David Jessop

'Past performance is no guarantee of future results' reads the 'health warning' on many financial products sold in the United Kingdom.

It is an expression of caution that might usefully be applied to the Caribbean's relationship with Europe.

As the region struggles to complete an economic partnership agreement (EPA), it is about to test whether a Europe of 27 states, where the majority have no historic perspective on the Caribbean, has any interest in the development of the region.

Unlike almost every other grouping in the African Caribbean and Pacific (ACP) bloc, the Caribbean is now very close to concluding a comprehensive EPA but requires about four more months to do so.

It has made clear that it will not follow the route of others in the ACP and sign an interim agreement.

Instead, it will continue to negotiate in its own time for a comprehensive text. It has also begun to make clear at the highest political levels in Europe that there is every reason why it should be given the space to do so.

By the time this column appears in print, Caribbean heads of government would have finished their December 8 meeting in Georgetown, Guyana, and should have made up their minds as to how they intend to make their case in Europe.

Speaking privately to some of the participants involved in this crucial meeting, it was clear that a number o outcomes were possible.

At best, they hoped that the region would remain steadfast in seeking a comprehensive EPA and that no Cariforum state would seek an interim trade-in-goods agreement or a mini-EPA.

If unity prevailed, it was likely that one head of government, would write to all EU heads of government, indicating the region's commitment to achieving a full EPA within the first three to six months of 2008 if the GSP threat is waived.

Finalising an agreement

At worst, they envisaged a much less propitious outcome.

If Caribbean heads were unable to reach any agreement or were to ask for more time for consultations, this would almost certainly result in the Dominican Republic (DR) breaking away from Cariforum and finalising an agreement of their own before the year's end.

If this happens, concluding an EPA would, it was suggested, become more complex as the Caribbean's tariff-reduction schedules would need recalculating, probably compromising the Caribbean's present market-access offer.

It was also felt likely that if the Dominican Republic did break away, regional sentiment would be so strong that DR/Caricom relations could break down irretrievably.

How this situation has been reached is not widely understood.

On November 23, in Uganda, in the margins of the Commonwealth Heads of Government conference, Caribbean leaders met with British Prime Minister Gordon Brown and his Development Secretary, Douglas Alexander.

There, while urging Caribbean heads to try to achieve an agreement by year's end, the British Prime Minister agreed to use the U.K.'s good offices to explore the possibility that the European Commission and European Union member states might suspend the introduction of the GSP for a short period, as the region was near to completion of a full EPA.

Then, quite separately and before this approach was under way an exchange took place in Barbados on December 1, at which the region's negotiators were able to make a comprehensive trade-in-goods offer to their European counterparts.

This came very close to the magical figure that Europe has been insisting on to achieve coverage of substantially all trade. However, Europe's response was unhelpful on this and a range of issues - about which more later - even reneging on some aspects of the services text that had already been agreed.

As a consequence, Caribbean heads agreed to meet again for the third time in as many months to try to find a way forward.

In the region there is a belief at the highest levels that, with compromise and flexibility, achieving a full EPA is possible, and for this reason, Europe should consider 'stopping the clock' on the application of the GSP.

In this respect, it is argued that even if a challenge should arise at the World Trade Organisation (WTO), adjudication would take significantly longer than the period required to complete a Cariforum EPA.

Political goodwill

Documents from the region suggest that with political goodwill on the European side, the remaining issues can be resolved.

First, it is recognised that agreement on tariff liberalisation is essential to the conclusion of any agreement. Cariforum has presented proposals in the vicinity of 85 per cent of total trade with Europe, but the EC is objecting to the inclusion of some items among those to be excluded from liberalisation that yield high government revenues - automobiles, for example.

Europe is also now objecting to the phasing of tariff reductions on certain items.

Second, Cariforum govern-ments want 'other duties and charges' to remain in place for seven years and be phased out over the following three years.

These charges provide essential public services such as health and education. Cariforum argues that their removal other than in a gradual and phased manner, would pose significant economic, social and even political problems. Despite this, Europe wants a brief moratorium followed by a short phase out.

Third, most favoured nation (MFN) treatment remains a problem.

In return for granting Cari-forum any more favourable trade conditions, Europe wants Cariforum to grant it similar MFN treatment flowing from any third party arrangement that the Caribbean bloc enters into with developing and developed countries or countries having 1.0 per cent or more of world trade.

In response, the Caribbean has said that it is prepared to extend such treatment to the EU in relation to developed countries only.

Fourth, on services, Cari-forum is concerned that the EC lacks an appreciation of the disparity in levels of development within the region and the fledgling nature of its services sector.

Europe is demanding sectoral coverage of 80 to 90 per cent while the region is prepared to offer between 75 per cent and 65 per cent, depending on the development status of the nation concerned.

There are also issues relating to services sectoral coverage and EU attempts to impose excessive conditions on the movement of Caribbean nationals wishing to provide services in Europe.

And fifth, while it is acknowledged that Europe has gone some way towards meeting the region's requests in respect of development, the volume and delivery of resources earmarked for EPA-related funding is considered insufficient.

There is also concern about how EU member states will turn their aid for trade provisions into firm commitments for the Caribbean.

Lack of perspective

Some years ago, a British minister faced with a crisis in relation to a meeting he was having with Caribbean ministers asked me bluntly: "What is up with these people?" I have since thought about this a great deal and have concluded that his incomprehension arose from his absence of history and the lack of any perspective on what motivates regional thinking.

Like him, it seems that Europe's EPA negotiators have, for the most part, failed to understand the intense desire of the region and its people to possess their own future.

Let us hope that the political faith now being shown in Gordon Brown and his European colleagues does not mark a step into the dark.

David Jessop is director of the Caribbean Council. Email: david.jessop@caribbean-council.org