CARICOM’S SINGLE DEVELOMENT VISION AND THE EPA ‘The Fork in the Road’

1. Norman Girvan ILO/CCL Round Table, 23-25 June 2008 CARICOM’S SINGLE DEVELOMENT VISION AND THE EPA‘The Fork in the Road’ 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 SOCIAL ENVIRONMENT 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 CARICOM’S SINGLE DEVELOPMENT VISION AND THE CSME:ISSUES

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. ASYMMETRIES OF SIZE AGGREGATE GDP (PPP) 2006 2,500,000,000,000 2,000,000,000,000 1,500,000,000,000 GDP (PPP) 1,000,000,000,000 500,000,000,000 0 Italy Haiti Spain Belize France Poland Austria Greece Antigua Sweden Guyana Belgium Portugal Grenada Jamaica St Lucia Romania Denmark Germany Dominica Barbados Suriname Bahamas St Vincent Netherlands St Kitts Nevis Czech Republic United Kingdom Trinidad and Tobago Dominican Republic Country 15 LARGEST EU ECONOMIES 15 RICHEST EU COUNTRIES CARIFORUM COUNTRIES CARIFORUM ECONOMIES

13. ESTIMATED EPA ADJUSTMENT COSTS FOR CARIFORUM 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.

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 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.

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 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.

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 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 .

22. 4. DOMINICAN REPUBLIC - CARICOM INTEGRATION 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

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. 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 Caricom’s 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. 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 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 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

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 • 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

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