By David Jessop (Executive Director of the Caribbean Council for Europe)
‘International NGO knocks EPA’; ‘Caribbean EPA held up as a model’; ‘Bernal departs Caribbean Regional Negotiating Machinery’: so read just three of the many thousands of headlines that accompany the hundreds of thousands of words about the Caribbean’s soon to be signed Economic Partnership Agreement with Europe.
They reflect an increasingly bitter divide over the benefits and failings of what has been negotiated as well as providing an opportunity for long-held political, academic and personal animosities to be deployed in a very public way. Some of the comment is important and reflects legitimate concerns about issues ranging from the broader implications of the EPA’s MFN provisions and future relations with other developing countries to, for instance, the shortness of the agreed period of entry into Europe for Caribbean musicians and entertainers.
However, at its extremes, it is far from edifying and does the Caribbean an international disservice, raising serious questions about who in future can be said to speak with authority for the region and who will want to negotiate for or with the region. It also begs the question as to whether any mechanism can be structured that can ever reflect the desires of a disparate group of nations and individuals that seem in some cases less than willing to endorse decisions in which they participated and which were agreed at the very highest levels.
Strikingly the same EPA debate and attendant criticism is not taking place in the Dominican Republic. Up to the time when all attention turned to the imminent presidential elections, the focus in government and the private sector has been on working together to extract the maximum advantage from what has been agreed.
But like it or not – regular readers will know I too have reservations – the EPA with faults and all will be signed soon. Caricom has already produced an extensive draft implementation plan and some governments such as Jamaica, and industries such as tourism have recognised that despite its imperfect nature they must rapidly develop new approaches that make use of what has been agreed.
At its heart the EPA attempts to reverse a culture of Caribbean economic dependence by encouraging new outward looking approaches to the world and new thinking about development through investment and trade. What it requires above all is confidence, a willingness to compete and for the region and individual nations to direct their own destiny.
For some, achieving this still seems to equate to continuing high levels of financial resources being transferred from Europe. And while there is an important place for well spent and targeted transitional support, far more important in the future will be the ability of individual Caribbean nations to transform national thinking by creating viable consensus driven models of development on the basis of social partnerships.
Achieving this suggests the creation of a new trust between those in positions of influence and those most affected by future economic decisions. It requires the constant provision of information and the collapsing of the present elitism and apartness that exists in many Caribbean nations between government and the governed.
Secondly, it suggests a psychological change in the ways in which the region relates its past to the present and its economic place in the world. It argues not for abandoning history but for addressing honestly why for some, increased European or North American private investment and trade denote a loss of sovereignty when the rapidly increasing interest in the region from huge sovereign investment funds from Qatar, Dubai, China and elsewhere do not attract the same concern.
And thirdly, it argues for the need for new thinking about how best to create a national consensus that turns the present EPA-led intellectual blood-letting into creative solutions on how best to take advantage of what has been agreed.
In this context the experience of Ireland is interesting. Itself a small nation of just 4.1 million people that for centuries saw its people exploited or lost to migration through poverty and starvation, it has gone from being the poorest nation in Europe to having in 2007 the sixth highest GDP per head in the world, ahead of that of the United States.
In a generation Ireland has been transformed.
Although it began receiving subsidies after joining the European Economic Community in 1973, economic growth remained weak at less than two per cent a year. But with a decision to embark on a radical change in policy the Irish economy grew by five per cent per annum from 1990 to 1995 and after that at more than nine per cent a year until 2007 when it slowed to five per cent but still more than double that of its near neighbours.
At the heart of its policy was a social partnership largely based on consensus-driven models used in Europe’s Nordic countries and in Austria. It decided on an approach that involved a multi-annual programme agreed between all social partners and aimed at facilitating the difficult financial decisions required to restructure the economy. In part this involved a trades union commitment to wage moderation in return for income tax cuts and their ongoing participation in economic decision-making. It also involved government making a commitment to the continuance of the welfare state.
Having achieved this, Ireland reduced the levels of government intervention in business in comparison to other EU member states in order to attract foreign investment. This plus membership of a larger market in the form of the EU enabled the Irish Development Authority and other agencies to attract major international companies to locate in Ireland particularly in the services sector, where thousands of high-worth jobs were created in the accounting, legal and financial sectors.
This approach was coupled with lower rates of corporation tax which together with macroeconomic and budgetary stability resulted in a high level of investor confidence and higher levels of private sector activity. At the same time the liberalisation of public utilities and transport caused airfares to fall and boost tourism.
Ireland also invested in education with the introduction of free secondary education and grants for those in tertiary level education. Many of those who had migrated recognised the opportunity and returned bringing high skill levels, experience, and extensive networks gained abroad.
EU Structural Funds also played a part and supported Ireland’s development through investment in transport infrastructure, education, training and industry. But while important, whether this was a key factor enabling Irish development remains uncertain not least because similar levels of support in other poor EU accession states has not resulted in the same rates of growth.
There are of course many differences between Ireland’s situation then and where the Caribbean finds itself now, not least Ireland’s membership of a viable and integrated economic union. Despite this, the Irish Republic and other small states across the world have proved what can be achieved despite their history and size. Theirs are cases worth studying and where relevant adapting.
Previous columns can be found at www.caribbean-council.org
