There has been a spate of comments since the initialing of the Economic Partnership Agreement between the European Union and Cariforum. The writers and commentators include professors of economics and political science, former Caricom ambassadors and practising politicians. They embraced even our own indefatigable President Bharrat Jagdeo who threatened to initiate civil proceedings against the European Union while, virtually at the same time, his Minister of Foreign Trade, Dr Henry Jeffrey, was attempting to describe the Agreement in positive terms.
In the final analysis, although their comments covered almost the gamut of political and economic opinion, these commentators were about equally divided between those who believed that the Caribbean Regional Negotiating Machinery which represented Cariforum obtained the best possible deal, in the prevailing circumstances, and those who were adamant that if the negotiating stances, strategies and tactics were more aggressively and better presented the negotiating machinery would have been able to gain concessions which were more in the interests of the Cariforum countries which they represented.
The discussions also revealed inherent weaknesses in the organization of our negotiating institutions, and an apparent lack of capacity in our negotiating structure.
However, before we address these issues, it is perhaps relevant to note that none of the commentators has pointed to the possibility that the removal of the preferences which we have “enjoyed” for decades on such commodities as sugar, might lead to the more rapid development of our region, and to the establishment of more diversified and less dependent economies in the individual countries and, consequently, in the region as a whole.
The evidence is unassailable that very few countries, if any, have been able to produce commodities that were able to compete in the open market, if the subsidies and preferences they obtained for the particular commodity remained available over long periods of time. The reasons for this failure to escape from the preferential trap are not difficult to fathom.
First, the recipient country builds the preferences and subsidies into its cost/benefit calculations so that the preferences and subsidies soon became essential and integral factors in the benefit part of their equations. Second, because of the spurious profitability of the preferred commodity, production is expanded in the recipient country and, over a period of time, this particular product becomes a significant component of the entire economy. Its proportionate contribution to the country’s gross domestic product increases almost exponentially, the number of people employed in the production of the commodity tends to dominate the economy, the particular commodity’s ripple effect on the overall national economy becomes even more dominant and pervasive, and, ultimately, the subsidized commodity becomes so socially important that decisions on its future are not made in economic or financial terms. The preferred commodity rules over the sector, then becomes indispensable to the entire economy, and then dominates the politics of the nation as a whole.
Put in another way, where a country relies on preferences and subsidies, its entire development eventually becomes dependent on the largesse and handouts of foreign countries.
Preferential treatment should therefore be understood for what it is: a short-term measure that is an insidious trap if steps are not deliberately taken to minimise the dependence it forces upon the society by diversifying the economy, by producing other goods and services, and by ruthlessly applying the basic tenets of economics and business to its continuation or expansion.
It is to be hoped that countries such as Guyana will now seize this opportunity to develop their economies without incorporating the so-called benefits of preferences into its economic forecasts and calculations. If this is done, then businesses would be more soundly based and, more important, the nations would not have to continue to rely on the donations of richer nations. Perhaps at last they might cease to be nations of mendicants.
This failure to appreciate the inappropriate nature of preferences is not the only reprehensible factor in our negotiations with the European Union.
Even the most cursory reading of the Cotonou Agreement which, over the last decade or so, became the most significant document which outlined the relationship between the European Union and the African, Caribbean and Pacific States would have revealed that because the deliberations were being centred on the best terms obtainable at the WTO, the future focus of the deliberations would have to be shifted from Brussels where the EU and ACP states are located, to Geneva, the Headquarters of the WTO. What was decided in Geneva exerted the greatest influence in Brussels.
And yet Guyana, for example, has no permanent trade representative in Geneva, the WTO being inadequately serviced by our Embassy in Brussels.
It is also fair to state that our Brussels Embassy, through no fault of its own making, is incapable of managing our country’s affairs in both the WTO and the ACP. Indeed, because of the hasty, irrational decisions of the then Foreign Minister Clement Rohee in 1992/3 the Brussels office was somewhat stripped of its capacity to undertake meaningful analytical work, and did not (indeed does not) contain a critical mass of economists and diplomats to perform the tasks assigned to it.
This deficiency in numbers of the Brussels staff might have been compensated for by the presence of adequately trained and motivated economists and diplomats in the Ministry of Foreign Trade in Georgetown. Alas, on many important issues in the past, there has been little or no policy guidance from Headquarters, little or no technical back-stopping, and little or no general cooperation. Reaction has been all.
It is to be hoped that under the new leadership of Minister Henry Jeffrey the situation might improve.
The following incident illustrates the non-professionalism of the Cariforum group in its dealings with WTO. When Brazil, Australia and Thailand got together to challenge the legality of the sugar subsidies which the Europeans conferred on their farmers at that time, it soon became apparent that if the WTO ruled against the Europeans the sugar subsidies doled out by the EU to the ACP countries would also be adversely affected, as the subsidies provided by the EU to their own farmers, and those which they provided to the Cariforum group, appeared to be inextricably linked.
After a period of merely meeting in the wings, perhaps in the hope that the problem would simply disappear, the Caricom Ministers of Foreign Trade decided that a representative number of them would fly post haste to Brasilia to beg or to plead with the government of Brazil not to pursue its pending challenge.
The Cariforum ministerial delegation arrived in Brasilia without any preparatory work being done by its ambassadors in Brazil. It spent a few long days in that country before it was permitted to meet any senior member of that country’s government and, in the end, seemed unable to discuss the matter with any important Brazilian decision maker.
Moreover, in its single minded objective of holding on to its preferences without countenancing competition from any other country, the Caribbean nations had already crossed swords with all the Least Developed Countries, the poorest of the poor, in the world. The European Union, in an effort to reduce world poverty, decreed that these poor countries would be allowed to export to Europe any commodity without the payment of taxes and duties, the sole exception being armaments. The West Indians immediately took up arms against this European attempt to assist their poorer brothers. They announced that they were being betrayed, and that their competitive status in Europe was being undermined. They demanded the withdrawal of the EBA decree, as it came to be called. Later, faced by hostile European and African and Pacific groups they changed their mantra to one which urged that the burden arising from the new concessions to the LDCs should be equally shared.
By that time, however, the West Indians had not only earned the displeasure of the poorest countries in the world, they had lost the moral high ground. There was little or no sympathy with them in both the European Union and in the rest of the ACP group for the Caribbean. The points that are being made about these two incidents are three-fold. First, they illustrate the ad hoc, non-thought through, non-professional nature of the Caribbean’s response to important matters. Second, they demonstrate the confrontational nature of their response. (This was perhaps in keeping with the confrontational attitude of the then Guyana Minister of Foreign Trade). And third, they disclose that the Caribbean countries imagined that the preferences they obtained from the Europeans were a right.
In other words, the EU had a duty to treat the Caribbean countries in an especially generous way. This general approach would affect our negotiation stances with the Europeans over the Economic Partnership Agreements, and perhaps lead to the dissatisfaction which has resulted.
The opportunity now presents itself for a major revision of our Regional Negotiating Machinery as it relates both to the conduct of foreign trade negotiations and to the improvement of Caricom’s efficiency and efficacy, i.e to the strengthening of the integration process.
If, as is expected after the signing of the EPA, our relationship with the EU becomes more regional than international; and if, as seems evident, the WTO will play a much more significant role in the formulation of foreign trade policies and programmes than Brussels, then our activities in Brussels should be downgraded; the regional institution, Caricom, should be much strengthened; and the quality, spread and competence of our embassies in Geneva be considerably enhanced. Caricom should be given the overall responsibility for trade negotiations. To this end, its core of trading officials must be improved. Above all, it must be staffed by officials and experts comparable in status and qualifications to those who now occupy similar positions in the European Commission in Brussels. This would mean that both senior politicians and officials from sovereign Caricom countries must be prepared to accept posts in a revitalized and reformed Caricom. It would almost inevitably follow that new arrangements would have to be made to increase Caricom’s decision – making powers.
This exchange between senior country officials operating at the national level and officials operating from the central regional secretariat has, indeed, for a long time now, been the practice in the European Commission to which many ministers gravitate from their individual countries, and from which many commissioners are called to their countries even to become Prime Ministers. In addition to strengthening their offices in Geneva, Caricom countries should restructure and improve the quality of their headquarters ministries of Foreign Trade to improve their capacity to service their negotiating counterparts in Geneva.
Above all, foreign trade policy should be seen as an integral part of national foreign policies. It must be admitted that standing alone, Cariforum countries do not by themselves possess the power and the influence for them, on their own, to lever important decisions at the WTO and in the European Union. It is only by putting together, or by joining, powerful blocs of nations that we can begin to hope to play important roles in the formulation of policies and in the crafting of strategies that are designed to influence solutions of the burning questions of our time.
We cannot rely, as we appear to have done in our negotiations with the Europeans over the banana and sugar subsidies for example, on organised street protests in our capitals, and on the shrill and strident utterances of various Caribbean Ministers. We must understand that we are no longer in a Cold War. We must appreciate that we are now negotiating with a new breed of ministers who do not seem to feel any guilt for the sins of their fathers. In these, as in all other matters, we should display analytical skills that are second to none.
