Transcript CARICOM’S SINGLE DEVELOMENT VISION & THE EPA ‘The …

Norman Girvan
ILO/CCL Round Table, 23-25 June 2008
http://normangirvan.info
‘We envision a Caribbean Community in which every citizen has the
opportunity to realise his or her human potential and is
guaranteed the full enjoyment of their human rights in every
sphere; in which social and economic justice is enshrined in law
and embedded in practice; a Community from which poverty,
unemployment and social exclusion have been banished; in which
all citizens willingly accept a responsibility to contribute to the
welfare of their fellow citizens and to the common good; and one
which serves as a vehicle for the exercise of the collective strength
of the Caribbean region, and the affirmation of the collective
identity of the Caribbean people, in the world community’.
Approved by Caricom Heads, July 2007
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HOLISTIC DEVELOPMENT
ECONOMIC
SOCIAL
ENVIRONMENT
GOVERNANCE
3
Self-sustaining growth
 Full employment
 Eliminate poverty
 Build an innovative & internationally competitive
economy
 Accelerated development of poorer countries in the
region
 Social justice
 Ecologically sustainable growth
 Democratic governance

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Regional integration as complement to national
development
 Regional social partnership
 Private sector as engine of growth
 Government provides enabling environment and regional
public goods
 Sectoral drivers of growth identified through multistakeholder consultation
 Common regional policies for key sectors
 Completion of CSME
 Regional Strategic Development Plan

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2006-2010
 Strategic Development Plan
 Extension of free movement
 Development Fund
 Financial integration
 Reform of Governance
 Social Partnership
2011-2015
 Common policies
 Harmonised business environment
 Monetary integration
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COMPATIBILITY OF THE EPA WITH
CARICOM’S SINGLE DEVELOPMENT
VISION AND THE CSME:
ISSUES
7
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Neo-liberalism vs. Managed development
Financing of development
Market access
Caricom-DR relationship
Phasing
Single Economy
Local entrepreneurship vs. Foreign investment
Governance
Implementation
Regional Integration vs. Regional Fragmentation
Policy flexibility
External Trade Policy
South-South Cooperation
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
The EPA - principles of neo-liberal globalisation
 Trade and investment liberalisation
 Non-discrimination between local and foreign firms
 Market-led integration with the world economy
 ‘locking in’ of government policies through binding/indefinite treaty obligations
 Commits future trade agreements
 Commits CSME policies

Development Vision & CSME - ‘managed development’
 Strategic engagement with the world economy
 Private sector led with strategic supportive role for governments
 ‘policy space’ is allowed to foster local and regional firms and industries.
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•
Exclusive reliance on market forces in integration schemes
usually benefits the stronger partner at the expense of the
weaker
•
Financing of infrastructure, financial and technical
assistance to firms for production and marketing, are
needed to overcome ‘market failure’
•
The EPA contains no quantified, time bound, legally
binding obligations to provide development support for
adjustment, diversification and competitiveness

EDF funds and ‘Aid For Trade’ are not a substitute
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Dominica
St Kitts Nevis
St Vincent
Grenada
Antigua
St Lucia
Belize
Guyana
Suriname
Barbados
Bahamas
Jamaica
Haiti
Trinidad and Tobago
500,000,000,000
Dominican Republic
Denmark
Romania
Portugal
Czech Republic
Greece
Austria
Sweden
Belgium
Poland
Netherlands
Spain
Italy
France
United Kingdom
Germany
GDP (PPP)
ASYMMETRIES OF SIZE
AGGREGATE GDP (PPP) 2006
2,500,000,000,000
15 LARGEST EU ECONOMIES
2,000,000,000,000
1,500,000,000,000
15 RICHEST EU COUNTRIES
1,000,000,000,000
CARIFORUM COUNTRIES
CARIFORUM ECONOMIES
0
Country
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ASSYMMETRIES IN LEVELS OF DEVELOPMENT
Per capita income (Purchasing Power Parity $)
70,000
60,000
15 RICHEST EU STATES
50,000
40,000
30,000
CARIFORUM STATES
20,000
10,000
0
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ADUSTMENT COST
MILLIONS EUROS
FISCAL
375
TRADE FACILITATION EXPORT DEVELOPMENT
240
PRODUCTION & EMPLOYMENT ADJUSTMENT*
140
SKILL DEVELOPMENT & PRODUCTIVITY
ENHANCEMENT@
210
TOTAL
924
Source: Milner Report
•*Programmes of assistance for workers (compensation for unemployment,
support for relocation and retraining) and by firms (closure, production line
restructuring etc)
•@ Support programmes to reduce the costs of adjustment and increase the
scope for dynamic benefits from export development: enhancement of
workers’ skills, the improvement of firm’s organisation and management
structures and the development of supportive economic policies and
infrastructures.
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
The amount programmed for Cariforum Regional Indicative Programme
for 2008-2013 under the 10th European Development Fund is Eu. 165
Mn.Of this, 33 Mn. is earmarked for EPA Implementation. This is 4% of
the total EPA adjustment and implementation costs estimated in the
Milner Report.

During 2000-2006 EU special funding for Ireland, a country of 4.5 million
people, totalled Eu. 4 Billion. In per capita terms the total funding for
Cariforum under the RIP is 1/560th of this.

In Aid For Trade, the EU has promised Eu. 2 Billion for the entire
developing world; of which 1 Bl. is supposed to be for the entire ACP;of
which Cariforum is only a small part. There is no assurance that AfT
funds will be available in the amount and timing and for the purposes
required for EPA implementation, adjustment and diversification.

Neither Aid For Trade nor EDF funding is part of the legally binding
obligations of the EPA Treaty. The EU Development Commissioner has
stated publicly that no additonal development funding wil be provided
under the EPA.
 Caricom countries have had duty-free quota-free (DFQF) access to the
European market for the majority of their exports since 1975.
 But there has been little diversification of exports to the EU away from
traditional commodities and into higher-value goods and services.
 Only 12% of Caricom’s exports now go to the EU; mainly sugar, bananas,
citrus, methanol and liquefied natural gas.
 The main reasons for lack of diversification are:▪ non-tariff barriers (NTBs) in EU markets – restrictive Rules of Origin,
Sanitary and Phytosanitary Standards and Technical Barriers to Trade--,
and
▪ supply constraints in Caricom economies—inadequate management,
technology and innovation, capital, skilled labour, and physical and
social infrastructure.
Caricom domestic exports to the EU by country, 2004-2006
Share in total exports
Domestic exports to EU (US$ 000)
(%)
CARICOM COUNTRIES
CARICOM
MDCs
BARBADOS
GUYANA
JAMAICA
SURINAME
2005
893,925
799,290
40,549
208,307
343,443
.
2006
2,037,357
1,933,982
38,717
196,641
476,305
.
2005
7
7
19
38
23
2006
12
11
16
36
24
TRINIDAD & TOBAGO
LDCs
BELIZE
OECS
206,991
94,636
55,667
38,968
1,222,319
103,375
84,357
19,018
2
26
28
23
9
26
31
15
ANTIGUA & BARBUDA
DOMINICA
GRENADA
MONTSERRAT
ST. KITTS & NEVIS
SAINT LUCIA
ST. VINCENT &
GRENADINES
103
6,869
5,378
0
60
16,014
.
7,622
1,878
0
121
..
3
18
25
0
0
40
.
19
10
0
0.3
..
10,544
9,397
31
28
16
%
% total
Exp.
CAR
Caricom Exports to the EU (2006) US $MN to EU exports
Total
2,037
100.0
12
Food
400
19.6
41
Beverages And Tobacco
42
2.1
15
Crude Materials Except Fuels
363
17.8
26
Mineral Fuels, Lubricants & Related
824
40.5
7
Animal And Vegetable Oils, Fats Etc
215
0.0
3
Chemicals And Related Products,
360
17.7
16
Manufactured Goods
33
1.6
4
Machinery And Transport Equipment
5
0.3
5
Miscellaneous Manufactures
8
0.4
6
0.4
0.0
1
Other
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Hence if Caricom is to derive signifcant benefit from DFQF
access, there needs to be
▪ (a) modification of the EU rules governing NTBs to them
easier to understand and to use
▪ (b) targeted technical and financial assistance to firms to
overcome NTBs, penetrate markets and build
production capacities
The EPA provisions under (a) are weak or non-existent.
Under (b) the EPA measures are not quantified or time
bound, and thus impossible to enforce.
“The Agreement provides, under extremely complex
rules, for cumulation among CF States, ten
neighboring Central American and Caribbean
countries, and, under highly restrictive “subsequent
sufficient working and processing” standards, for
materials originating in EC Parties, in the OCT and
other ACP States. The standard for “sufficiency”
varies from product to product, but in most cases
requires that the value of extraneous material
should not exceed 15 to 30 percent of the ex-works
price of the product.”
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“For an Agreement that purports to be not only
development oriented but aims at
“integrating CF into the world economy”
these are restrictive conditions that do more
to preserve European interests than to
promote the announced development and
integration objectives for CF”.
Havelock Brewster, The Anti-Development
Dimension of the EPA
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Conditions of access – employees of service firms - Art. 83
1.
2.
3.
4.
5.
6.
7.
8.
Must be working with a firm with a service contract in an EU member state
not exceeding one year’s duration
Must have at least 1 year’s working experience with the supplying firm as
well as 3 years’ professional experience
With certain exceptions*, must possess a university degree or equivalent
qualification and professional qualification required in receiving state.
Mutual recognition agreements may be necessary.
Stay limited to cumulative period of six months in any 12-month period or
duration of contract, whichever is less
Access limited to performance of contract
Number limited to what is necessary to fulfill contract as determined by
local laws
Other ‘discriminatory limitations’ are allowed, including limitations on the
number of employees permitted entry as a result of ‘economics needs tests’
in the receiving countries.
Other conditions are specified in Annex 4.
* Fashion model services, chef de cuisine services, and entertainment services other than
audio-visual .
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CARIFORUM will replace CARICOM in:•
Phased free movement of the majority of goods, services, and
investment
•
Regional Preference—Caricom LDCs will be obliged to give the
DR the same level of market access as the EU
•
Common policies on Trade Facilitation and Customs
Administration, Competition, Public Procurement, Intellectual
Property
•
Governance Organs - Caricom will share a single representative
with the DR in matters in which the CF states agree to act
collectively
•
Dispute Settlement Procedures on Intra-Regional Trade,
Services and Investment which parallel the CCJ
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
Import liberalisation phasing of the EPA is unrelated to a
strategy for the development of production capabilities
linked to implementation of common sectoral policies
under the CSME and the realisation of the SDV

New policy regimes begin to ‘kick-in’ on Provisional
Application of the EPA, pre-dates anticipated CSME
policies
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% and timing of imports to be liberalised
COUNTRY
ANTIGUA / BARBUDA
0
5Y
10 Y
15 Y
20Y
25Y
EXC
7
7
25
35
2
2
22
BAHAMAS
32
2
13
34
3
2
13
BARBADOS
48
0
2
24
1
1
23
BELIZE
13
6
10
27
1
3
39
DOMINICA
17
3
18
27
2
1
27
DOMINICAN REPUBLIC
53
8
5
21
3
5
5
9
14
20
25
2
3
28
GUYANA
53
1
7
18
2
1
18
HAITI
60
0
1
7
2
4
27
JAMAICA
56
0
1
26
2
1
13
ST. KITTS AND NEVIS
18
16
16
17
2
2
29
ST. LUCIA
38
0
4
22
5
2
29
ST. VINCENT/GREN
8
7
14
30
2
2
37
SURINAME
9
9
20
27
2
3
28
TRINIDAD/TOBAGO
73
0
1
18
0
1
6
CARIFORUM
53
3
5
22
2
2
13
GRENADA
Source: CRNM
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The EPA binds Caricom governments to adopt laws, regulations
and policies for the following areas that were to be part of the
Caricom Single Economy:
Trade Facilitation and Customs Administration

Intellectual Property

Competition Policy

Public Procurement

Investment and Current Account payments

Services
These policy regimes were to have been designed with Caricom’s
own development needs in mind. They will now be driven by
the obligations of ‘EPA compliance’-- or become entirely
redundant.
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
‘National treatment’ obligations in the EPA
restrict the ability of Caricom governments to
foster the development of local/regional
firms by preferential treatment

Other regulatory rules circumscribe
governments’ ability to regulate services in
the public interest
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JOINT CARIFORUM-EC COUNCIL
Ministerial – binding decsions
TRADE AND DEVELOPMENT COMMITTEE
Officials – binding decsions
COMMITTEE ON CUSTOMS CO-OPERATION AND
TRADE FACILITATION
PARLIAMENTARY COMMITTEE
Deliberative - recommendations
CONSULTATIVE COMMITTEE
Consultative - recommendations
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
336 identified EPA implementation actions
 90 legislative
 72 institutional
 110 policy
 64 other
 Most are to begin on Provisional Application of the EPA

Estimated cost: Eu. 401 M

Over 300 outstanding CSME actions (2005)

Any available EU funding will privilege EPA implementation
 Will Caricom be able to implement both the EPA and the CSME?
 In case of conflict, which one will take priority?
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






Caricom as a juridical entity is not a ‘Party’ to the EPA
The key rights and obligations are legally expressed as relating to
‘Signatory Cariforum states’
Therefore each Caricom state is individually entitled to the rights and
responsible for the obligations
States with better institutions and manpower will have an advantage
in implementation
Individual states will have an incentive to compete with one another
to comply with obligations and access the rights
This will foster intra-regional competition and fragmentation. This
has already started
Each state will have a bilateral legal relationship with the EU, making
bargaining power more uneven
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“Minister of Foreign Affairs and Foreign Trade, Dr. Ken
Baugh, has emphasized that Jamaica must make every effort
to be first in line with projects to take advantage of
assistance under the agreement…
"My greatest fear is that if we continue to lament and dwell on
what the detractors are saying, our partners in
CARIFORUM will quietly get their houses in order, and
ready themselves to take advantage of this agreement. And
before we know it, they will run ahead of us and take up the
benefits envisioned under the Agreement," the Deputy Prime
Minister said.
Jamaica Information Service, June 27, 2008


The EPA is a legally binding international
treaty of indefinite duration and with limited
scope for revision
This is an inflexible instrument with which to
develop policies for regional development
and integration and the participation of the
region in the global economy
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The EPA ‘frames’ the future external trade policy of Caricom
with all other trading partners and in the WTO with
respect to
 Market access
 Services
 Public procurement
 Competition policy
 Investment
 E-commerce
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
‘Most Favored Nation’ Clause – compels Cariforum to
grant EU the same treatment as that given to China,
India, Brazil, and Mercosur in any future trading
agreements

This will discourage Caricom from negotiating SouthSouth trade links that give preference to other developing
countries

Brazil has objected to this Clause in the Interim EPAs, in a
statement made to the WTO
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Article 246, the “Revison Clause” states
1.
“The Parties agree to consider extending this Agreement with the aim of
broadening and supplementing its scope in accordance with their
respective legislation, by amending it or concluding agreements on
specific sectors or activities in the light of the experience gained during its
implementation. The Parties may also consider revising this Agreement to
bring Overseas Countries and Territories associated with the European
Community within the scope of this Agreement.”
2. “As regards the implementation of this Agreement, either Party may make
suggestions oriented towards adjusting trade related cooperation, taking
into account the experience acquired during the implementation thereof.
3.
The Parties agree that this Agreement may need to be reviewed in the
light of the expiration of the Cotonou Agreement.”
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
The Revision Clause focuses on extending the scope of EPA. This opens the
way to future EU pressure on Cariforum to make additional commitments
in such areas as Services and Public Procurement; but without a binding
commitment to include concrete development support measures in the
future

The Revision Clause does not envisage a fundamental modification of the
Agreement; such as (i) restricting its scope to that of existing or future
WTO agreements; (ii) incorporating enforceable development provisions;
(iii) strengthening Special and Differential Treatment in line with the
outcome of the Doha Development Round in the WTO; or (iv) review and
major revisions to conform with the mandate of the Cotonou Partnership
Agreement

As the Agreement is legally binding and of indefinite duration; it is in
Caricom’s interest to build as much flexibility as possible into it, to provide
for changes that better address its development and regional integration
objectives in the light of implementation experience
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
1. Limit the EPA only to what is required to make it WTO compatible
2 . Insert Protocols on the principal CARIFORUM productive sectors, goods and
services, including those identified in the CARICOM Regional Strategic
Development Plan, that outline in broad terms their main development problems,
and the bilateral cooperation measures needed. These Protocols would be
the juridical basis for the subsequent preparation of detailed CF-EC Sectoral
Partnership Development Programs, specifying activities, policies, resources, and
timelines.
3. Insert legally binding development benchmarks designed to measure the socioeconomic impacts of the EPA on key sectors of our societies - women, youth and
children, farmers, workers, fisherfolk and
4.Include a mandatory participatory review of the impact of the implementation of
EPA after three years, with the possibility of renegotiation.
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
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
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
Caricom’s LDCs have objected to the EPA’s Regional Preference Clause
and the European Commission (EC) has reportedly agreed to re-open it
The Opposition PNP in Jamaica has called for deletion of the MFN Clause
At the WTO, Brazil has objected to the EPAs MFN Clauses
Move in the WTO by the G77 and China to modify the ‘substantially all
trade’ rule as it relates to North-South FTAs
African countries have been given until end-2008 and even later to
complete EPA negotiations
The EC has not yet officially notified the WTO of the initialled EPAs
Commonwealth-ACP High Level Meeting made a strong case for
renegotiation of initialled EPAs
Support in Europe for development-oriented EPAs
Need to design an EPA that secures ‘buy-in’ from the public—a critical
success factor for the Agreement
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•Integration
•Autonomy
•Managed engagement
•Holistic Development
•Neo-liberal globalisation
•Loss of autonomy
•Fragmentation
•Uneven Development
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Single Development Vision, click here
EPA: Text, Evaluations & Critiques click here
Caribbean Regional Negotiating Machinery click here
Civil Society Petition to Renegotiate the EPA click here
Caribbean Labour Congress Recommendations on the EPA click here
Havelock Brewster, The Anti-Development Dimension of the EPA click
here
Clive Thomas, Caricom Perspectives on the EPA click here
Norman Girvan, The EPA: A Critical Evaluation click here
Commonwealth-ACP Meeting on the EPAs click here
Oxfam Report, Partnership or Power Play click here
Chris Milner, EPA Adjustment Costs, click here
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