Bridges Weekly Trade News Digest • Volume 12 • Number 30 • 18th September 2008

13 Caribbean Nations Set to Sign EPA with EU in October

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A group of Caribbean states agreed last week to sign an Economic Partnership Agreement (EPA) with the EU by the end of October. The new deadline represents yet another delay to the conclusion of the agreement, which trade officials originally hoped to finalise in June. An early September deadline has also been missed.

The agreement, one of a series of EPAs that Brussels hopes to negotiate with groups of former European colonies, is meant to serve as a continuation of the Cotonou Agreement, a nonreciprocal scheme under which the EU provided duty-free access to most exports from African, Caribbean, and Pacific countries. That agreement expired at the end of last year.

In a statement released on 11 September, the Caribbean Community (CARICOM) Secretariat clarified that, although the date to ink the trade deal can only be finalised after further discussions with the EU, the agreement should be concluded in time to ensure provisional application of the EPA by the end of October.

The deal between the 15-member Caribbean Forum of African Caribbean and Pacific States (CARIFORUM) and the EU was the focus of two high-level meetings in Barbados last week that were billed as ‘consensus building’ sessions for the EPA.

However, the recent spate of hurricanes that have caused widespread devastation in the Caribbean region prevented heads of governments from Belize, Trinidad and Tobago, The Bahamas, Haiti, Cuba and the Dominican Republic were not present at the meeting.

Only two of the CARIFORUM member states — Haiti and Guyana — indicated at the meeting that they were not ready to sign the EPA.

The Haitian representative noted some reservations, including the fact that the text of the final agreement varied from what was sent to the Caribbean Regional Negotiating Machinery. This and other concerns would require approval at the presidential level before any commitment of a signature could be given, the representative said. Guyana also said it was unwilling to sign the EPA, a position that it has long held.

Guyana against EPA, but willing to do ‘goods-only’ deal

Guyana’s President Bharrat Jagedo remains the chief opponent of the EPA in its present form. Jagedo has stated that he will only sign the deal if the EU coerces him into doing so by threatening to revert to the generalised system of preferences (GSP), which would subject Guyanese goods to significant tariffs.

”The only reason I’m going to sign this agreement is if Europe imposes GSP on my country because I don’t have a choice; my exports are vulnerable. But outside of that I will never subscribe to an agreement” Jagedo told reporters at the meeting.

Guyana is not alone in its criticism of the deal. In fact, several of the EU’s potential EPA partners have raised concerns over the development implications of trade agreements with reciprocal market access commitments, such as the possibility of EU products flooding their markets and harming domestic industries. They also worry about the costs of adjustment and implementation, promises of assistance notwithstanding.

The CARIFORUM EPA includes several issues that were taken off the WTO’s agenda because of concerns from developing countries. Jagedo insists that by adding these Trade Related Issues (TRIs) - such as investment, competition and government procurement - to the EPA, Europe will have a legitimate right to lobby the WTO for these contentious topics to be placed back on the agenda.

Furthermore, the Guyana President argued that the benefits and protection offered by regionalism are being undermined by the multilateral EPA. Specifically, Jagedo referred to the Most Favoured Nation (MFN) clause, whereby any preferences the region extends to any of its other partners must also be extended to Europe. Jabgedo pointed out Guyana has a special trade relationship with neighbour Brazil, with whom they may want to negotiate a more favourable trade deal, but, by doing so they will be obliged to extend the privileges to Europe.

Instead of the EPA now on the table, Jagedo has lobbied for a ‘goods-only’ deal, which he claims is fully compatible with WTO requirements. Jagedo has pointed out that other countries and regions are either still in negotiations or have initialled goods-only agreements with the EU; the Caribbean is the only region that has initialled a full EPA.

Yet this option was rejected by other CARIFORUM members at the Wednesday meeting, who said they did not want to renegotiate the deal at this late stage.
Prime Minister Bruce Golding of Jamaica, who has lead responsibility for CARICOM’s external economic relations, stated that the EPA did not undermine the viability of the CARICOM single market and economy, but strengthened it by forcing the region to be more competitive. Golding said in a statement that not signing the EPA would damage the interests of the citizens.

”That is something that would have to be discussed with the European Commission, to the extent that the agreement was negotiated on the basis of a full EPA agreement involving not just goods, but services, investments, intellectual property and so on. To the extent that that was the context in which the negotiations were conducted, discussions would have to be pursued to determine whether Guyana would have the option of signing a limited agreement as they have indicated they would be prepared to do,” Golding said on the topic of a goods-only agreement.

However, the European Commission has repeatedly expressed reservations at the idea of Guyana having a goods-only deal instead of a full EPA with the EU. Instead, the Commission maintains that full EPAs must be signed without delay, and further that it is in the interest of the Caribbean nations to do so, as trade liberalisation will facilitate development and the EPA will ensure that trade relations between the parties are in compliance with WTO rules.

The CARIFORUM pact is one of a series of EPA’s the EU is currently negotiating with the ACP group (see Trade Negotiations Insights, September 2008, http://ictsd.net/i/news/27844/). But the progress in negotiations is uneven and no sub-region has yet endorsed an EPA or an interim agreement.

ICTSD reporting; “CARIFORUM agrees to sign EPA,” BILATERALS, 16 September, 2008; “President Jagedo on EPA… CARICOM leaders could undermine key tools protecting regional interests,” KAIETEURNEWS, 12 September, 2008; “Guyana stakeholders ’roundly condemn’ Cariforum EPA,” BILATERALS, 5 September, 2008; “Guyana holds out as others agree to sign EPA,” CARIBBEAN360.COM, 11 September, 2008; “EC: No to goods-only agreement,” STABROEK NEWS, 10 September, 2008.