By IPS Correspondents
PORT OF SPAIN, Apr 21 2004 (IPS)

Caribbean experts say a new trade accord with the European Union (EU) will give the two sides another chance to put trade at the service of development, unlike former and current agreements with the region’s second largest trading partner.

The governments opened talks last weekend on an economic partnership agreement (EPA), which provides another opportunity for the Caribbean “to get our house in order”, according to trade policy consultant Rosalea Hamilton.

“Let’s not miss this opportunity to get it right this time. A great deal is at stake for CARICOM (the Caribbean Community),” she added in a column in the ‘Jamaica Observer’ newspaper.

The European Commission (EC) describes the future pact, expected to enter into force by Jan. 1, 2008, as a free trade deal between the EU and the Caribbean. Europe is negotiating similar agreements with African and Pacific nations as a follow up to the 2000 Cotonou Partnership Agreement between the 15-member EU and 77 African, Caribbean and Pacific (ACP) nations.

The new deals will broaden access to European markets for “basically all ACP products”, said Amos Tincani, head of the EC delegation to Barbados and the Eastern Caribbean, in a series of articles leading up to the announcement.

“It will lower the price paid for capital and intermediate goods, fundamental for local industries. Ultimately, it will promote more competitive, better-governed and more credibly regulated economies, again fostering investment and growth,” he added.

These pacts were mainly based on a dual approach: they gave ACP products non-reciprocal preferential and, in most cases, free access to the EU market, while providing financial assistance to ACP countries through traditional aid and policies that stabilised export earnings.

But neither current nor past deals succeeded in their stated intentions of spurring Caribbean development, according to experts.

Official figures indicate that in 2000, only 3 per cent of EU imports originated in ACP countries, compared to 6.7 per cent in 1976.

In 2000, EU countries exported about 8.3 billion U.S. dollars worth of goods to the region, while Caribbean exports to Europe totalled 4.1 billion dollars.

The Lomé pacts fell short “as vehicles for stimulating growth and development and boosting new exports”, said Jamaican Prime Minister PJ Patterson at the start of last weekend’s talks in Kingston.

Even those preferences, such as the Sugar Protocol, which were intended to have lasted in perpetuity, are now threatened under the rules of the World Trade Organisation (WTO), added Patterson, one of the architects of the Lomé Conventions, which eventually gave way to Cotonou.

The Caribbean banana industry has also fallen prey to WTO rules, as Central American producers, backed by major U.S. corporations, challenge the EU/ACP banana regime, he added.

“Any new economic partnership agreements must seek to establish asymmetrical trade arrangements which recognise the differences in development and size of economies,” Patterson urged.

Barbados Foreign Minister Billie Miller, who has lead ministerial responsibility for the new negotiations, has laid out three main benchmarks for progress – “reduction of vulnerability while facilitating sustainable development; enhanced structural transformation of our economies; and international competitiveness and export diversification”.

Hamilton wrote that the Lomé arrangements failed to take “sufficient account of the institutional inadequacies and structural deficiencies of our countries, as well as the basic uncompetitiveness of traditional agricultural exports in our countries”.

Under the 1975 Lomé Convention, Caribbean countries enjoyed a one-way, non-reciprocal trade with Europe, selling bananas, sugar, rice and rum.

“By using tariff barriers that would allow ‘infant industries’ to grow and develop, the objective was to use trade, as well as aid, to contribute to our development. Today, after more than 25 years, these barriers persist, protecting ‘mature industries’ that have not grown or developed significantly,” wrote Hamilton.

“Our economies are still largely dependent on a limited range of agricultural (bananas, sugar, rice) and mineral (bauxite, alumina and petroleum) products.”

Richard Bernal, head of the Caribbean Regional Negotiating Machinery (CRNM) has described the new negotiations as “a watershed in relations” between the two groups of nations.

While the success of the new venture will “depend critically on the negotiating architecture put in place”, the region’s states must also ensure that the EPAs foster the structural transformation and adjustment of its economies, he argued.

“The EPA must do so in a manner and a pace that is conducive to economic and social development, and in a way that enhances Caribbean states’ role in the international community,” Bernal added.

In his speech at the start of last weekend’s talks, EU Commissioner for Trade and Development Pascal Lamy called the proposed deals, “instruments for achieving the objective of sustainable development”.

“In a way, they are a launching pad for effective beneficial integration into the world economy. At the same time, world economy should not mean jungle,” added Lamy.

While development should be the focus of the new arrangement, Caribbean leaders must ensure that it also kick-starts the structural adjustments needed to permit the region to prosper in the globalised world, according to Vaughan Lewis, former director general of the Organisation of Eastern Caribbean States (OECS).

The Caribbean Single Market and Economy (CSME) is due to come on stream in 2005, and regional governments believe it will provide essential weight in dealing with the changing global economic environment, dominated by mega-trading blocs.

Now a professor of international relations at the University of the West Indies, Lewis wants the Barbados-based Caribbean Development Bank (CDB) to be integrated into the region’s negotiating system so as to identify projects that would advance both “regional integration and structural adjustment simultaneously”.

“This in part was the rationale for the cohesion or structural fund which the Europeans used to ensure the adjustment of countries like Spain, Portugal and Ireland into the free-market liberalised system of the European Union,” he told IPS.

The region should “focus on systems that advance the creation of an economic space of the Caribbean that facilitates international investment in areas identified as growth areas”, added Lewis.

“All this means that from a policy point of view, the Caribbean countries would need to make a further commitment to integrating the policy mechanisms in a coherent fashion in much the same way as the European Union has increasingly integrated its macro-economic policies,” he said.

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