Shot in the arm for Caricom
Editorial
Stabroek News
April 21, 2004
One lesson which should have come through loud and clear from the Haiti crisis is how that issue is embedded in the structures of world power politics. The lesson is widely applicable. Last week Friday Caricom delegations including Guyana sat down in Jamaica to negotiate with the delegation of the European Union (EU) on an Economic Partnership Agreement (EPA). As already discussed in a previous editorial, this region-specific EPA takes the place and is a succession to Lome/Cotonou type agreements. However, instead of one agreement with the entire ACP group of countries like those in the past each region or sub-region of the ACP will now have its own EPA, dealing with its economic relationship with the EU and reflecting it is expected the specific needs of that region/sub-region. But as with the Haiti crisis the negotiations and outcomes will resonate to the world system and the developments therein - the EU's imminent expansion, the collapse of the WTO talks at Cancun, the EU's particular preoccupation with the Singapore issues and the re-emergence of the North South configuration in global economic issues and so on.
The expansion involving ten new Member States could for Caricom exports pose an immediate hazard as the new member states will provide access routes for export commodities especially under the EU's Everything But Arms (EBA) duty free arrangement for the Least Developed Countries (LDC). Products imported into a new member state once in keeping with EU norms and standards could immediately move through to its intended market in the UK where it may compete with Caricom exports.
But the expanded membership has a still deeper global significance. Many of the new members - Cyprus, Czech Republic, Estonia, Hungary and Slovakia - are comparatively underdeveloped, as compared with the present members of the EU. In all likelihood the EU will see the new members as having the first call on economic assistance and investment at a time when aid budgets are already under strain because of commitments to the reconstruction of Iraq and the war against terrorism. The ACP grew out of the old colonial links and the colonial conscience, the feelings of responsibility of the former colonial powers for their ex-colonies. The accession of the ten new members to the EU almost certainly marks the ending of such sentiments and the further turning inwards of the EU, away from its former colonies.
While the primary focus of Guyana's attention will be on preserving the preferential market and price for sugar and special access for rice and newer exports including fish, the EU has made it plain that they see the EPA as a transformative mechanism/arrangement which would wean the region from its heavy dependence on preferential markets in the EU, a dependency arrangement which requires a waiver from WTO trade rules and hence is politically vulnerable. This waiver granted in Doha will not be extended beyond 2007. The EU points out in a statement on the EPA of which four are now in negotiation (three in Africa) that in any event preferential arrangements are bound to be gradually eroded. The EU further asserts that preferences will not induce change in the present colonial structure of ACP economies which are now heavily dependent on a very few export products.
In this connection it is of the highest significance that the IMF last week announced its readiness to lend to developing countries whose balance of payments positions suffer as multilateral liberalisations diminish their competitive position in world markets (SN, 15th April). In short the IMF is now standing by to help countries who lose their preferential markets. The IMF is clearly responding to pressure from the powerful industrial states determined to pursue the policy of opening markets.
The EU therefore conceives of the EPA not as just a truncated regional version of the old style Lome/Cotonou agreements but as a new instrument of change. Towards this objective the EU assigns particular importance to the promotion of South-South integration. The US sees the EPA negotiations as giving new impetus to advancing the regional integration agenda. The EU goes on to insist that there is need for a bottom-up approach by identifying economic priorities of the region and locking them into the EPA. The EU notes that one integration grouping, the Economic Community of West African States (ECOWAS) has already responded to the EPA by accelerating its integration plans.
This then will be the challenge facing Caricom in Jamaica. While maintaining their concerns with safeguarding the preferential markets including the market for sugar and insisting on adequate transition periods for the full opening of their markets under the demand for reciprocity, they should be at the same time equally concerned with accessing the opportunities which the EPA will present for the reinvigoration of Caricom so that it becomes as its founders intended the major instrument of national development. The EPA could provide the shot in the arm which Caricom so desperately needs.
In a communication from the European Commission to the EU's Council of Heads of Government and the European Parliament, it is contended that while developed countries should make the biggest contribution to most trade liberalisation, "the development of trade among developing countries is also essential, as those are the countries where demand for food is expected to rise and where most of the future growth in and benefits from trade are likely to arise" The EU identification of the demand for food in South-South trade is of particular interest as it opens up the potential for special assistance for the development of the agricultural sector of Caricom for which President Jagdeo is preparing a strategy.
The EU commitment to advancing South-South trade must be seen as a radical departure from the traditional approach of major powers to groupings. On the whole, major powers have shown a strong preference for relationships with individual States which in that situation are naturally most susceptible to pressure.
Another challenge which Caricom will face in the EPA negotiations is how and when to invoke the need for Special and Differential Treatment (SDT). SDT seems to have become in practice in developing world diplomacy a kind of magic word, an incantation which solves all difficulties. But the application of the concept is fraught with difficulties as recent negotiations show. The Declaration of the Doha WTO Ministerial Conference had recognised the need for SDT in which WTO rules are applied in a flexible manner to developing countries. In the follow up negotiations in Geneva the developing countries submitted eighty proposals which reflected SDT for amendments to WTO rules but when the deadline was reached for the conclusion of the work only four had been agreed.
The EU recognises the need for SDT for Less Developed Countries, small economies, land-locked developing countries, others particularly vulnerable to economic shocks or with particular weak economies or infrastructure or who remain highly dependent on preferential access and revenues from tariffs.
Guyana certainly qualifies for SDT but the EU does not see the principle as being of general application, the case must be made for each state. The Guyana case should include the high cost of negative development (sea defences etc) to protect the fertile coast against erosion or flooding, the heavy dependence on a few export crops and on the exploitation of wasting mineral resources and the difficulties of building consensus in a population which still reflects its divisive colonial origins and so on. But however strongly the case is made, the EU asserts that it should be kept in mind that the principle does not amount to a permanent waiver but one that must be reviewed from time to time and perhaps removed as the country develops.
There should be a new dimension to the talks in Jamaica. As a departure from the old pattern of demanding that benefits be maintained and expanded, if the EU is taken at its word, the opportunity should be seized to build a more self-reliant Caricom.