Legal Opinion: “Goods Only” EPA consistent with WTO rules

Sep 21, 2008 Features / Columnists, Ronald Sanders

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By Sir Ronald Sanders

Dr Lorand Bartels, a Lecturer in International Law and Fellow of Trinity Hall at Cambridge University, has advised that it is possible for all, a few, or even one, of the Caribbean countries on whose behalf an Economic Partnership Agreement (EPA) has been initialled with the European Union (EU) to sign a “goods only” agreement that satisfies World Trade Organisation (WTO) rules.

His written opinion arose from the controversy surrounding the EPA and increasing alarm in Africa, the Caribbean, the Pacific and the EU over the adverse effects the agreement would have on the development and autonomy of developing countries.

The international Christian organisation, Christian Aid, has declared that “far from being a key concern”, development “actually appears to have been, at the very least, a marginal issue for negotiators on both sides.

What is this going to mean for farmers? What is this going to mean for women and children? What is this going to mean for the poorest sectors in Caribbean society?

The fact that there are no clear development benchmarks integrated into the agreements seems to indicate that the powerful partner in this relationship is much less concerned with development than with furthering its own interests. It is the relationship of the bully to the bullied – not that of equal partners in a responsible and fruitful relationship”.

Guyana and Haiti, two of the Caribbean countries on whose behalf the EPA was initialled, have indicated their reluctance to sign the agreement in its present form which covers not only trade in goods, but also trade in services as well as the “Singapore issues” – government procurement, trade facilitation, investment and competition policy – which have not been agreed in global trade talks and which all Caribbean countries had joined other nations in resisting at the WTO.

After a national consultation in Guyana involving political parties, trade unions, the private sector and religious bodies, Guyana’s President Bharrat Jagdeo was mandated to try to convince Caribbean governments to sign a “goods only” agreement.

The participants in the consultation were mindful that the EU has threatened that, unless Caribbean governments signed the agreement, GSP treatment would be applied to the region’s crucial exports such as sugar, rice and rum, and tariffs would be imposed on Caribbean bananas that would make all these goods uncompetitive.

Experts from various fields have made it clear that the EPA would be compatible with WTO rules as long as it covered trade in goods. WTO compatibility does not require an agreement on trade in services or the “Singapore issues”.

The fact that the EPA was initialled by the Regional Negotiating Machinery (RNM) on behalf of the Caribbean states was not a commitment to sign it in its present form, nor was it an obligation under international law, treaty law or WTO rules.

And, as Sir Shridath Ramphal has argued and EU representatives have agreed, Caribbean countries “are not precluded by international law, by treaty law (or WTO rules), from renegotiating that initialled agreement.

This much is clear from general international law and more specifically from the 1970 Vienna Convention on the Law of Treaties”.

Now Dr. Bartels states unequivocally that it is legally possible to sign a “goods only” agreement. He gives three options, two of which are unproblematic legally. The two are:

* amendment of the EPA (by Protocol) to provide that for some Cariforum States non-goods parts of the EPA do not apply.

This option is the most conventional, both in terms of treaty practice (c.f., the EU opt-outs on the Schengen area and the Euro) and in terms of WTO compatibility. This option depends on the agreement on all EPA parties (i.e., the EU, the EU Member States, and all Cariforum States)

* separate agreement providing for partial (i.e., goods-only) provisional application of the EPA by some CF States

It depends on the agreement of the EU but not of the other CF States (or the EU Member States).

Dr Bartels identifies some difficulties in adjusting the overall EPA text to cater for countries that might opt for a “goods only” agreement, but they are difficulties that could be overcome by drafting.

For instance, with respect to development cooperation, he argues: “To the extent that these Chapters are not applied, these provisions on development cooperation will also not be applied.

Even so, this does not prevent the EU from continuing to provide development cooperation in these areas on an autonomous (or otherwise agreed) basis”.

The WTO compatibility of a “goods only” agreement is known and acknowledged by the EU, whatever its representatives may say to the Caribbean.

Evidence of this is that the Pacific countries in a letter dated June 11, 2008, from their lead spokesman to EU trade Commissioner, Peter Mandelson, proposed that the EPA negotiations “focus on finalising outstanding issues related to the trade in goods component and development, with services and most trade related areas deferred for future consideration”.

In his reply of July 19, 2008, Mandelson stated, “We are open to the idea that some Pacific countries may decide not to make commitments in certain areas due to their specific circumstances”.

So, it is possible to sign a “goods only” agreement that is perfectly compatible with WTO rules. As Professors Norman Girvan and Vaughan Lewis and Ambassador Havelock Brewster have said, signing a “goods only” agreement “will remove whatever legal justification there may be for the threat by the EU to impose tariffs on Cariforum exports”.

They have also rightly noted that deferring negotiations on services and the Singapore issues would eliminate “several contentious features of the EPA” including “areas of incompatibility with the CARICOM Single Market and Economy (CSME)”.

The problem is that some Caribbean countries have been persuaded that breaking ranks with other developing countries on services and the Singapore issues is in their interest and the fallacy or otherwise of that belief will only be proven by irreversible experience.

(The writer is a business consultant and former Caribbean diplomat)
Responses to: [email protected]

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