The CARIFORUM-EC EPA and the Services Sector

1. The CARIFORUM-EC EPA and the Services Sector By Carlos L.A. Wharton Senior Trade Policy Advisor Management Consulting Business Symposium 2 St. Kitts & Nevis HEAD OFFICE: Hastings Main Road, Christ Church, BB15154, Barbados. Tel: +1 246-436-0578 Fax: +1 246-436-9999 Email: info@carib-export.com SUB-REGIONAL OFFICE: C/ Carlos Lora #9, Ensanche Los Retauradores, Santo Domingo. Dominican Republic Tel:+1-809-531-2411 Fax: +1-809-473-7532 Website: www.carib-export.com

2. Contents • Concepts • EPA Implementation • Trade in Goods • Trade in Services • Regional Integration • Implications of trade agreements on Industrial and Investment policies • Development cooperation • Private Sector Constraints • The Way Forward

3. CONCEPTS - EPA IMPLEMENTATION • What is EPA Implementation? • Treaty Implementation • Ensuring that firms and individuals take advantage of the new trade regime offered under the EPA (and by extension all other bilateral and multilateral trade agreements) • Government agencies must ensure that they are equipped with tools and human resources to monitor, regulate (inclusive of enforcement) and evaluate trade flows and patterns • Ensuring that the necessary regulatory framework accommodate new commitments taken with the various trade instruments

4. CONTEXT • Context • Erosion of preferential treatment • Reciprocity– (preference creation) • Asymmetry • New Disciplines – Services and Investment as well as Intellectual Property, Innovation, transparency in government procurement • Regional Integration • Development Cooperation

5. Key Trade Agreements/Arrangements • CARICOM Single Market and Economy • CARICOM-Dominican Republic • CARIFORUM-EC EPA • CARICOM-Colombia • CARICOM-Costa Rica • CARICOM-Cuba • CARICOM-Venezuela • CARIBCAN • CBI/CBPTA

6. TRADE IN GOODS • Trade in Goods • Phased reduction of Customs Duties/ODCs (Art. 16) • National Treatment (Art. 27) • Rules of Origin – (Protocol I) • Administrative Cooperation (Art. 20) • Safeguards (Art25 (6)(b) (Only with respect to the FCOR)

7. Adjustment Challenges • Phased Reduction of Customs Duties etc. • Fiscal reform to replace and create revenue • Private sector competitiveness (Like or substitute products originating from the EC) • Exclusion list provides limited breathing room for producers and government • TBT/SPS measures have limited the exports of agro-processed goods in the past. Establishing appropriate regulatory, institutional and monitoring mechanisms is required to enable these firms to export to EU Market.

8. ADJUSTMENT CHALLENGES • Rules of Origin • Reciprocal nature of the Agreement requires CARIFORUM Governments to enforce the rules and therefore training of officials and the private sector will be important • Firms must alter production methods and input markets in order to qualify for preference or be competitive • Industrial and investment policies must be reviewed and revamped

9. Trade in Services and Investment • Trade in Services and Investment • Commitments in all modes of supply taken by the Parties – asymmetrically in favour of CARIFORUM • Investment (commercial presence) CARIFORUM has taken broader commitments than the EC for non-servicesinvestment • Visas and work permits not covered by the Agreement • Moratoria exists for some countries in some sectors

10. ADJUSTMENT CHALLENGES • Development of domestic regulations • Establishment of and compliance to standards • Development of Mutual Recognition Agreements (More so for Architects and engineers, Accountants) & Management Consultants? • Establishment of Co-production Agreements

11. REGIONAL INTEGRATION • Pace and content of integration is a matter to be determine exclusively by CARIFORUM Member States (Art 4) • In the area of services – the progressive removal of remaining barriers and the provision of appropriate regulatory framework among CARIFORUM States (Art. 64) • Regional Preference – (Art. 238) • Cooperation with FCORs – (Art 239)

12. Regional Preference • This principle has implications for: • the trade relationship between CARICOM and the Dominican Republic in particular the Strengthening of the Agreement Establishing a Free Trade Area between CARICOM and the Dominican Republic (elimination of customs duties, rules of origin, trade in services and investment and so on) • Bahamas and CARICOM • Bahamas and the Dominican Republic • Haiti and the Dominican Republic

13. ADJUSTMENT CHALLENGES • CARICOM-Dominican Republic as well as CARICOM-The Bahamas trade relations set to deepen. Provides an opportunity for the Parties to develop a mutually beneficial arrangement that is consistent with Art. 238 • Fast tracking the CSME –to provide the development space required for CARICOM SMEs • Deepening relations with the Bahamas will require political commitment and human resources

14. Impact of Trade Policy on Industrial Policy • These Agreements will have implications on the types of assistance that can be offered to firms in the future. Member States should re-examine their industrial policy in lights of the evolving framework. • Safeguard Article on Infant Industries prohibits the use of tariffs as a safeguard measure to protect infant industries 10 years after entry into force the Agreement • Liberalisation of Services also require States to revisit industrial and incentive regime to promote trade with Europe • WTO SCM Agreement prohibits the use of important Export Subsidies by 2015

15. Private Sector Constraints: Role for Management Consultants • Few firms are exporting and the range of products exported are limited • The use of limited and outdated technology in production • Limited supply capacity and value chain management • Limited or no use of research & development and innovation • High production costs • Limited skills sets • Limited access to affordable financing • A business environment that is often characterised as bureaucratic and slow to facilitate business transactions • Limited foreign direct investment as well as local and regional Investment flows • The lack of modern management and business processes that promote efficiency, product quality and cost competitiveness. • limited exposure to standards, market requirements and best practices in their fields.

16. Development CooperationPriorities • Building human, legal and institutional capacity • Promotion of private sector enterprise development • Diversification of exports • Enhancing technological and research capabilities • Development of Innovation systems • Development and use of IP

17. Development PrioritiesServices • Improving Access to Market Intelligence • Improving the export capacity of service suppliers • Promoting Investment and Joint ventures between service suppliers • Facilitating dialogue between CARIFORUM and EC Service Suppliers

18. EPA IMPLEMENTATION • Focus on building human and technical capacity • Enhancing training and education • Deepening trade relations with the FCORs and OCTs • Ensuring that there is sufficient direct assistance to encourage firms to meet the necessary standards and requirements in export markets • Working with professional associations to ensure that qualifications are recognised

19. EPA IMPLEMENTATION • Strengthen Business Support Organisations to ensure that firms are equipped with the necessary intelligence to penetrate markets • Identify possibilities for joint ventures and strategic alliances between regions • Working with Management Consultants to assist firms in mitigating the challenges associated with trade liberalisation.

20. WHO SHOULD BE INVOLVED? Regional • CARIFORUM Coordinator • CARIFORUM DIrectorate • CARICOM SEC/CARICOM Implementation Unit • OECS Secretariat • CROSQ, CAFHSA, CCC, • Caribbean Export • National • Implementation Unit • Customs • Ministries of Finance, Foreign Trade, Industry and commerce, Labour, Education • BSOs, Universities, NGOs • FIRMS

21. Contact Details Carlos Wharton Senior Trade Policy Advisor Email: cwharton@carib-export.com Head Office Mutual Building Hastings Main Road Christ Church, BB15154 P.O. Box 34B Brittons Hill Post Office St. Michael, BB14000 BARBADOS Tel: +1(246) 436-0578 Fax: +1(246) 436-9999 E-mail: info@carib-export.com Sub Regional Office Calle Carlos Lora No. 9 Ensanche Los Restauradores Santo Domingo DOMINICAN REPUBLIC Tel: +1 (809) 531-2411 Fax: +1 (809) 473-7532 E-mail: c.export@codetel.net.do