European Union responds to Caribbean criticisms of the EPA process

I am pleased to be here this morning to take part in the launch of this Technical Barriers to Trade programme, which is geared towards facilitating intra- and interregional trade, as well as international competitiveness and sustainable production of goods and services within the CARIFORUM states.

This programme, which is being funded by a BBD $18.5 million (7.8M €) grant from the European Union, is one of the components of the 46.5M euros EPA Implementation intervention under the 10th European Development Fund Programme of Support to CARIFORUM states. This is proof of further tangible support by the European Union to regional integration. The other components, which cover areas such as fiscal adjustment and reform; sanitary and phyto-sanitary (SPS) measures; services; and support to the regional EPA implementation unit will also be launched shortly. The Regional Private Sector Development Programme in the amount of 28.3 million euros which is being implemented by Caribbean Export is another example of the considerable level of support by the EU. It also underscores our ongoing commitment to our CARIFORUM partners through the growth and expansion of the regional private sector.

{FILE IMAGE – Caude Bochu at Mic, while Amb. Diaz in white shirt} Speech delivered by Ambassador Valeriano Diaz, Head of the European Union Delegation to Barbados and the Eastern Caribbean on 25 July 2012 at the launch of the Technical Barriers to Trade projects administered by CROSQ

However, despite the considerable support being provided by the EU towards EPA implementation in the Caribbean, there seems to be some unease with the pace of progress and the realisation of potential benefits in this regard. This has led some people to question whether the region should have signed off on the EPA.

It is important to highlight that a trade arrangement has always existed between CARIFORUM and the EU under the Cotonou Agreement! The change which the EPA represents – that is the transition from one way preferences to the Caribbean, to reciprocal trade in most areas – is the response to CARICOM, the Dominican Republic and the EU’s non-compliance with WTO rules and obligations and the subsequent expiration of the trade arrangements under the Cotonou-in 2007. My question therefore is – What was the alternative to the signing of the EPA, given the challenges to the then preferential system by the USA in the case of bananas and Brazil, Australia and Thailand in the case of sugar?

A lot of focus in the region seems to be consumed with the theory that with the signing of the EPA the Caribbean will be swamped by European firms and goods. It might surprise many but I need to tell you that the Caribbean does not present many European companies with the type of volume market that is needed to sustain their industries. The EPA encourages the Caribbean to implement regional commitments in trade in goods and as such it supports OECS integration, the CARICOM Single Market and Economy, as well as the CARICOM-Dominican Republic Free Trade Area. This in turn will promote the free movement of goods amongst Caribbean neighbours and will facilitate the full operation of the customs unions which are presently being pursued. This type of structure is the catalyst for an integrated regional market, which helps local businesses create economies of scale and make the region more attractive as a market for investment and trade.

There is also the view that there was this arbitrary negotiation and subsequent implementation of the EPA by the EU. This was simply not the case. Many studies on the impact of the EPA were carried out by the EU and by CARIFORUM countries before, during and after it was negotiated. These studies received input from many regional private sector and governmental organisations. In addition to shaping negotiating positions, the outcome of these studies formed the basis of the region’s requirements for assistance once the negotiation process was completed. With the submission of the region’s needs, the EU almost tripled the financial envelope to CARIFORUM to 165 million euros primarily for EPA implementation, compared to the previous regional assistance of 57 million euros under the 9th EDF.

Other sources of funding have also been made available through national programmes in all of the CARIFORUM Member States, coupled with the EU Member States’ Aid for Trade programmes specifically PTB, the national metrology institute of Germany which continues to work closely with CROSQ; the United Kingdom’s Caribbean Aid for Trade and Regional Integration Trust Fund, and also the all-ACP funds.

Having provided this perspective you might ask: What is the way forward? The EPA is a partnership agreement and the EU remains committed to the objectives of the agreement including on development cooperation. However, partnership is a two-way street and we are therefore looking to CARIFORUM countries to meet their commitments as well.

I speak specifically here about the initial tariff cuts on goods imported from the EU that countries were due to implement since January 2011, over 18 months ago. We are aware that countries are dealing with capacity constraints and outdated legislation in some instances. However, the importance of the Caribbean meeting their obligation in this regard cannot be over-emphasized.

There are many who argue that if Caribbean governments cut their tariffs as agreed, they’ll see revenues fall, which they simply can’t afford in these testing times. The reality is that the time period for reducing tariffs extends over 25 years! This initial cut is therefore very miniscule and will have very little impact, if any, on Governments’ revenues as the products committed for early tariff removal were those with already low tariffs.

Additionally the argument that if governments cut their tariffs, local producers who are already struggling to compete could go out of business and people will lose their jobs, is also false. CARIFORUM countries will not reduce tariffs on most sensitive products. These products exempted from liberalization were identified through a stakeholder consultation in each CARIFORUM country. This looked at tariff revenue, production, employment, food security, livelihoods, rural development and environmental and other concerns.

It is a proven fact that tariff reductions help to reduce the cost of imports. Inputs for CARIFORUM businesses sourced from Europe will therefore become cheaper and as net importing countries this will boost the competitiveness, exports and economic growth of Caribbean countries. Finally on this point, the EU is committed to working with CARIFORUM countries to make their tax systems less dependent on customs duties and improve the efficiency of revenue collection.

In closing I would like to remind all that the credibility and predictability of our joint commitments in the EPA is at stake. The WTO is watching; the other developed countries that have repeatedly challenged our trading relationship are watching; and developing countries who wish to get the kind of access that is available in the EPA for themselves are watching as well. We have a lot at stake.

I hope the launch of this Technical Barriers to Trade programme represents a turning point in the pace and outlook on EPA implementation in the region and globally as well…

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