(Stephen Lande, former Assistant United States Trade Representative (ret.), is President of Manchester Trade and has 40 years trade negotiating experience dating to the 1960’s Tokyo Round of the GATT. While at USTR, he developed and implemented the CBI (c.1983) and in 1984 founded Manchester Trade, a Washington, DC consulting firm focused on international trade in the Caribbean, Latin America, and Africa.)
Introduction
Last week it was argued that CARICOM appears to be sacrificing any possibility of continuing benefits under the U.S. Caribbean Basin Initiative (CBI) by rushing into full Economic Partnership Agreements (EPAs) with the EU, and that, given the complexities that have arisen since the conclusion of the negotiations, a delay in finalizing the EPAs would be prudent. If the agreements are implemented before these issues have been resolved, CARICOM may find itself losing preferential access into the U.S., the major market of the Caribbean, in order to come to an agreement with the EU, a secondary trading partner. This week we conclude the update by noting that compared to the Caribbean region, Africa has carved out a potentially stronger bargaining position vis-à-vis the EPA negotiations.
In the U.S., the New Partnership Development Act (NPDA) introduced by Congressman Jim McDermott (D-WA) with the cosponsorship of Chairman Rangel, and Phil English, leading Republican Ways and Means Committee member along with more than thirty others, is gaining increased support.
The bill will not only extend and deepen textile concessions under African Growth and Opportunity Act (AGOA) for sub-Saharan Africa (SSA) beneficiaries but will also provide duty-free treatment for agricultural commodities and for the first time in a trade bill-authorize funding for Aid for Trade. There had been no effort by the Caribbean to gain similar benefits.
The Sub-Saharan African
region and EPAs
African countries benefit from unilateral benefits under the African Growth and Opportunity Act (AGOA).
They are in a better position to protect these benefits than CARICOM since they successfully resisted EU pressure to enter into full EPAs. No Sub Saharan African (SSA) country entered into a full EPA. Less than half of eligible African countries entered into interim EPAs which do not go beyond products to include services and trade facilitation. The strong African position exists since if there is a second round of negotiations, they can profit from worldwide opposition to the agreements and gain less stringent terms. Member states, particularly the French who will chair the EU starting July 1st, have indicated that it will relax their demands for concessions. Given that Doha negotiations may now be picking up, African countries are also in strong position to protect and even expand unilateral benefits through negotiations in the World Trade Organization (WTO).
The resurgence of Doha also offers an opportunity for CARICOM to work with African countries along with both developed and developing countries concerned about EU efforts to cartelize Africa Caribbean Pacific (ACP) markets. Manchester Trade suggests that before EPAs are signed and ratified there be a serious review of their implications for U.S.-Caribbean trade relations, as well as with emerging economies such as China and India.
Way forward
The Caribbean Regional Negotiating Machinery (CRNM) deserves credit for the EPA since it represented a number of hard to gain concessions from the EU. However, CRNM is largely a technical organ which may have been forced to play too much of a policy role in the negotiations. They were complex negotiations that appeared to be going nowhere.
The negotiations picked up momentum due to direct pressure from the EU only in the final few months particularly their unwillingness to extend the deadline for negotiations. The January 1, 2008 deadline was not believable. The EU claimed dispute settlement would be invoked if the new agreements were not agreed by that date. WTO does not move that fast especially when negotiations on resolving a problem is ongoing. Even if a case was brought, dispute settlement takes many months during which time solutions can be developed.
The last minute agreement did not leave sufficient time for national leaders and the political arm of CARICOM to grasp all the complexities of the 1000 plus page document. The unreasonable attitude of the EU in not extending the calendar was the cause for the rush. This situation was complicated by the fact that a number of key players were involved in domestic elections, and also the confidential nature of much of the discussion made it difficult for stakeholders to participate as well. The impending change in leadership at CRNM, the number of new leaders in the region assuming power, and the unhappiness with CRNM in the academic and stakeholder communities all support taking a breathing space before signing and ratifying the EPAs. Such a breathing space will allow other options to be explored and to compliment Europe-focused initiatives with similar advances on trade and economic development with the U.S and possibly other third countries.
We doubt that the EU will withdraw preferences currently granted for CARICOM exports to the EU market if CARICOM members devote time to careful reflection on what was agreed. The only reason they would withdraw preferences is if a complaint was lodged in the WTO. Although some of the details of the EPA may be challenged successfully, there appears little chance that the basic provisions will be found to be inconsistent with the WTO. The result would be that CARICOM preferential access into the EU will be protected from a WTO challenge.
The WTO, perhaps even Doha itself, offers an opportunity for the Caribbean to develop a better system – one that not only protects its preferences but does not mortgage its market to one of the less competitive trading blocs in the world. Third countries will certainly be willing to explore with Caribbean leaders a way to prevent such an outcome that benefits no one but the EU.
