New dawn of trading between the Caribbean and Europe

After three and a half years of intense negotiations, an agreement has been reached between the CARIFORUM states and the European Community which will usher in a new era of trading relations.

The agreement, expected to come into play from 15 April this year, will bring to an end the preferential one-way duty free access into the EU currently enjoyed by Caribbean countries. It will also commit CARIFORUM states to open their markets to European goods and services.

African, Caribbean and Pacific (ACP) developing countries have all been negotiating with Europe since 2004, but the Caribbean is the first region to reach a complete and comprehensive new trade agreement.

Critics of the plan argue that signing the Economic Partnership Agreement (EPA) will make Caribbean countries worse off, because they do not believe they are in a position to compete effectively on the world market. On the other side of the debate, there is the view that reciprocal trading will in fact help developing countries, by giving them more of a chance to integrate effectively in the world economy, and not be left behind.

Within this new agreement, certain measures have been built in to control the proposed changes, such as the exclusion of sensitive sectors, like fruit and dairy products, as well dampening potential adjustment costs while the countries find their feet. It also supports initiatives that aim to promote regional co-operation between CARIFORUM countries.

“Trade has become a vitally important vehicle of economic development. Because many small, vulnerable economies cannot currently compete on their own in an international market this new partnership aims to encourage small developing countries to work together to produce and supply competitively,” said Sheldon McLean, a Regional Trade Policy Adviser for the Caribbean Community (CARICOM) Secretariat, who is involved in formulating the agreement.

He contends that the agreement also supports conditions for increasing investment and initiative from the private sector in Caribbean countries, which is expected in turn to enhance the competitiveness and economic growth in the region.

Mr McLean is one of a number of experts funded by the Commonwealth Secretariat and the European Commission as part of a project to assist ACP countries integrate more easily into the world’s trade system.

This project, often referred to as ‘Hub and Spokes’, is a joint initiative between the Commonwealth Secretariat, the Organisation Internationale de la Francophonie and the European Commission, along with support from the ACP Secretariat.

Mr McLean and other experts have been working alongside Caribbean governments as well as the CARICOM Secretariat in the run-up to this new EPA, which aims to use trade as a vehicle for development by offering access to Europe’s US$450 billion market.

“We hope that when businesses invest in the new trading opportunities, they will increase employment in their companies, which will generate better incomes and help improve standards of living,” said Edmund Paul Kelekyezi, a Trade Policy Analyst in Guyana’s Ministry of Foreign Trade and International Co-operation.

“The other side of the coin is that poverty may increase because too much competition will lead to local industries collapsing. However, we have worked to ensure that the agreement has the necessary controls and structures to help prevent any negative repercussions.”

Secretariat Links:

• Hub and Spokes
• Country Profile: Guyana