Havelock R. Brewster is presently consultant to the Caribbean Development Bank, Hon. Professor of Economics at the Sir Arthur Lewis Institute of Social and Economic Studies, UWI, and Senior Associate of the Caribbean Regional Negotiating Machinery.
By Havelock Brewster
The basic development problem of the African-Caribbean-Pacific Group of Countries (ACP), including those with relatively high incomes due to petroleum and tourism resources, is inadequate, uncompetitive and undiversified productive capacity. Yet the present Economic Partnership Agreement (EPA) with the European Community (EC), that CARIFORUM countries initialed in December and are expected to sign in July, is almost entirely about market access and other trade-related modalities.
The EC makes no secret of their theory that they expect “the trade policy framework to deliver development”, notwithstanding the fact that, over the thirty-two year history of Agreements, this has just not happened. The EPA is replete with development rhetoric, most, if not all, of which is compromised by the content of the Agreement.
A good illustration of the anti-development bias of the EPA is its treatment of the food security issue.
The extraordinary rise in food prices over the last couple of years has given a new prominence and urgency to this problem in the Caribbean, where as Tony Weis pointed out in a recent Diaspora column, “food security is so utterly wedded to global markets and heretofore cheap breadbasket imports”. The CARICOM experience has been one of mounting food import bills, stagnating if not declining agricultural production for domestic consumption, and a deepening concern about the effect of imported foods on health, in particular the alarming increase in obesity. The CARICOM Common External Tariff (CET) seemed ineffective against these problems. Tariffs alone do not necessarily give “effective protection’ to infant industries against imports, which often have the advantages of lower cost of production, quality and timeliness of supply, and better and cheaper storage, shipping, marketing and distribution. Moreover, with the continued rise in food prices, some governments decided to suspend the CET in order to lower food prices, a measure designed to provide immediate relief to households but which further entrenches the structural problem of the region’s import dependence.
The EPA provisions on food security provide little or no support in grappling with this difficult dilemma, at the root of which is the production problem that afflicts staples like rice, ground provisions, vegetables and fruits, combined with the consumption of imported, processed, canned, frozen foods, rich in chemical preservatives, hormones, fats, and additives, exacerbating the health problem.
The main relevant substantive provision in the Agreement is aimed simply at allowing import restrictions when importation leads to “major difficulties” in a CARIFORUM State, but is subject to consultation procedures in the Joint Trade and Development Committee, and thus dependent on EC approval of the safeguard measures to be employed. Allowing temporary import restrictions is merely a stop-gap device, not a development measure. What is required is on-going support for a regional food policy that effectively targets structural and institutional impediments to expanding production and intra-regional trade, such as investment in agricultural infrastructure and land preparation, economic incentives, technical assistance to farmers, rural community development, institutional commercialization, and the whole range of storage, processing, marketing and distribution problems.
In fact, the EC would have found, if they were so interested to help, a ready-made regional food security plan initiated by President Jagdeo of Guyana.
Although productive sectors like agriculture, forestry and fisheries, primary commodities and manufacturing are the life-blood of most ACP countries, the EPA is silent on any concrete partnership measures to improve and diversify productive capacity, productivity and competitiveness. This is notwithstanding the innovative efforts pioneered in the Cotonou Agreement for sugar, bananas, rice and rum. In respect of Agriculture and Fisheries, despite the recognition of development as a “fundamental objective”, of all the problems that afflict this sector, there appears simply the statement that there is the “need to avoid major disruption of markets” and “to take account of “conservation and management of resources” and of “development strategies”. In respect of Traditional Agricultural Products there is simply the provision “to undertake prior consultation on trade policy developments that impact on competitive positions” and to “maintain significant preferential access…. as long as is feasible.”
The point is not at all to maintain preferential access “ as long as is feasible.” It is that, so far as traditional agricultural exports with a potential comparative advantage are concerned, the need is for substantial infrastructural, productivity and quality enhancing and other measures that would render them internationally competitive after a reasonable period of time. These are precisely the kind of problems that Guyana, Belize and Jamaica are struggling with in respect of the sugar industry, and which a development-oriented EPA would have been expected to address. The argument in respect of domestic agriculture is similar. This is not an argument for autarky, but for effective protection combined with a comprehensive support program to nurture the industry so that it can stand on its own as soon as possible.
The EC has been less than forthcoming on information on, and commitments to the removal of, a multiplicity of non-tariff measures, other than quantitative restrictions, that inhibit CARIFORUM exports to European markets, including the use of technical barriers to trade, rules of origin, sanitary and phyto-sanitary standards. Furthermore, certain provisions under “non-tariff measures’ are distinctly anti-development, such as the prohibition on applying internal taxes or other charges to afford protection to like domestic products; and the prohibition against applying any new subsidy program upon exports of agricultural products destined for the territory of the other Party.
These provisions destroy two of the most effective “infant industry” measures, often necessary to develop new productive capacity. Note here too, the reference is to “new” subsidies, bearing in mind that the EU countries continue to apply agricultural subsidies on a large scale, while this is not generally a feature of CARIFORUM and ACP export agriculture regimes. In other words, so far as European agriculture is concerned, the status quo remains, or whatever eventually comes out of the Doha Round.
Given the ineffectiveness of the CARICOM CET as a mechanism for dealing with the production problem, one can now expect that, with a full free trade regime in place, the production, and thus the food security problem will be exacerbated. Finally, food security could be further jeopardized by the prohibition, under the EPA (Chapter 3, Article 1), of restrictions on exports, whether by means of quotas, export licenses, or other measures. This provision could be invoked in respect of, for example, regional rice, vegetable oil and even sugar exports, at a time when ensuring local consumption becomes a national or regional priority. Again, this would be subject to EC approval in the Joint Trade and Development Committee in respect of the safeguard measures to be employed.
