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EU-CARIBBEAN: New EPA Sets Timeline For Trade Liberalisation
By Bert Wilkinson
GEORGETOWN, Guyana, Dec 21 (IPS) - Come Jan.1 a new trade and aid pact between fifteen Caribbean nations and the
27 members of the European Union (EU) kicks into force heralding in a new era
in relations between the two trade blocs that will be based largely on reciprocity
rather than protected trade, as has been the case for centuries.
In recent days, negotiators for the two sides completed most of the final text
of a new Economic Partnership Agreement (EPA) that took the better part of
five years to negotiate, involved threats by the Caribbean of litigation in
European courts in a dispute over sugar, and led to bad blood between the
two regions because of what Guyana's President Bharrat Jagdeo refers to as
EU bullying to forge an agreement at all cost.
The negotiations were wrapped up in Barbados with just days left before a
yearend deadline that, if missed, would have meant disaster for the
Caribbean - as most of its key export products would have faced duties of
up to 30 percent entering the EU. That was the threat from the EU that Jagdeo
and other leaders were uncomfortable with, but had to respect just in case
the Europeans were not bluffing.
Under the new EPA, which replaces the 2001 Cotonou Agreement signed in
Africa, the Caribbean will now have to open 86.9 percent of its market to duty
free imports of EU products over the next 25 years. It calls for 82.7 percent to
be liberalised in the first 15 years. There will be a moratorium of three years
on all tariffs except those on motor vehicles, spare parts and gasoline coming
into the region. Other duties and charges are to be kept during the first seven
years and then phased out in the following three years.
For sugar, which governments so zealously guarded during negotiations, the
Caribbean gets an additional 60,000 tonnes on top of the 410,000 it is
allowed to export under the old arrangements. But the quota now has to be
split between a new exporter - the Dominican Republic - and the English-
speaking producers that traditionally sold the commodity to European
destinations. Fixed quotas and duty free access are set to be removed by late
2009, meaning that exports from the region will no longer be protected and
would have to compete with cheaper products from third party exporters.
Additionally, the two sides agreed that those able to take up the slack would
share any shortfall by a sugar-producing nation. A 41,000 tonne Trinidad
shortfall will go to its neighbours. St. Kitts has also quit sugar production, but
it is unclear what has happened to its quota if not divided among bloc
members already.
One thing has clearly emerged from the talks that began when the EU decided
to split up the 79-nation African, Caribbean and Pacific (ACP) umbrella group
into six separate regions, with each having to battle for its own EPA. Leaders
say the new liberalised environment means that the region has to produce
more efficiently as competition would come from countries with cheaper
labour and production costs.
"We have to increase our productivity and competitiveness. That is the lesson
we have to imbibe now. We have to start now. And the quicker we get that
message out in an unvarnished fashion the better," said Edwin Carrington,
secretary general of CariForum, under which the 15 negotiating nations fall.
Jamaican Prime Minister Bruce Golding, who is responsible for external
negotiations for the Caribbean trade bloc, echoed Carrington’s sentiments.
"It is now for us to get our act together, to demonstrate efficiency in the
goods we produce and the services we provide and competitiveness in how
we price our goods," he told Jamaica's parliament this week.
Twice in recent weeks the two sides were deadlocked. First there was a
disagreement over sugar. Then the some EU states, France in particular,
refused to allow regional entertainers to work freely in Europe. Calling it one
area where the region remains competitive, Barbados Prime Minister Owen
Arthur had said leaders were "prepared to draw a line in the sand" and to go
without an agreement if its cultural workers were not allowed free access to
the EU. The new deal allows unrestricted access except in Austria and
Germany where artists will be limited to authors and dance instructors.
Some artists like reggae superstars - including Shaggy, Sean Paul and
Bennie Man, among others - bring the region more income annually than
Jamaican banana exports. There were calls to devote less energy to
negotiating on bananas, sugar, rice and rum exports, and more energy to the
arts and entertainment sector. Musicians and studio owners like Eddy Grant
of Ice Studios say that is where the focus should be as this sector is not yet
fully developed or exploited.
Still, Miller and Carrington say the region has a perfect opportunity to exploit
the new arrangements. Rum producers for example, need not worry about
competition from the EU as taxes remain on their wines and spirits. Analysts
say that one thing is clear: preferential, duty free, fixed quota, infinite time
trade is a thing of the past and the Caribbean had better be prepared for it.
More of the same could be coming in the 2008 when Canada and the
Caribbean begin free trade talks that would cover hundreds of goods.
Governments are also thinking about whether to follow the lead of Central
America in negotiating a group free trade agreement with the U.S. now that
talks for a hemispheric pact have collapsed with little hope of resuming.
Regional negotiators say they will take a break over the holidays and then
prepare the agreement for cabinet and parliament consideration.
"We are the only ones who have concluded a full EPA. The other regions have
concluded interim agreements that relate only to the trade in goods. Other
areas like services will be negotiated at a later date," said negotiator David
Hales, paying tribute to the team."
(END/2007)
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