states in the global
community. Reponses to:
ronaldsanders29@hotmail.com