JAMAICA and the United Kingdom (UK) could be faced with tariffs in each other’s markets if Caribbean Forum (CARIFORUM) countries are unable to reach either a post-Brexit preferential or transitional preferential arrangement for bilateral trade.

CARIFORUM is a sub-group of the African Caribbean and Pacific States — a bloc of countries that conduct economic negotiations with the European Union (EU).

According to a trade competitiveness briefing paper prepared by the Commonwealth Secretariat on the challenges and opportunities for Jamaica and CARIFORUM, which was discussed on Wednesday at an in-country consultation at the Jamaica Pegasus in Kingston, the potential for trade diversion is high as UK imports into the island would face most favoured nation (MFN) tariffs, averaging five per cent across a majority of goods.

According to the research, which was conducted by trade adviser at the secretariat, Olayinka Bandele, and head of the Trade Competitiveness Section of the secretariat’s trade division, Rashami Banga, the highest tariffs on Jamaica’s top five exports to the UK range from 12.5 per cent to 40 per cent, while UK imports into Jamaica face MFN tariffs of up to 23.5 per cent across four major products.

The paper noted that while the UK has committed to ensuring that there is no disruption to trade by rolling over the EU regime for trade into its domestic law, when the UK is no longer a party to these agreements the transition would be subject to its domestic legislative processes. “This decreases the level of certainty around this treatment, especially as the Government notes that this rollover will occur wherever practical and appropriate,” the researchers said.

In his remarks at the forum, Deputy British High Commissioner to Jamaica Nick Astbury sought to give some comfort to the concerns, pointing out that after the UK leaves the EU, CARIFORUM and the UK could still “look for ways to improve the existing arrangements” and tailor them accordingly. He added that “the UK is aiming to transition the effect of EU agreements, working with our partners around the world to ensure that, as far as possible, current trade and investment relationships continue as they are, including between the UK and CARIFORUM.”

Astbury said, too, that a pragmatic approach such as that emphasised in the white paper would avoid the application of World Trade Organisation tariffs and the potential impact on trade flows between the UK and the region.

Jamaica enjoys trading and development arrangements with the UK under the 2000 ACP/EU Cotonou Partnership Agreement and the CARIFORUM/EU Economic Partnership Agreement (EPA), which was signed in October 2008. The EPA was set up to allow local manufacturers, exporters and services providers’ access across 28 EU member countries.

Director General of Trade Negotiations at the Caribbean Community Secretariat Ambassador Gail Mathurin noted that 18 per cent, or the bulk of Jamaica’s trade with the EU, takes place solely with the UK and that the majority of the country’s economic relationship with the bloc is as a direct result of the relationship with the UK, despite Jamaica’s strong relationship with the EU.

“The UK’s decision to leave the EU will also have significant implications for Jamaica’s trade and development relationship with that region,” she noted, but stressed that strategies are still being discussed with the EU for a successor arrangement, for the Cotonou Partnership Agreement which expires in 2020.

She said the CARIFORUM region has been actively reviewing and assessing the way forward in relation to the maintenance of its preferential trading relationship with the UK. The ACP is due to start negotiations with the EU27 by August 2018, for a successor arrangement to Cotonou.

The paper also highlighted that Jamaica’s trade in services with the UK fell from US$98 million in 2011 to US$51 million in 2014, while the UK increased exported services to Jamaica from US$287 million in 2011 to US$300 million in 2014. Jamaica, meanwhile, continues to face a number of non-tariff barriers in exporting services, impacting the movement of professionals, but it is anticipated that a new EPA should be able to fix these issues.

Britain is expected to exit the EU on March 30, 2019, almost two years after its electorate voted in a referendum (Brexit) to leave the EU.