Caribbean should prepare now for implications of EPA with Europe

by Sir Ronald Sanders


LONDON – The Economic Partnership Agreement (EPA) between the Caribbean and European Union (EU) countries is now a done deal.


Negotiators initialled it on December 16th and Ministers will sign it early in the New Year.


The Caribbean public is yet to see the content of the EPA and it is, therefore, impossible for anyone but the negotiators to fully understand it.


We do know two things.  First, these were extremely difficult negotiations with EU playing hard ball throughout.  And, second, our negotiators were Caribbean patriots who would have fought for the best deal they could get.


Whatever gloss the EU Commissioners put on it, their threat of the imposition of Generalised System of Preferences (GSP) standards on Caribbean exports into Europe, if the EPA was not signed, sufficiently frightened some government representatives and special interest groups such as rum producers who desperately wanted to protect their exports.


In other words, the EU were determined to get their way, and however well Caribbean negotiators fought with them, the EU were supremely conscious that the ultimate power was in their hands –  the Caribbean needs the EU market more than the EU needs the Caribbean.


All the talk of development assistance to compensate for the disruption to Caribbean economies in vital areas of production is cheerful talk, but the proof of that pudding is in the eating.  And, the pudding to be shared amongst all 78 African, Caribbean and Pacific (ACP) countries is not very large.


So, we should be clear:  The EU has done the Caribbean no favours, and whatever has been extracted from them by the Caribbean negotiators was done by very hard graft indeed.


The EU was negotiating at the Caribbean table, but the eyes of their Commissioners were on Africa.  They wanted no precedent set in an agreement with the Caribbean that would affect the access they want to the resources of Africa.


It was good for the EU, therefore, that they settled their first comprehensive agreement with the Caribbean.  Now it can be waived as a standard to all others.


In very broad terms, we know a few other things.


The EU will be able now to compete with local companies and get national treatment in bidding for government contracts in the Caribbean.  


80 per cent of imports from the EU will enter Caribbean markets at lower duties than they now pay.  In some cases, there will be no duty at all.


EU service companies in tourism, banking etc will also have access to Caribbean markets to compete with local companies.


Of course, the EU would argue that these are reciprocal arrangements and 15 CARIFORUM countries will have duty free and quota free access to the EU markets for all goods except sugar and rice “for which there will be a short transitional arrangement”.  Caribbean service companies, they will say, also have access to the EU market.


But, the bottom line is that the EU companies with their far greater resources will exploit the Caribbean market.  There are few Caribbean companies, at the present time, that have the means to compete with European companies in their own Caribbean markets.


A further worry to Caribbean countries is that in seven years time, Caribbean governments will have to eliminate “Other Duties and Charges” which are a major source of government revenue at their ports.


These border duties and charges on imports will have to be replaced by internal taxes.  This could mean increases in income tax, government sales taxes and the introduction of new tax measures. The burden of government revenue will shift directly to the Caribbean people.


The bottom line of all this is that, for better or worse, there is now an EPA between the Caribbean and the EU and it has to be implemented.


The Caribbean has various periods of time to adjust to the enormous changes that this agreement will bring.  And, no time should be wasted in fully understanding all the implications of the EPA and taking action to prepare for them.


The private sector organisations and trade union groups that remained supine while the negotiations were going on, can not complain when the realities of the EPA start to take effect.  Many of them failed to ask for a place at the negotiating table.  Even worse, they did not insist on setting up working parties to constantly engage in a dialogue with governments and the negotiators on the various aspects of the agreement.  They are now estopped from objection by their own lack of action.


But, they should now demand the very early publication of the agreement, and they should insist on the immediate creation of regional and national working parties of governments, private sector organizations and trade unions to analyse it, understand it, explain it to the wider public, and prepare for the changes.


They should also work to devise regional and national plans to take advantage of the access to the EU market that has been achieved.  While it will be difficult, enterprising Entrepreneurs in the region could broaden the scope of their businesses. There should be a regional effort to do so, backed by risk capital from indigenous banks and governments for companies with viable business plans.


The negotiations were shrouded in secrecy but maybe that was allowed because organisations in the Caribbean did not insist on public discussion and public involvement.


Now that the deal is done, all should be revealed and collective preparation to meet the challenges thrown down by the EU should begin without delay.


(As I finished writing this commentary, I received the text of the EPA it is 404 pages without the annexes. It requires time for sensible analysis. I will return to it next week after I have digested it).

Caribbean should prepare now for implications of EPA with Europe

Commentary
by Sir Ronald Sanders


LONDON – The Economic Partnership Agreement (EPA) between the Caribbean and European Union (EU) countries is now a done deal.


Negotiators initialled it on December 16th and Ministers will sign it early in the New Year.


The Caribbean public is yet to see the content of the EPA and it is, therefore, impossible for anyone but the negotiators to fully understand it.


We do know two things.  First, these were extremely difficult negotiations with EU playing hard ball throughout.  And, second, our negotiators were Caribbean patriots who would have fought for the best deal they could get.


Whatever gloss the EU Commissioners put on it, their threat of the imposition of Generalised System of Preferences (GSP) standards on Caribbean exports into Europe, if the EPA was not signed, sufficiently frightened some government representatives and special interest groups such as rum producers who desperately wanted to protect their exports.


In other words, the EU were determined to get their way, and however well Caribbean negotiators fought with them, the EU were supremely conscious that the ultimate power was in their hands –  the Caribbean needs the EU market more than the EU needs the Caribbean.


All the talk of development assistance to compensate for the disruption to Caribbean economies in vital areas of production is cheerful talk, but the proof of that pudding is in the eating.  And, the pudding to be shared amongst all 78 African, Caribbean and Pacific (ACP) countries is not very large.


So, we should be clear:  The EU has done the Caribbean no favours, and whatever has been extracted from them by the Caribbean negotiators was done by very hard graft indeed.


The EU was negotiating at the Caribbean table, but the eyes of their Commissioners were on Africa.  They wanted no precedent set in an agreement with the Caribbean that would affect the access they want to the resources of Africa.


It was good for the EU, therefore, that they settled their first comprehensive agreement with the Caribbean.  Now it can be waived as a standard to all others.


In very broad terms, we know a few other things.


The EU will be able now to compete with local companies and get national treatment in bidding for government contracts in the Caribbean.  


80 per cent of imports from the EU will enter Caribbean markets at lower duties than they now pay.  In some cases, there will be no duty at all.


EU service companies in tourism, banking etc will also have access to Caribbean markets to compete with local companies.


Of course, the EU would argue that these are reciprocal arrangements and 15 CARIFORUM countries will have duty free and quota free access to the EU markets for all goods except sugar and rice “for which there will be a short transitional arrangement”.  Caribbean service companies, they will say, also have access to the EU market.


But, the bottom line is that the EU companies with their far greater resources will exploit the Caribbean market.  There are few Caribbean companies, at the present time, that have the means to compete with European companies in their own Caribbean markets.


A further worry to Caribbean countries is that in seven years time, Caribbean governments will have to eliminate “Other Duties and Charges” which are a major source of government revenue at their ports.


These border duties and charges on imports will have to be replaced by internal taxes.  This could mean increases in income tax, government sales taxes and the introduction of new tax measures. The burden of government revenue will shift directly to the Caribbean people.


The bottom line of all this is that, for better or worse, there is now an EPA between the Caribbean and the EU and it has to be implemented.


The Caribbean has various periods of time to adjust to the enormous changes that this agreement will bring.  And, no time should be wasted in fully understanding all the implications of the EPA and taking action to prepare for them.


The private sector organisations and trade union groups that remained supine while the negotiations were going on, can not complain when the realities of the EPA start to take effect.  Many of them failed to ask for a place at the negotiating table.  Even worse, they did not insist on setting up working parties to constantly engage in a dialogue with governments and the negotiators on the various aspects of the agreement.  They are now estopped from objection by their own lack of action.


But, they should now demand the very early publication of the agreement, and they should insist on the immediate creation of regional and national working parties of governments, private sector organizations and trade unions to analyse it, understand it, explain it to the wider public, and prepare for the changes.


They should also work to devise regional and national plans to take advantage of the access to the EU market that has been achieved.  While it will be difficult, enterprising Entrepreneurs in the region could broaden the scope of their businesses. There should be a regional effort to do so, backed by risk capital from indigenous banks and governments for companies with viable business plans.


The negotiations were shrouded in secrecy but maybe that was allowed because organisations in the Caribbean did not insist on public discussion and public involvement.


Now that the deal is done, all should be revealed and collective preparation to meet the challenges thrown down by the EU should begin without delay.


(As I finished writing this commentary, I received the text of the EPA it is 404 pages without the annexes. It requires time for sensible analysis. I will return to it next week after I have digested it).