Strong case for revisiting that EPA
Close to seven years ago, Caribbean countries entered a new relationship with Europe that promised to deliver significant benefits in support of economic growth and development, building on the achievements of the Lomé Conventions and Cotonou Agreements that previously provided the framework
for such cooperation.
The purpose of the new Economic Partnership Agreement (EPA), the product of extensive negotiations between the European Union (EU) and the Caribbean Forum (CARIFORUM) group of countries, was to make it easier for people and businesses from the two regions to invest in and trade with each other, thus helping Caribbean countries to grow their economies.
Under the EPA, substantial EU aid was also promised to help Caribbean countries in their transition to a new relationship which was going to be based on reciprocity, instead of traditional one-way preferences that over the years had provided a guaranteed market in Europe for key Caribbean exports such as sugar,
rum and bananas.
Without a doubt, the EPA was an ambitious undertaking, but there was a recognition, almost from the outset, that implementation would not be easy and straightforward. Compared with Lomé and Cotonou, the EPA was more complex and wide-ranging in scope and was expected to tax the limited resources and expertise at the disposal of Caribbean businesses and governments.
It did not come as a complete surprise, therefore, when former Antigua and Barbuda diplomat Sir Ronald Sanders, who is seeking to be the next Commonwealth Secretary General, declared this week that few real commercial benefits had come the way of the Caribbean since the EPA was signed in October, 2008. He noted too that promises of EU aid had “significantly” fallen short.
In sharing the Caribbean’s EPA-related disappointments with delegates attending an EU-Economic Community Of West African States (ECOWAS) Economic Partnership Conference, Sir Ronald was clearly hoping Africa would draw valuable lessons from the Caribbean’s experience to guide their own EPA experience with the EU.
Sir Ronald told them, among other things, that Caribbean exporters trying to get into the EU market faced non-tariff barriers, especially technical, sanitary and phytosanitary barriers. In the case of providers of services, he said they faced similar barriers related to mutual recognition of standards and were also encountering difficulties obtaining visas that affected their freedom of movement.
These issues clearly merit serious discussion when EU and Caribbean negotiators get together to review progress under the EPA. The EPA is intended to facilitate two-way free trade and the existence of these barriers only serve to frustrate this objective and prevent the Caribbean from reaping real benefits.
On the other hand, the agreement has clearly worked more to Europe’s benefit because the removal of tariffs by Caribbean countries would have freed up market access for European exporters.
Sir Ronald also noted that the EPA had taken effect at a time when Caribbean economies were taking a beating from the global financial crisis. Still, he noted, “the EU demanded full implementation of the EPA’s tariff cuts and intimated that non-compliance would lead to a dispute and costly arbitration”.
A responsible EU, he contended, would have tried to engage in a constructive dialogue with the region and opened the space for renegotiation rather than arbitration.
Sir Ronald is advising African countries to give priority to advancing their own integration agenda, especially the continental Free Trade Agreement which appears similar in intent to the Caribbean Single Market and Economy (CSME) which, for whatever reason, appears to have stalled.
“To avoid being left behind and to ensure continued trade success in the 21st century, the priority for African countries should be to develop forward-looking strategies that build and strengthen their productive capacity and enhance their international competitiveness,” he advised.
Sir Ronald’s comments raise a timely question about whether developing countries, at a global level, should not revisit the whole idea of South-South cooperation in trade and economic development and place it high on their agenda again. This option was keenly debated by developing countries up to a few decades ago and some progress was made but somehow it fell by the wayside when just about everyone jumped on to the bandwagon of global free trade.
South-South economic cooperation still has relevance for developing countries as an option because the playing field at least would be more level. As the Caribbean’s experience so far with the EPA has shown, developing countries, especially small island states like our own, will always be at a disadvantage in a reciprocal economic relationship with developed countries because of historical imbalances that are not so easy to correct.