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Agreement with Europe begins to kick

Sir Ronald Sanders

Sunday, July 01, 2012    

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A statement credited to Alexander Walford, policy officer of the Caribbean-European Union (EU) in the European Commission, says that eight Caribbean countries have not implemented tariff cuts on EU goods as required by the Economic Partnership Agreement (EPA) signed in 2008.

This is not surprising news for two reasons. First, very few of the 14 Caribbean countries that individually signed the EPA with the 27-Nation EU collective had the resources to implement the undertakings for tariff cuts that they gave. Over the last four years, many of them have not put the required machinery in place and many more of them have not ratified the EPA.

Subject to correction of recent developments, at my last count only Guyana had ratified the EPA and introduced legislation in Parliament that identified the tariffs that would be cut and the timing of such cuts.

The second reason for the non-implementation of tariff cuts by eight countries (of which Jamaica is specifically named) is that the signing of the EPA coincided with the global financial crisis that adversely affected many Caribbean economies.

Hit as they were by a decline in revenues from decreased tourism, high energy costs and little investment, the removal of the tariffs on EU imports as required by the EPA would cause all governments to lose much needed income.

Mr Walford is reported to have said that Jamaica, being part of the international trade community, risks sending the wrong signal in not living up to its obligations. The report in the Jamaica Observer newspaper credits Mr Walford as saying that Jamaica is yet to signal its intent to the European Union. Disturbingly, he is also credited with saying that the EU could treat the issue as a dispute and refer the matter to arbitration.

Arbitration would be an expensive course of action to take. But it is one that the collective 27-nation EU could far more afford to do than could the eight Caribbean nations which would have to act individually. It is important to recall that, while the EPA was signed by the 27-nation EU collectively through the European Commission, Caribbean countries had to sign individually. It was not an agreement between the EU collective and a Caricom or Cariforum collective.

A responsible EU, concerned about economic stability in the Caribbean, would acknowledge the difficulties that the region is facing and try to engage in a constructive dialogue that would waive the tariff reductions at this time, and, in a spirit of co-operation, negotiate a period of deferment.

Indeed, it would seem appropriate that this is precisely what all Caribbean signatory states to the EPA should be aiming to do, and they should be doing so collectively through the Caricom Secretariat.

It is unfortunate that the EU spokesperson would talk of "arbitration" and not negotiation. It is up to the Caribbean countries to place the option of renegotiation firmly on the table, and while each of them has signed the EPA individually, they must fight their corner collectively.

It is certain that if some of the small island states of the Caribbean are among the eight who may be taken to arbitration, they do not have the means to do so effectively. This was always one of the perils of the EPA, but it is one that Caribbean governments accepted when they signed it.

However, at the insistence of Guyana's then President Bharat Jagdeo, who had held out to the last minute from signing the EPA, there is provision for the agreement to be reviewed after five years. Fortuitously, the end of that five-year period comes up in a few months in early 2013.

In the light of the experience of all aspects of the EPA so far — including the huge challenges that many Caribbean countries would confront if they implemented the tariff cuts on EU goods — the Caribbean countries should call for the review of the EPA, and prepare the case for a renegotiation of some of its aspects.

The Secretariat of the Caribbean Community and Common Market (Caricom) has in place a unit that monitors the EPA, and so do some Caribbean countries individually.

The time may be appropriate to pool the work of these units into a regional whole and to prepare well-researched and professionally prepared arguments that could be jointly put to the European Commission. It is certain that, with their great financial and human resources, the EU will be well prepared for a review of the EPA.

Given the fact that the EU is still in negotiation for full EPAs with countries in Africa, the European Commission would be loath to surrender ground to the Caribbean that would affect their position. On the other hand, the Caribbean experience, if well presented, could lead to changes in the EPA with which all the developing regions of Africa, the Caribbean and the Pacific could better live -- and so, too, might the EU.

Sir Ronald Sanders is a consultant and former Caribbean diplomat

Responses and previous commentaries: www.sirronaldsanders.com

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