EPA good for Dominican Republic, says former diplomat

Bernardo Vega

BRIDGETOWN, Barbados, February 7, 2008 - As the Dominican Republic prepares to sign a new Economic Partnership Agreement (EPA) with Europe as part of CARIFORUM (CARICOM and the Dominican Republic), a former Ambassador is suggesting that the move will work in that country's favour.

But he says the protectionism which other Caribbean countries have become accustomed to could put them at a disadvantage when they're forced to open up their markets.

Bernardo Vega says the new trade deal which is expected to be signed on March 31st and provisionally applied on April 1st provides certainty for investors and is much more beneficial than the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA).

"Unlike DR-CAFTA, the EPA recognises concepts like non-reciprocity and slower opening up of markets by the Caribbean. It also provides temporary migration facilities and guarantees a certain volume of aid not available under DR-CAFTA," he said.

"Caribbean exports, with the exception of bananas, rum, and sugar, are not likely to increase substantially, due to competition from lower-cost producers in Asia and Africa

who will also benefit from the EPA. The Dominican Republic, the only Caribbean

country that signed both DR-CAFTA and the EPA, will particularly benefit, as it

already opened up its economy," he added.

Vega, a former Dominican Ambassador to the United States offered an explanation for other Caribbean countries' resistance to the reciprocal agreement on trade in goods and

services and investment.

"The English-speaking islands have been more protectionist, so to them the opening up to

free trade will be more problematic, including loss of customs revenues," he said.

But former Caribbean Ambassador Sir Ronald Sanders has insisted that the reciprocity and open markets which the EPA demands between unequals will favour the bigger and richer region – the European Union, putting sectors in CARIFORUM countries in peril.

He contended that those in Caribbean countries cannot compete on the same scale that those in Europe can.

"Over time, the terms of this agreement will give European companies national

treatment in CARIFORUM countries. With their greater resources, European companies will dislodge all but a few Caribbean companies from their own markets. European goods will also push out products of small Caribbean firms from their domestic space," he explained.

"While reciprocity also allows CARIFORUM companies national treatment in the EU,

Caribbean companies simply lack the resources to compete with much larger European companies in the EU; reciprocity for CARIFORUM countries is therefore meaningless."

Sir Ronald said these countries face the prospect of a return to a plantation-type economy as was the case during colonialism, where large companies in the Caribbean will be owned by absentee European owners, managed by expatriate managers and the profits repatriated to Europe.

He further suggested that with the region's signing of the EPA, other countries will demand similar arrangements – a situation which he insisted the region is not ready for.

"The conditions such as national treatment for European companies and the right to compete in the provision of services will be standards that other countries, like Canada and the US will demand in free trade arrangements with CARIFORUM. In turn, this will limit even more the ability of Caribbean companies to survive," Sir Ronald cautioned.