David Jessop
THE CLOCK is ticking. By the early part of next year, at the very latest, Europe and the Caribbean must reach agreement on some new form of trade arrangement acceptable to all of the members of the World Trade Organisation (WTO).
Up to now only one option has been considered: an economic partnership agreement (EPA) between the European Union and the Caribbean. Yet the signs are that this concept is in trouble. So much so that recent developments in Europe and the Caribbean make it hard to understand whether there is any longer common ground on some of the most basic aspects of a Caribbean EPA.
In the last two weeks, there have new developments that threaten to undercut the preparatory work undertaken by trade ministers and the Caribbean Regional Negotiating Machinery. So much so that there is a possibility that the third and detailed final phase of negotiations may stall.
The range of unresolved issues is startling. They include the shape of the region to be included within an EPA, whether an EPA is about development or trade, the absence of an effective funding mechanism, the percentage of goods and services that any agreement should cover, and the timing and phasing of EPA-related tariff liberalisation.
So much so that speaking on June 27 about the whole EPA process, Barbados' Minister of Foreign Affairs and Foreign Trade, Dame Billie Miller, noted that the "major differences" between the positions of the ACP regions and the EC had become a cause for real concern.
ISSUES REQUIRING RESOLUTION
Observing that a working trade arrangement had to be in place by the time that the WTO waiver on the Cotonou Convention's trade provisions expires on 31 December, 2007, she suggested that if negotiations did not accelerate, "an alternate WTO-compatible arrangement which will facilitate
the continuation of trade and development cooperation" would have to be arrived at.
All of the issues still to be resolved in a Caribbean EPA
are critical, but none are more fundamental than the developmental role and the grouping of nations that the new arrangement will apply to: the so-called geometry of the relationship.
The first is in the hands of the European Union and here the answer ought to be simple. If an EPA is, as the EC proclaims, about development, then Europe has, to put it crudely, to place its money where its mouth is and cease to use its trade negotiating weight to leverage open the Caribbean market. The Caribbean response is fast approaching exasperation and anger and it is no help to hear once again on June 28, the EC's Trade Commissioner suggest that EPAs are about development and equity but that " it is not possible to contractualise finance into an EPA with no end date."
In contrast, the second issue requiring resolution the nations to be included in the Caribbean's customs union is very much in the hands of the region.
Here it is the European Union and the world beyond the region that is looking on with something approaching incredulity. They note the Caribbean proclaims a single identity and has just agreed the structure of a regional development fund to float some of the region's poorer economies up to a level closer to those of the more developed. Yet they also see a region's that is rapidly breaking up into a number of parts.
SINGLE CUSTOMS UNION
Europe wants a relationship with a single customs union. Ideally, this would include all of the independent Anglophone Caribbean, plus the Dominican Republic and probably Haiti. Instead, what it sees is a jumble of unequal-sized economies of little global economic significance with a non-inclusive single market and a fragmented single economy seeking highly variable inter-relationships with Europe within a single agreement.
Commenting indirectly on the need for clarity in configurations, Europe's Trade Commissioner was clear: "I recognise that the choice of EPA geographical configurations is difficult. The EU will not interfere in ... sovereign choices. But, as your partner and as a party to these negotiations, we have to avoid unworkable solutions. We cannot, for example, make it possible to be part of two customs unions at once. But we do not need a common regional tariff in place overnight."
And here lies the real challenge. With just negotiating six months to go there is no clarity about which nations will be within the single customs union for an EPA.
Instead, there is now uncertainty about where the Organisation of Eastern Caribbean States' (OECS) decision to establish a treaty of economic union leaves its relationship with the CARICOM Single Market and Economy.
SPECIFIC CONCERNS
At their meeting earlier in June in Basseterre, OECS governments made clear they have specific
concerns in the area of trade liberalisation. The organisation has been developing a trade policy framework that is premised on a desire for permanent special and differential treatment. This has led it to have quite different offensive and defensive negotiating interests from its more developed Caricom neighbours and a desire to preserve traditional exports sectors and to protect its 'disadvantaged' private sector operators.
It reflects a changed strategic approach and a desire to assert the sub-region's identity or as St Vincent's Prime Minister, Ralph Gonsalves put it, make clear that the OECS is "possessed of real flesh and blood people with a
real history, with legitimacy with a trajectory for ennoblement and a permanent occupation."
DEADLINE WITH EUROPE
Uncertainty also surrounds the Dominican Republic's relationship to a Caribbean EPA, albeit for
very different reasons. It remains rebuffed, isolated and not a member of any integration process despite its wish to participate in a Caribbean customs union. The Bahamas' intentions about an EPA with Europe remain unclear and there is yet to be an understanding of how Haiti, now back within the Caricom economic fold, might be accommodated.
In a matter of days, CARICOM heads of government will meet in St. Kitts. Their already overfull agenda will again consider how the region's disparate economies are to be assimilated into a whole, to say nothing of how this new geometry will play into trade arrangements with Europe and elsewhere.
If the past were any guide to the present, extended inter-regional
dialogue and delay might be a
solution. But external factors no longer make this possible. There is a deadline with Europe and the international community.
David Jessop is the Director
of the Caribbean Council and can be contacted at david.jessop@ caribbean-council.org
Previous columns can be found at www.caribbean-council.org
