Stabroek Business has agreed to publish a series of articles prepared by the Guyana Manufacturers and Services Association (GMSA) on issues of interest to the manufacturing sector and to the business community as a whole.
Following is the first instalment in the series
Guyana and the other member states of the Caribbean Community (CARICOM) are party to a number of agreements which provide their exports with preferential access to international markets. Exports from CARICOM have benefited for many years from privileged access to European markets through the conditions of the Lomé IV Convention and the General System of Preference (GSP).
In June 2000, after a quarter of a century of the Lomé Convention being the cornerstone of trade and aid between Europe and the developing world, a new trade and aid agreement was reached between the EU and 71 African, Caribbean and Pacific (ACP) countries. The treaty, which replaced Lomé IV, became known as the Cotonou Agreement. The Cotonou Agreement was concluded for a twenty-year period from March 2000 to February 2020. At the time of this report the CARIFORM-EC Economic Partnership Agreement (EPA) was about to be signed. This agreement will ensure that the preferential market access arrangements in Contonou 2000 are World Trade Organization (WTO) – compatible, Among the many benefits for Guyana under this agreement will be the improvement of market access to the European Union (EU), the protection of local markets and the creation of unprecedented opportunities for the country’s services sector.
The Caribbean Basin Initiative (CBI) gives all CARICOM member states (excluding Suriname) access to the US market, while the Canadian market is accessible through the CARIBCAN programme. CBI was intended to facilitate the economic development and export diversification of the Caribbean Basin economies. The CBI currently provides 19 beneficiary countries with duty-free access to the U.S. market for most goods. It entered into force on October 1, 2000 and remains in effect until September 30, 2008 or the date, if sooner, on which the Free Trade Area of the Americas (FTAA) or another free trade agreement as described in legislation enters into force between the US and a beneficiary country.
CARICOM has commenced FTA negotiations with the US. However, FTA negotiations with Canada have not yet begun. In recognizing that continued growth in exports depends on either maintaining these relationships or expanding exports into new commodities, CARICOM member states have been actively broadening the base of their trading partnerships.
The Lomé IV Convention of 1995 provided CARICOM with preferential access to the EU market. Exports to the EU are evenly distributed among the member states of CARICOM. The EU has special protocols on certain agricultural products which dominate CARICOM’s trade with Europe. These include rum, bananas, sugar and beef. The protocols established by the EU in the Lomé conference have given CARICOM producers a degree of security in European markets. However, reliance on the export of a limited number of basic agricultural products has limited gain for these smaller economies.
In 2000, CARICOM signed the EU-ACP Partnership Agreement. This guarantees a rollover of the Lomé IV Convention trade preferences for exports from the ACP entering the EU until the new CARIFORUM-EC EPA comes into force. As this new agreement calls for a more diverse range of products, it presents a welcome challenge to the member states of CARICOM by encouraging further agricultural production and diversification.
Although the EU will maintain their agreements with the ACP, producers in Latin America and the US have issued complaints about the preferential treatment offered to products from the ACP. Latin American bananas in particular have become a strong competitor for CARICOM produce in the EU market.
In 1996 CARICOM and the Andean Development Corporation signed a co-operation agreement with the intention of developing relations between the private sectors of both regions. Trade relations between the communities are promoted through the exchange of trade information, with a particular focus on identifying potential areas of cooperation and discussing new methods for banks to support production and trade.
CARICOM members have been included in the Association of Caribbean States (ACS) since its inception in 1994. Also included in the ACS are the Caribbean Forum of ACP states, (CARIFORUM) and the Central American Common Market (CACM) members as well as Colombia, Mexico, Venezuela, Panama and Cuba. The goal of the ACS is to promote cooperation in areas such as tourism, transportation, agriculture and natural resource management.
CARICOM has actively developed closer relationships with members of the ACS while steadily increasing exports to non-CARICOM members.
The introduction of the North American Free Trade Agreement (NAFTA) gave rise to some concern for CARICOM, as member states worried about possible erosion of their markets. The prevailing view now held by CARICOM is that the best strategy would be to continue negotiating an extension of its existing preferential trade agreements, and seek eventual parity with the NAFTA.
CARICOM has been involved in negotiations for an FTAA. Those negotiations, however, have stalled. CARICOM had hoped to capitalize on a number of gains from the FTAA, including improved access to Latin American markets, stabilized access to the US market and increased foreign investment.