EU and the Caribbean: A “Goods” Agreement?

Sep 07, 2008 Features / Columnists, Ronald Sanders

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By Sir Ronald Sanders

A national consultation in Guyana on September 5th to which I was invited to participate as a panelist with representatives of the European Union (EU) and the Caribbean Regional Negotiating Machinery called on Caribbean leaders not to sign a controversial Economic Partnership Agreement (EPA) with the European Union.
The consultation, attended by all political parties, the trade union movement and the private sector, requested that Caribbean leaders use the opportunity of a Summit meeting of African, Caribbean and Pacific states on October 2 and 3, to discuss the EPA issues before making any decision on signing it or not.
Below is an abridged version of my presentation to the Guyana consultation.
Throughout the Caribbean now, political parties, religious groups, trade unions and others are saying that not enough is known and understood about this EPA, and there should be more time to learn its details and their implications, and to continue to negotiate in a spirit of cooperation those aspects of it that cause us worry.
If there were similar unease in the EU amongst its leaders, the EPA would never have seen the light of day, and European leaders would not have proceeded to sign the EPA.
Why then should the Caribbean not pause to reflect more deeply on an agreement that will bind the people of the region for generations to come?
The answer is that our leaders have been placed in the invidious position by the EU whose negotiators have said that if Caribbean governments don’t sign, their important exports will be placed under GSP terms, which means that they will become uncompetitive in the EU market.
At the expiry of the Cotonou Agreement, all that the World Trade Organisation (WTO) required of the EU and ACP countries were arrangements for trade in goods that were compatible with WTO rules.
But, the EU added to these negotiations, issues that have not been settled in the WTO and are not part of the requirements for WTO compatibility.  Those issues are: investment, competition policy, and government procurement. They all fall under the general term “Singapore issues”.
It is the private sector of the Caribbean that should be keen to understand precisely what their governments are being asked to concede on these issues.
The range of services that will be opened up under the EPA is very wide from accounting through financial services, medical services to tourism.
There will be no restriction on EU companies entering Caribbean territories to set up businesses in competition with local businesses, and if they have deeper pockets and can put the local companies out of business, then so be it.
Governments will not be able to regulate effectively the sectors in which these companies are involved since the EPA requires government regulations to be “not more burdensome than necessary”.
The EU argues that the EPA is reciprocal, and that Caribbean companies can enter the EU market to compete with EU companies. Since the Caribbean has no more than a handful of firms with the resources to establish pan-Caribbean companies, the likelihood of the region developing companies with the capacity to establish and compete in Europe seems somewhat remote.
And, as for the export of services, the EPA prioritises accounting, architecture, engineering and tourism for mutual recognition agreements.  So the question is: how many professionals in these areas does each Caribbean country have who are qualified to sell their services in Europe in competition with well-established European firms?
And, assuming that these exist in large numbers, are the professional associations sufficiently well developed to negotiate with European Professional Associations?  What is a realistic assessment of the probable number of benefiting professionals, and what is the probable value of their exported goods?  By the same token, EU professionals can and will come to the Caribbean to sell their services.  They do so now without an EPA.
No country in the Caribbean requires an EPA to get investment from the EU.  The incentives and concessions that Caribbean governments give to foreign investors are already over generous.  But, at least, because of contractual arrangements and local legislation, governments are able to restrict sectors of the local economy for local investment only, and they are able to regulate foreign companies, especially in the areas of public utilities, to ensure that they meet service requirements.
To be EPA compliant will not be cheap for any Caribbean country.
The EU negotiators point to funds that will be available from the European Development Fund and the ‘Aid for Trade’ arrangements.
But, if we are to believe the European Parliament, these funds are more illusory than real. Its Working Document dated July 1st, 2008, says:
“ACP countries insisted that firm legal guarantees for development resources additional to the EDF would be part of the EPAs.  Commission and Member States refused to negotiate development resources as part of the EPAs.  Finally, development chapters or annexes were integrated in the agreements which do not provide for the possibility of a kind of EPA funds, but accompanied only by vague pledges to increase development resources spent on trade related services”.
The document goes on to state that the EU decided that needs arising from the EPA would be dealt with in the context of an EU Aid for Trade Strategy established in 2007 in which the EU made a commitment to provide three to four hundred million Euros for trade related assistance to the ACP group.
But, it specifically states that the three to four hundred million Euros will not be “fresh money”, and, even if it were, “it would not be sufficient to offset the loss in customs duties before even starting any additional support for adjusting to the duty free import of EU goods”.
Every Caribbean country wants an EPA with the EU, but in the interest of an enduring and sustainable agreement that commands the support of the widest cross-section of the Caribbean people, more time is needed to discuss and negotiate a services agreement even if a “goods-only” agreement can be initially signed to comply with WTO rules. Caribbean countries should give serious consideration to that course of action.
(The writer is a business consultant and former Caribbean diplomat)
Responses to: [email protected]

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