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Caribbean Leaders Split On Economic Partnership Agreement (EPA) With European Union (EU)

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Caribbean people repeatedly turn to our political leaders to chart a path through the complex global maze of our modern times. The phenomenon of ‘globalization’ has seen our national borders fizzle in the face of economic partnership agreements which to the most naive are tilted in favour of the developed countries. What feeble defence the Caribbean could have offered around the negotiating table has crumbled in the face of the disunity which our regional leaders appear to strive on in a post colonial era.

The BU household have been following the latest ‘buzz’ surrounding the Economic Partnership Agreement (EPA) between the Caribbean and the EU. One key ingredient of an Economic Partnership Agreement is the element of reciprocity. Immediately this brings to mind the fact that our region is comprised of small open economies which for the most part is heavily dependent on tourism and the offshore sector to generate revenues. This heavy dependence on the developed world to support our economies make the business of negotiating economic partnership agreements a tricky business. To use a simple analogy the player holding the stronger hand is obviously in a position to raise the stakes. It is hard to imagine how the ACP countries (includes Barbados) are able to walk away from the negotiating table with the EU thinking that there was a ‘fair’ divide of the spoils.

Last week former Prime Minister Owen Arthur delivered a lecture at the Errol Barrow Centre for Creative Imagination where he fully endorsed the EPA with the EU and outlined the assistance which it would bring to help Barbados “economic situation by greatly facilitating or repositioning away from primary commodity producers and the exporter of a limited range of rudimentary services”. Truth be told, we have no clue what that quote attributed to former Prime Minister Arthur means! What we know is that Arthur’s willingness to join free markets, whether regional or international at any cost should have been a source of concern to Barbadians for a long time. We think his willingness to sell our sovereignty is bound up in his legacy building. History now shows that it was unceremoniously cut short. All around us St. Lucia, Jamaica, Bahamas and others have been strident in their positions which beat home drums first. It seems that only Barbados has been willing to speculate by giving the little that we have in the expectation of finding the pot of gold at the end of the rainbow.

Back to this EPA business.

We have read that Doctor Richard Bernal who is Director General of the Caribbean Regional Negotiating Machinery (CRNM), and principal negotiator of the Economic Partnership Agreement (EPA) agrees with Arthur that the EPA although not a perfect agreement is the best that the Caribbean could have negotiated at this time. Again we don’t know what Dr. Bernal is trying to say because he says nothing as far as we are concerned. However we can place Dr.Bernal’s opinion in proper perspective because he is a paid servant. What we find interesting is the position which has been taken by Guyana’s President Bharrat Jagdeo who has heavily criticized the EPA with the EU. New Prime Minister David Thompson has instructed his Foreign Affairs Minister Sinkler to thoroughly review the agreement as a prerequisite for Barbados making its position known. He issued a statement that “Barbados is expected to host the signing ceremony. Despite his government’s reservations about the agreement, Thompson said it has already assured the Caribbean Regional Negotiating Machinery (CRNM) that it would not go back on that commitment.” Can somebody please explain the double speak of Prime Minister Thompson because we are dizzy. Ironically the longest serving Prime Minister Patrick Manning has thrown his fill support behind the EPA agreement with the EU.

So what is the EPA doing for us in the Caribbean including the Dominican Republic?

Under the new agreement, the Caribbean will now have to open nearly 90 percent of its market to duty-free imports of EU products over the next 25 years. The new accord calls for 82.7 percent to be liberalized in the first 15 years and there will be a moratorium of three years on all tariffs except those on motor vehicles, spare parts and gasoline coming into the region. Other duties and charges are to be kept during the first seven years and then phased out in the following three years. Rice will not be among the commodities liberalized upon entry into force of the EPA – Source: GEOSTRATEGY

It seems to the BU household that far from opening our tiny Caribbean markets we should be introducing levels of protection. Who is to benefit when we open our markets to duty free goods from the EU? We know them to be technologically superior so how do we propose to exploit the reciprocal component of the EPA to the benefit of CARIFORUM? We don’t buy the academic argument that our production and service levels will rise to align with the EU, we just don’t but it. Our conclusion is based on simple commonsense.

A dumb conclusion we know but we have never been afraid to state our position.

Caribbean Regional Negotiating Machinery – Related Information

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13 responses to “Caribbean Leaders Split On Economic Partnership Agreement (EPA) With European Union (EU)”

  1. David Avatar
    David

    Here is an intelligent article on the EPA which we had to find in the Gleaner. The local newspapers seem intent on reporting what PM Arthur is saying about it. Can we have some other views please from the local media and other stakeholder?

    Understanding the EPA – Most Favoured Nation concession a danger for the Caribbean
    published: Friday | March 14, 2008

    David Jessop, Trade Writer

    The most difficult aspect of explaining a trade agreement in simple language comes when elements that are politically and economically important relate to concepts remote from daily life.

    It is easy to explain that in the Economic Partnership Agreement (EPA), imported spirits drinks from Europe will not become any cheaper because all Cariforum Governments bar the Dominican Republic agreed to exclude them from tariff liberalisation.

    But much less easy to explain simply is the Most Favoured Nation (MFN) treatment that the Caribbean agreed with Europe and why in theory it might affect the region’s future trade relations with say Brazil, India or China.

    Read more of the Jamaican Gleaner article

  2. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    It is very clear that the Prime Minister and Minister of Finance and Economic Affairs, Mr. David Thompson, the Foreign Affairs and Foreign Trade Minister, Mr. Chris Sinckler, the Parliamentary Representative for St. Peter, and BLP member, Mr. Owen Arthur, and some other political leaders in Barbados have for a long time been STARKLY FAILING to tell the people of Barbados and by extension CARICOM that whether it has been the LOME Agreements, the Cotonou Agreement, GATT > WTO Agreements, the EAI, the CBI, or whatever else multilateral agreements that we in Barbados and by extension CARICOM have been acceding to, the facts are such that these kinds of agreements have been very elitist, imperialist and neo-colonialist in nature, are such that the particular reasons for the bringing about of these agreements are very disturbing to thousands upon thousands of citizens within Barbados and CARICOM and , too, are such that these agreements have therefore NOT been according with our status as so-called peripheral capitalist developing countries. Indeed, based on the net balance of power and influence that bigger countries and their respective constituent and sectoral interests have long possessed and wielded over others in the international relations and political economy environment, they therefore are sometimes wont to get smaller countries and their respective constituent and sectoral interests to so-called agree to or ratify the terms, conditions and provisions of these agreements themselves, and altogether to follow through on their commitments within the framework of the implementation of these agreements.

    But, just look at the fact of the statistics related to the import patterns of Barbados and other CARICOM countries and one gets the general picture as to the very adverse impacts these agreements have had on the TOTAL VALUE – NOT SO MUCH THE TOTAL QUANTITIES – of the importation of goods and services from the said bigger countries that participate in these agreements!!Therefore, this REPA between CARICOM and the Dominican Republic and the EU is and will be NO different from agreements like those mentioned above, AND WILL CONTINUE, AS THOSE SAID AGREEMENTS HAVE ALREADY DONE OR HAVE BEEN DOING, TO HELP DEVASTATE the so-called economies of Barbados, CARICOM and the Dominican Republic esp. from the point of view of the chronic dependency such countries have on imports from particular EU countries, and from the point of view of foreign exchange losses such countries incur to those EU countries.

    These bigger countries and the respective constituent and sectoral interests are NOT the only ones to blame for the adversities and challenges that smaller countries and their respective constituent and sectoral interests face in the context of the processes of the negotiation, ratification and implementation of such agreements, for when political leaders like Thompson, Arthur, Sinckler REFUSE TO NEGOTIATE FOR A RIGHT TO CONSULT with and GIVE the people of Barbados a say in the negotiating of these said agreements, what kind of regard would any reasonable citizen of Barbados therefore have for wanting to know about the nature, history, implications and other relatives of these agreements? What an inglorious shame and travesty!!

    PDC

  3. Jagdeo Avatar
    Jagdeo

    The Economic Partnership Agreement
    Friday, March 14th 2008
    There has been a spate of comments since the initialing of the Economic Partnership Agreement between the European Union and Cariforum. The writers and commentators include professors of economics and political science, former Caricom ambassadors and practising politicians. They embraced even our own indefatigable President Bharrat Jagdeo who threatened to initiate civil proceedings against the European Union while, virtually at the same time, his Minister of Foreign Trade, Dr Henry Jeffrey, was attempting to describe the Agreement in positive terms.

    In the final analysis, although their comments covered almost the gamut of political and economic opinion, these commentators were about equally divided between those who believed that the Caribbean Regional Negotiating Machinery which represented Cariforum obtained the best possible deal, in the prevailing circumstances, and those who were adamant that if the negotiating stances, strategies and tactics were more aggressively and better presented the negotiating machinery would have been able to gain concessions which were more in the interests of the Cariforum countries which they represented.

    The discussions also revealed inherent weaknesses in the organization of our negotiating institutions, and an apparent lack of capacity in our negotiating structure.

    However, before we address these issues, it is perhaps relevant to note that none of the commentators has pointed to the possibility that the removal of the preferences which we have “enjoyed” for decades on such commodities as sugar, might lead to the more rapid development of our region, and to the establishment of more diversified and less dependent economies in the individual countries and, consequently, in the region as a whole.

    The evidence is unassailable that very few countries, if any, have been able to produce commodities that were able to compete in the open market, if the subsidies and preferences they obtained for the particular commodity remained available over long periods of time. The reasons for this failure to escape from the preferential trap are not difficult to fathom.

    First, the recipient country builds the preferences and subsidies into its cost/benefit calculations so that the preferences and subsidies soon became essential and integral factors in the benefit part of their equations. Second, because of the spurious profitability of the preferred commodity, production is expanded in the recipient country and, over a period of time, this particular product becomes a significant component of the entire economy. Its proportionate contribution to the country’s gross domestic product increases almost exponentially, the number of people employed in the production of the commodity tends to dominate the economy, the particular commodity’s ripple effect on the overall national economy becomes even more dominant and pervasive, and, ultimately, the subsidized commodity becomes so socially important that decisions on its future are not made in economic or financial terms. The preferred commodity rules over the sector, then becomes indispensable to the entire economy, and then dominates the politics of the nation as a whole.

    Put in another way, where a country relies on preferences and subsidies, its entire development eventually becomes dependent on the largesse and handouts of foreign countries.

    Preferential treatment should therefore be understood for what it is: a short-term measure that is an insidious trap if steps are not deliberately taken to minimise the dependence it forces upon the society by diversifying the economy, by producing other goods and services, and by ruthlessly applying the basic tenets of economics and business to its continuation or expansion.

    It is to be hoped that countries such as Guyana will now seize this opportunity to develop their economies without incorporating the so-called benefits of preferences into its economic forecasts and calculations. If this is done, then businesses would be more soundly based and, more important, the nations would not have to continue to rely on the donations of richer nations. Perhaps at last they might cease to be nations of mendicants.

    This failure to appreciate the inappropriate nature of preferences is not the only reprehensible factor in our negotiations with the European Union.

    Even the most cursory reading of the Cotonou Agreement which, over the last decade or so, became the most significant document which outlined the relationship between the European Union and the African, Caribbean and Pacific States would have revealed that because the deliberations were being centred on the best terms obtainable at the WTO, the future focus of the deliberations would have to be shifted from Brussels where the EU and ACP states are located, to Geneva, the Headquarters of the WTO. What was decided in Geneva exerted the greatest influence in Brussels.

    And yet Guyana, for example, has no permanent trade representative in Geneva, the WTO being inadequately serviced by our Embassy in Brussels.

    It is also fair to state that our Brussels Embassy, through no fault of its own making, is incapable of managing our country’s affairs in both the WTO and the ACP. Indeed, because of the hasty, irrational decisions of the then Foreign Minister Clement Rohee in 1992/3 the Brussels office was somewhat stripped of its capacity to undertake meaningful analytical work, and did not (indeed does not) contain a critical mass of economists and diplomats to perform the tasks assigned to it.

    This deficiency in numbers of the Brussels staff might have been compensated for by the presence of adequately trained and motivated economists and diplomats in the Ministry of Foreign Trade in Georgetown. Alas, on many important issues in the past, there has been little or no policy guidance from Headquarters, little or no technical back-stopping, and little or no general cooperation. Reaction has been all.

    It is to be hoped that under the new leadership of Minister Henry Jeffrey the situation might improve.

    The following incident illustrates the non-professionalism of the Cariforum group in its dealings with WTO. When Brazil, Australia and Thailand got together to challenge the legality of the sugar subsidies which the Europeans conferred on their farmers at that time, it soon became apparent that if the WTO ruled against the Europeans the sugar subsidies doled out by the EU to the ACP countries would also be adversely affected, as the subsidies provided by the EU to their own farmers, and those which they provided to the Cariforum group, appeared to be inextricably linked.

    After a period of merely meeting in the wings, perhaps in the hope that the problem would simply disappear, the Caricom Ministers of Foreign Trade decided that a representative number of them would fly post haste to Brasilia to beg or to plead with the government of Brazil not to pursue its pending challenge.

    The Cariforum ministerial delegation arrived in Brasilia without any preparatory work being done by its ambassadors in Brazil. It spent a few long days in that country before it was permitted to meet any senior member of that country’s government and, in the end, seemed unable to discuss the matter with any important Brazilian decision maker.

    Moreover, in its single minded objective of holding on to its preferences without countenancing competition from any other country, the Caribbean nations had already crossed swords with all the Least Developed Countries, the poorest of the poor, in the world. The European Union, in an effort to reduce world poverty, decreed that these poor countries would be allowed to export to Europe any commodity without the payment of taxes and duties, the sole exception being armaments. The West Indians immediately took up arms against this European attempt to assist their poorer brothers. They announced that they were being betrayed, and that their competitive status in Europe was being undermined. They demanded the withdrawal of the EBA decree, as it came to be called. Later, faced by hostile European and African and Pacific groups they changed their mantra to one which urged that the burden arising from the new concessions to the LDCs should be equally shared.

    By that time, however, the West Indians had not only earned the displeasure of the poorest countries in the world, they had lost the moral high ground. There was little or no sympathy with them in both the European Union and in the rest of the ACP group for the Caribbean. The points that are being made about these two incidents are three-fold. First, they illustrate the ad hoc, non-thought through, non-professional nature of the Caribbean’s response to important matters. Second, they demonstrate the confrontational nature of their response. (This was perhaps in keeping with the confrontational attitude of the then Guyana Minister of Foreign Trade). And third, they disclose that the Caribbean countries imagined that the preferences they obtained from the Europeans were a right.

    In other words, the EU had a duty to treat the Caribbean countries in an especially generous way. This general approach would affect our negotiation stances with the Europeans over the Economic Partnership Agreements, and perhaps lead to the dissatisfaction which has resulted.

    The opportunity now presents itself for a major revision of our Regional Negotiating Machinery as it relates both to the conduct of foreign trade negotiations and to the improvement of Caricom’s efficiency and efficacy, i.e to the strengthening of the integration process.

    If, as is expected after the signing of the EPA, our relationship with the EU becomes more regional than international; and if, as seems evident, the WTO will play a much more significant role in the formulation of foreign trade policies and programmes than Brussels, then our activities in Brussels should be downgraded; the regional institution, Caricom, should be much strengthened; and the quality, spread and competence of our embassies in Geneva be considerably enhanced. Caricom should be given the overall responsibility for trade negotiations. To this end, its core of trading officials must be improved. Above all, it must be staffed by officials and experts comparable in status and qualifications to those who now occupy similar positions in the European Commission in Brussels. This would mean that both senior politicians and officials from sovereign Caricom countries must be prepared to accept posts in a revitalized and reformed Caricom. It would almost inevitably follow that new arrangements would have to be made to increase Caricom’s decision – making powers.

    This exchange between senior country officials operating at the national level and officials operating from the central regional secretariat has, indeed, for a long time now, been the practice in the European Commission to which many ministers gravitate from their individual countries, and from which many commissioners are called to their countries even to become Prime Ministers. In addition to strengthening their offices in Geneva, Caricom countries should restructure and improve the quality of their headquarters ministries of Foreign Trade to improve their capacity to service their negotiating counterparts in Geneva.

    Above all, foreign trade policy should be seen as an integral part of national foreign policies. It must be admitted that standing alone, Cariforum countries do not by themselves possess the power and the influence for them, on their own, to lever important decisions at the WTO and in the European Union. It is only by putting together, or by joining, powerful blocs of nations that we can begin to hope to play important roles in the formulation of policies and in the crafting of strategies that are designed to influence solutions of the burning questions of our time.

    We cannot rely, as we appear to have done in our negotiations with the Europeans over the banana and sugar subsidies for example, on organised street protests in our capitals, and on the shrill and strident utterances of various Caribbean Ministers. We must understand that we are no longer in a Cold War. We must appreciate that we are now negotiating with a new breed of ministers who do not seem to feel any guilt for the sins of their fathers. In these, as in all other matters, we should display analytical skills that are second to none.

  4. Straight talk Avatar
    Straight talk

    Thank you Jagdeo, for your most intelligent and enlightening analysis of the EPA.

    You have cogently stated the many and diverse misgivings of many commentators to this whole procedure and our response to it.

    Welcome to our blog.

  5. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    A very significant and commendable piece of writing by Jagdeo indeed on, et al, some of the factors that have led to Caribbean political and other leaders and technocrats having so many differences among themselves on the Regional Economic Partnership Agreement (REPA)with the European Union (EU). We in the People’s Democratic Congress (PDC) hope that Jagdeo will, by any future contributions he/she/they make to this blog, continue to help raise the standard of discussion on this blog itself. This is something that PDC has been looking forward to for a long time.

    And, it must be said by us that among intellectuals, academics and social commentators sometimes there is NOT any thing better than a very informed and salubrious discussion on very important local, regional and international matters and issues. We look for to engaging you on many issues on this blog. Thank you!!

  6. David Avatar
    David

    Please note the ‘comment’ by Jagdeo was an article which was copied and pasted from the Stabroek News!

  7. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    David, thanks for the clarification. Nevertheless, it does not take away from the general soundness and validity of the piece of writing itself.

  8. shernice Avatar
    shernice

    i asked for caribbean leaders this is borin

  9. David Avatar
    David

    The EPA is now signed (Guyana to sign later) and Minister Sinckler seems very enthusiastic that Barbados will be able to make it work to its advantage. We hope so!

    He has already promised to establish the EPA Unit very soon.

    One point which the Minister keeps making is that with the need to get in line with WTO requirements not signing the the EPA EU was not an option.

  10. The scout Avatar
    The scout

    If we ripping hell about the illegal people in Barbados, the signing of the EPA is a legal way for us to be re-colonialised. Big EU businesses will move into this country and compete with our business here. The big sharks will eat up our small jacks and all that will be left is the EU or Union Jack flag replacing our National flag. With property taxes rising at this rate poor bajan will have no alternative but to sell out and return to SLAVE HUTS. Oh no, there is another alternative STAND UP AND PROTECT WHAT IS OURS.

  11. ROK Avatar
    ROK

    Scout

    You have given the best advice: STAND UP AND PROTECT WHAT IS OURS.

    How do we do that? We stop buying EU Goods as consumers; we stop selling land just to get the short term hefty price that will leave you as fast as you get it because it will just not be enough; We should start our own stock market that will help our own businessmen grow; pool money and resources with initiatives like the BOLD Company and start buying up Barbados.

    Those are a few, but sufficient to give you the gist.

  12. Flug Kapstadt Avatar
    Flug Kapstadt

    We need more fixes.It becomes more and more complicated…

    it seems like a “battle call”
    ->”STAND UP AND PROTECT WHAT IS OURS.” 😉

    Greets

  13. RAAM Avatar
    RAAM

    EPAs are coming to Mauritius. What advice can be given to us citizens of Mauritius?

The blogmaster invites you to join the discussion.

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