By David Jessop
CaribWorldNews, LONDON, England, Mon. May 18, 2009: For much of the last week, European and Central American Ministers and trade negotiators have been in dialogue in Prague and Brussels. Their objective has been to achieve by July 10 an association agreement that will link the two regions politically, developmentally and through trade.
Negotiations for a similar EU agreement with Colombia, Peru and Ecuador, the Andean countries minus Bolivia, are also progressing quickly and it is expected that whatever is agreed finally will inform a further and presently stalled negotiation between Europe and the nations of Mercosur: Brazil, Argentina, Paraguay and Uruguay.
All three association agreements seek to establish, over a short period, free trade in goods and services between the regions concerned and Europe. Each will result in new concessions on market access for products for which the Caribbean still has preferential arrangements with Europe. These include sugar, bananas, ethanol, and rice and most probably rum, thereby further accelerating the diminishing value of the Caribbean’s remaining arrangements with Europe.
These agreements will create new challenges for the Caribbean. They will not only result in increased competition in Europe for commodity agriculture and rum, but will also increase the competition for investment and the export of goods and services to Europe just as the region begins to contemplate the implementation of the Economic Partnership Agreement (EPA) with the EU.
So far, little attention has been paid as to the implications of these new arrangements despite the fact that what Latin countries produce and offer, mirrors the Caribbean’s trade profile, but at lower cost.
The developments come just as the region is undergoing one of its periodic bouts of institutional restructuring.
Over the past several months a process of administrative and financial resource centralisation has been underway so that all matters relating to regional trade negotiations and their implementation now come under the control of Caricom.
Thus in February, the Caricom Secretariat announced that an EPA implementation unit had been established in Georgetown to advise the Secretary-General.
This group consists of specialists in trade in goods, trade in services and investment, and a legal officer who will collaborate with the relevant regional public and private sector organizations and agencies when required. The unit has already created a road map for EPA implementation that focuses on the resources required regionally for delivery and has produced, for discussion with the EC, the draft rules that will govern the procedure and relationships between the four bodies that will govern the EPA. More recently, it has begun work on an outline list of private sector and civil society institutions that will sit on the EPA’s consultative committee and has also set about designating contact persons in Cariforum states to liaise directly with the implementation unit.
Despite this, few beyond government, and especially those who will have to deliver growth through their commercial activities, have any idea what is happening or how they are meant to prepare for a process that requires a willingness to compete globally.
Even those companies and associations well-disposed towards Caricom are querying how its hard-pressed staff will be able to respond on a day-to-day basis to the type of practical questions they require answers to. They suggest that beyond the implementation unit there will be the need for a further body that at the very least is services focussed, understands tourism, the entertainment industries and financial services, and is able to explain and support in real time the development deliverables these industries need from the EPA.
As this is happening the Caribbean Regional Negotiating Machinery (CRNM), the body that has undertaken almost all of the region’s recent trade negotiations, has been placed under the auspices of the Caricom Secretary General following a decision by Caribbean Heads of Government meeting in Belize in March.
Although some Caribbean Heads of Government attending that meeting were reluctant to see this change occur, the view for change led by Guyana prevailed. As a consequence the CRNM will now report to Heads through the Caricom Secretary General and move its headquarters to Jamaica, a process that led the CRNM Director General, Henry Gill, to resign on May 1 and to a growing sense among CRNM specialists that its expertise and experience will now be dissipated.
What this change implies is that there will be a hiatus in further trade negotiations as new structures are created and a mechanism established that will enable Caricom to provide Heads of Government with the political overview that President Jagdeo and others so strenuously argued for. In the short term at least, this will probably have negative implications for a free trade arrangement with Canada and may also bring difficulties when it comes to integrating the Dominican Republic into Caricom; a process that requires greater acceptance of the significance of integration with the larger economies of the Hispanic Caribbean.
Outside the region, these changes have disappointed those Governments and institutions who saw the CRNM as a model institution. So much so that when Pascal Lamy the WTO’s Director General was in Jamaica recently, he spoke in private to senior Caribbean figures about his concern that the developing world had lost an important body that others might have emulated. It is also likely at a time when development budgets are under pressure as a result of the recession, there will be questions about the value of further support without a sense of continuity.
Having said this, it is of course for no one other than the region and its leaders to determine what institutional mechanisms it requires, who it wishes to run them and how it wishes to control them politically.
Trade negotiations and the implementation of what has been agreed, by their nature take place rapidly and within finite periods of time. They also require constant attention if nations like those in Latin America who are also being offered the same challenges and opportunities, are not to take away what little trade advantage a region like the Caribbean has. Very soon it is possible that the US will move to consolidate its trade relationships within the Americas through new forms of trade agreement. For all these reasons Caricom Governments will need to move rapidly to ensure that their external trade negotiating and trade implementation capacity are able and ready to respond.