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Title: CARICOM S SINGLE DEVELOMENT VISION & THE EPA The Fork in the Road Author: user Last modified by: ngirvan Created Date: 6/19/2008 5:30:04 PM – PowerPoint PPT presentation

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Title: CARICOM


1
CARICOMS SINGLE DEVELOMENT VISION AND THE
EPAThe Fork in the Road
  • Norman Girvan
  • ILO/CCL Round Table, 23-25 June 2008

http//normangirvan.info
2
Development Vision - Mission Statement
  • 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

3
HOLISTIC DEVELOPMENT
ECONOMIC
ENVIRONMENT
SOCIAL
GOVERNANCE
4
OBJECTIVES
  • 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 

5
MEANS - STRATEGIES
  • 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
    multi-stakeholder consultation
  • Common regional policies for key sectors
  • Completion of CSME
  • Regional Strategic Development Plan

6
PHASING
  • 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

7
COMPATIBILITY OF THE EPA WITH CARICOMS SINGLE
DEVELOPMENT VISION AND THE CSMEISSUES
8
COMPATIBILITY ISSUES
  • 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

9
1. Neo-liberalism vs. managed development
  • 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.

10
2. Financing of development
  • 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

11
15 LARGEST EU ECONOMIES
15 RICHEST EU COUNTRIES
CARIFORUM COUNTRIES
CARIFORUM ECONOMIES
12
(No Transcript)
13
ESTIMATED EPA ADJUSTMENT COSTS FOR CARIFORUM
ADUSTMENT COST MILLIONS EUROS
FISCAL 375
TRADE FACILITATION EXPORT DEVELOPMENT 240
PRODUCTION EMPLOYMENT ADJUSTMENT 140
SKILL DEVELOPMENT PRODUCTIVITY ENHANCEMENT_at_ 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)
  • _at_ 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 firms
    organisation and management structures and the
    development of supportive economic policies and
    infrastructures.

14
Financing in context
  • 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 ACPof
    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.

15
3. Market access is not enough
  • 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 Caricoms 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 economiesinadequat
    e management, technology and innovation, capital,
    skilled labour, and physical and social
    infrastructure.

16
Caricom domestic exports to the EU by country, 2004-2006 Caricom domestic exports to the EU by country, 2004-2006 Caricom domestic exports to the EU by country, 2004-2006 Caricom domestic exports to the EU by country, 2004-2006 Caricom domestic exports to the EU by country, 2004-2006
  Domestic exports to EU (US 000) Domestic exports to EU (US 000) Share in total exports () Share in total exports ()
CARICOM COUNTRIES 2005 2006 2005 2006
CARICOM 893,925 2,037,357 7 12
MDCs 799,290 1,933,982 7 11
BARBADOS 40,549 38,717 19 16
GUYANA 208,307 196,641 38 36
JAMAICA 343,443 476,305 23 24
SURINAME . .    
TRINIDAD TOBAGO 206,991 1,222,319 2 9
LDCs 94,636 103,375 26 26
BELIZE 55,667 84,357 28 31
OECS 38,968 19,018 23 15
ANTIGUA BARBUDA 103 . 3 .
DOMINICA 6,869 7,622 18 19
GRENADA 5,378 1,878 25 10
MONTSERRAT 0 0 0 0
ST. KITTS NEVIS 60 121 0 0.3
SAINT LUCIA 16,014 . . 40 ..
ST. VINCENT GRENADINES 10,544 9,397 31 28
17
Caricom Exports to the EU (2006)  US MN Exp. to EU total CAR 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
Other 0.4 0.0 1
18
Need to supplement market access
  • 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.

19
Non-tariff barriers - Rules of Origin
  • 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.

20
  • 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

21
Non-tariff barriers Services
  • Conditions of access employees of service firms
    - Art. 83
  • Must be working with a firm with a service
    contract in an EU member state not exceeding one
    years duration
  • Must have at least 1 years 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 .

22
4. DOMINICAN REPUBLIC - CARICOM INTEGRATION
  • CARIFORUM will replace CARICOM in-
  • Phased free movement of the majority of goods,
    services, and investment
  • Regional PreferenceCaricom 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

23
5. PHASING EPA vs. CSME
  • 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

24
  and timing of imports to be liberalised and timing of imports to be liberalised and timing of imports to be liberalised and timing of imports to be liberalised and timing of imports to be liberalised and timing of imports to be liberalised and timing of imports to be liberalised
COUNTRY 0 5Y 10 Y 15 Y 20Y 25Y EXC
ANTIGUA / BARBUDA 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
GRENADA 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
Source CRNM
25
6. The EPA and the Caricom Single Economy
  • 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 Caricoms own development needs in mind.
    They will now be driven by the obligations of
    EPA compliance-- or become entirely redundant.

26
7. Local entrepreneurship
  • 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

27
8. EPA GOVERNANCE
Does it parallel or supersede the Caricom organs?
28
9. EPA Implementation
  • 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?

29
10. Integration vs. Fragmentation
  • 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

30
Does the EPA foster integration or divisiveness?
  • 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

31
11. Flexibility
  • 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

32
12. External Trade Policy
  • 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

33
13. South-South Cooperation
  • 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
    South-South 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

34
  • Article 246, the Revison Clause states
  • 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.

35
Revision of the EPA Conclusions
  • 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 Caricoms 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

36
Renegotiation Civil Society Proposal
  • 1. Limit the EPA only to what is required to make
    it WTO compatible2 . 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 socio-economic
    impacts of the EPA on key sectors of our
    societies - women, youth and children, farmers,
    workers, fisherfolk and4.Include a mandatory
    participatory review of the impact of the
    implementation of EPA after three years, with the
    possibility of renegotiation.

37
Grounds for Renegotiation
  • Caricoms LDCs have objected to the EPAs
    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 publica critical success factor for the
    Agreement

38
Which way Caricom?
  • Integration
  • Autonomy
  • Managed engagement
  • Holistic Development
  • Neo-liberal globalisation
  • Loss of autonomy
  • Fragmentation
  • Uneven Development

39
SOURCES
  • 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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