One of the most difficult aspects of writing about the negotiations with Europe for an Economic Partnership Agreement (EPA) is that events at a government level that are shaping their outcome may well have moved on by the time this appears in print.
The matter of trying to address the detail is made more complicated by the negotiation being seen by large swathes of the Caribbean media as some gladiatorial fight both within the region and between Cariforum and Europe.
Understanding the very serious implications of what may happen next is not helped by the absence of any practical sense of what could occur in trade terms if regional governments are unable to agree within the next few days on how to proceed. That is to say, reach a consensus on the scope of a trade in goods agreement, if, as seems increasingly likely, the negotiation of the outstanding aspects of a full EPA may have to continue into 2008.
In all of this what is particularly startling is the total absence of any pubic expression of concern or caution from Caribbean private sector leaders or those who represent the interest of companies small and large that stand to be economically disadvantaged if no arrangement at all is in place by the year’s end.
As is now well known, the European Commission has said that if ACP nations are unable to complete an EPA by the time the World Trade Organisation (WTO) waiver on the trade aspects of the Cotonou Convention expires, the Caribbean and other ACP nations have two alternatives. These are to agree a tariff reduction schedule that covers what is described as substantially all trade – around eighty-five per cent of goods imported from Europe – or accept that the EC will cause its existing largely duty-free tariff regime on Caribbean exports to revert to the Generalised Scheme of Preferences (GSP).
What seems not to be recognised is what this means in concrete terms.
To understand one only has to look at the EU’s GSP tariff schedule on a line by line basis. This shows that everything from sugar and bananas to low-priced bulk rum will start to pay tariffs in 2008 unless greater credence is taken of what is being said by negotiators.
To take two simple examples: exporters of hot pepper sauce to Europe will find themselves paying a 4.2 per cent duty while exporters of honey will cease to have a zero tariff in Europe and be paying duties of over 17 per cent.
Regional estimates suggest that the overall damage could amount to an additional Euro 300M per annum in EU duties and that some products would cease to be competitive.
Making clear in a very carefully worded November 6 statement what may happen next, Richard Bernal, the Director General of the Caribbean Regional Negotiating Machinery noted: “The EC has advised that if the ACP countries are not included in the transitional arrangement [for an interim goods agreement] they will have to resort to the Generalized System of Preferences (GSP) regime. This would put the exports of Cariforum at a disadvantage.”
The CRNM noted also that the deadline for completion of the negotiations in time for the entry into force of the EPA by January 1, 2008, was in jeopardy. A further round of technical negotiations have been scheduled for the end of November to resolve the outstanding is-sues, in particular “those relating to tariff liberalization which continues to be the main subject of disagreement in the negotiations.”
These meetings, Ambassador Bernal said, would be the last opportunity to accomplish this task. He continued – no doubt conscious that regional criticism of the process and the EPA text has now migrated from the private to the public domain – by stressing that despite the pressures to negotiate on time, “under no circumstances will Cariforum sacrifice the quality of the agreement to meet any given schedule.”
What has become public in the last week are the very different views prevailing in the region about how serious the GSP threat from Europe is; what substantially all trade means; how much Caribbean states at very different levels of development with hugely varying existing tariff schedules and related fiscal requirements, should open their market to Europe; whether there is enough deliverable development content in the text to make an EPA have value; and the deliverability of what has so far been agreed.
As this is being written meetings are taking place in Georgetown to try to resolve these issues. These are not being helped by the absence of public comment on the GSP from those that might be most affected.
While speeches by European commissioners and officials on this subject may be set aside as self-serving, less easy to ignore is the fact that the EC has produced a draft regulation enabling it to establish an interim goods agreement in the event of the failure of any full EPA text.
The point of it doing so is in order that it can claim it has not disadvantaged the ACP, but the ACP by not taking this option has disadvantaged itself. This may be hard to stomach when some Caribbean governments feel they have gone as far as they can in their offers. However, it appears from internal EU documents, admittedly still in draft, that most of Europe’s member states will accept the EC’s position, only going as far as urging a strong political commitment and courage by all parties to achieve an agreement on the basis of “compromise, realism and flexibility.”
While it is still possible that one EU member state that has fundamental differences with the EC Trade Commissioner over trade liberalisation may take a stand, especially in respect of Africa, this is unlikely to stop the GSP juggernaut in a Europe that now largely consists of nations with no historic connection to the developing world.
What happens next across the whole ACP is becoming less clear by the day.
In my last column I wrongly stated on the basis of inaccurate newspaper reports that the Pacific had agreed to initial a trade in goods agreement. I have subsequently discovered this is not so. While talks to this end and with two regions of Africa are now advanced, there are also signs that in other regions of the ACP new EPA related alliances are forming, led by nations such as Mauritius and others that are seeking their own configurations. There are also some indications in the region that the Dominican Republic could, if a Cariforum trade in goods arrangement is not possible, decide with great reluctance to seek a relationship with Europe of its own.
None of which should be taken as exonerating the EC for pressing a trade agreement on a Caribbean regional integration process that is far from mature.
As a consequence Caribbean policy towards the negotiations is in danger of disintegration with unpredictable consequences for regionalism.
Previous columns can be found at www.caribbeancouncil.org
