THE CARICOM SINGLE MARKET AND ECONOMY: CHALLENGES, BENEFITS AND PROSPECTS

The CARICOM Single Market and Economy in Context

The Grand Anse Declaration (1989) of the Heads of Government of CARICOM outlined their intention to work towards the creation of a Single Market and Economy in as short a time as possible. According to the West Indian Commission Report (West Indian Commission, 1992) , the 1990 Kingston Declaration could be interpreted to have fixed 1993 as the date for establishing the CARICOM Single Market and Economy (CSME). This however has obviously not materialised as some sixteen years on, whilst the Single Market component is in operation, the Single Economy is yet to be implemented.

The CSME Defined

The West Indian Commission Report (West Indian Commission, 1992) clearly sets out the technical aspects of the CSME. The Report notes that the Single Market and Economy is supposed to be structured and functioning as if it were within the borders of a single country. Free movement of goods, services, labour and capital and attendant fiscal and monetary measures along with administrative arrangements are expected to form the core of the CSME.

Challenges

The challenges confronting the successful implementation and operation of the CSME are enormous. It was previously hinted that the original intention of the Heads of Government appears to have been to establish the CSME by 1993. In 2006, the Single Market came into operation and the Single Economy is expected to follow suit in 2015. One of the major challenges therefore seems to be an inability on the part of Member States to honour timeframes. The shifting of timeframes does very little to inspire confidence in the people of the region that the CSME can and will work. Ultimately, the CSME is about the people and if there is no public “buy-in”, efforts and resources expended thus far towards the implementation of the CSME could very well prove to be futile.
Another major challenge has to do with the retention of full national sovereignties by individual Member States whilst simultaneously seeking to implement the CSME. Brewster (2003) addresses this issue and notes that moves toward the creation of the CSME and the retention of maximum national sovereignty by Member States are contradictory. On occasions, decisions are taken at the regional level and very little implementation takes place at the national level immediately after. This is counterproductive as it places an unnecessary and unfair burden on the CARICOM Secretariat and its various organs. It also slows the integration process enormously and until the decisions taken at the regional level become legally binding and enforceable; problems with respect to the implementation of the CSME will persist. In essence, Member States are proceeding with a Single Market and Single Economy agenda in the absence of an appropriate political platform within which decisions taken at the regional level could be fully legitimised. This does not bode well for the viability of the regime we are seeking to create.

Benefits

The twenty first century is and will continue to be of a much different complexion than preceding eras. This epoch is one of highly competitive global markets, increasing trade liberalisation, new and improved information and telecommunication technologies as well as enormous challenges with respect to national and global economies as defined by the 2008/2009 global financial and economic crisis. The small size and open nature of Caribbean economies as well as their susceptibility to external shocks render them too vulnerable to confront the myriad of challenges and developments of the twenty first century as separate and disjointed entities. The CSME, if implemented and operated properly, can provide a solid platform for Member States to act in concert to address issues at the national, regional and international levels especially at a time when the lines separating what is national, regional or international are increasingly becoming blurred.
The CSME also promises to be of tremendous benefit to peoples and businesses throughout CARICOM. Instead of looking at the free movement of people in a negative light, the truth is that it creates an avenue for the region to share skills whilst simultaneously facilitating those seeking improved standards of living and better employment prospects away from their domestic spheres. Businesses also have access to a much bigger market than their national markets would allow and therefore, the potential to generate additional revenue and increased profit margins.
The CSME can also act as a vehicle through which the region can rationalise its production of goods and services as more Member States can now become involved in the production process. Therefore, the region can share its expertise, technology and resources to greater effect.

Prospects

The prospects facing the CSME are obvious and simple. Member States can either allow the regime to fade into oblivion or do what is necessary to bring about its successful implementation and operation. The latter is the harder of the two; however, the costs involved with the former are too severe to even contemplate it as a viable and serious option. There is a place for the CSME on the regional agenda and despite the lapses in implementation at various times and levels, the CSME remains the best option within which the region can pursue its common economic and market policies. This realisation should spur those central to its implementation to greater action and a greater sense of urgency.

Conclusion

This paper does not allow for the time or space to fully express the intricacies surrounding the CSME. However, it should serve as a reminder that the region needs to act swiftly to implement the outstanding components of the CSME. The dynamic and sometimes harsh nature of the global system demands that Member States deepen their integration of which the CSME is a centre piece in order to ensure that we not merely survive the times, but thrive and compete effectively together rather than apart.

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Capitalism’s Berlin Wall

The financial meltdown taking place in the United States (US) which has now spread to other countries and regions could be for capitalism what the fall of the Berlin Wall represented for communism. In essence, the financial meltdown could potentially be capitalism’s Berlin Wall in that just as the fall of the Berlin Wall signaled the end of communism for the Soviet Union, the financial meltdown taking place in the US and elsewhere could bring about an end to capitalism as we know it.

After the fall of the Berlin Wall, the reunification of East and West Germany, the end of the Soviet Empire and the eventual fall of communism, renowned American intellectual Francis Fukuyama heralded the “end of history”. In doing this, Fukuyama was asserting that democratic capitalism had triumphed as the ultimate form of political and economic organization (my emphasis). Subsequent market reforms in communist countries such as China essentially reaffirmed the triumph of capitalism as the definitive path to national growth and development.

However, the current financial crisis in the US is questioning the fundamental assumptions on which capitalism has been based. The concept of minimal government intervention in the socio-economic affairs of the state (rule of the free market), the cutting of expenditure on social services such as health care and education, privatization of state owned entities, government deregulation and the elimination of the concept of community for individualism have been some of the hallmarks of capitalism. However, this latest crisis is now forcing not just the US, but also all other countries that have adopted capitalism wholesale to reconsider the type of economic, political and social system that best suits their realities.

In saying this, it is not expected that there would be a re-emergence of communism. However, we can expect that the state would re-emerge, at the expense of the free market, as the dominant social, political and economic player in governing the affairs of citizens. Furthermore, we can also expect that neo-liberal capitalist institutions such as the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO) would have to reconsider their market oriented policy prescriptions for developing countries. Developing countries in turn can also be expected to reject such policies and seek to implement policies that are tailored to their respective circumstances.

The current US, or more appropriately global financial crisis marks yet another time in recent history that capitalism has been discredited. During the 1930s and the years immediately following the Second World War, capitalism was discredited as a result of the Great Depression and the global economic fallout that occurred and intensified during and after the war. However, instead of devising an alternative system, the post war period saw the reinforcement of capitalism via institutions such as the World Bank and the IMF and more potently, via successive US governments. Capitalism was also discredited during the global financial crises of the 1980s and 1990s. However, despite these crises, there was no serious attempt at reforming whether it is neo-liberal capitalist institutions or the manner in which economic, political and social issues were governed. Hopefully, the current crisis would fast track the issue of reform for the institutions previously mentioned and it is also hoped that the next US administration and others into the foreseeable future would not be as dogmatic in advancing failed capitalist social, economic and political philosophies.

Finally, while the current global financial crisis may or may not be what the fall of the Berlin Wall signified for communism, the fact remains that it will not and cannot be business as usual. This is a time when all countries (not just members of the elite G 8 group of nations) must come together to forge a new global political, economic and social consensus.

Caribbean Food Insecurity

Recently, I was joking with a friend that not too long from now, I may have to get a little swamp going in my backyard to grow my own rice and get a piece of land to grow some wheat. However, while I said this jokingly, the stark reality is that a major food security crisis is upon us. Some of our basic food commodities such as rice, milk and flour are not only becoming more expensive, but they are also becoming scarce. Essentially, we have to wake up to the possibility that in the months ahead, items that we are accustomed to seeing on the supermarket shelves could start disappearing and in cases where they have not, the price can be such that many of us may not be able to afford. Such is the gravity of the situation that according to the Food and Agriculture Organisation (FAO), food costs worldwide spiked 23 percent from 2006 to 2007; grains went up 42 percent, oils 50 percent and dairy 80 percent. For many experts, this trend is expected to continue for 2008 and beyond.

There are several factors driving the general and sustained rise in food prices. Chief among these factors is the record high fuel prices around the globe. Essentially, the rising price of oil on the international market is affecting both the transportation cost of goods as well as the cost of production in major global production centres. As oil prices increase, there is also an attendant rise in the cost of production and the cost of transportation of goods. Therefore, by the time most food items get to the consumer, the cost of these items reflect significant mark ups as each entity along the supply chain would have had to push prices up to recover costs and make a profit. The spike in oil prices has also pushed some countries towards bio-fuels. Therefore, corn, sugar and soybeans are not only being used as food items now, but they are also being produced for fuel. As a result, the cost of these items has been rising and is expected to continue moving upwards in the foreseeable future as they continue to compete with satisfying our food and energy needs.

We have to also bear in mind a few other factors that are pushing food prices up. India, Brazil, Russia, China and other emerging economies have been experiencing economic growth at alarming rates and as their populations become more affluent, there is a simultaneous growth in demand for food, especially food items that at one time would have been too expensive for the majority of their populations. As consumption grows in these countries, if this consumption is not met with increased global supply, food becomes scarce and following from a basic principle in economics, scarcity drives prices upward.

However, despite the fact that a number of external forces are currently in operation over which we in the Caribbean have no control, there are some critical issues that we have failed to address in the past and which must be addressed now with the greatest urgency if we are serious about tackling high prices. First of all, as a region, we have become too dependent on food imports. Many of our countries have been selling what was traditionally agricultural land to various types of commercial interests. We need to halt this practice and return to emphasizing the value of local and regional production and consumption. If we cannot feed ourselves as a people, we should not reasonably expect anyone else to. In fact, a basic and fundamental objective of any civilization should be to first and foremost have the ability to feed itself.

In the past, many of the economies in the region were heavily dependent on agriculture and the contribution of this sector to the GDP of many countries testified to this. However, we became convinced that relying heavily on agriculture would be to our detriment and as such, we shifted our focus to the services sector, in particular tourism and built our economic growth and development priorities around this sector. In hindsight, we are able to see the fallacy of such thinking. Rationality would dictate that the foreign exchange earned from services could be used to import food. However, rationality would also dictate that if that food is scarce or others are not willing to sell, there would be nothing to purchase with the foreign exchange earned. This underscores the value of local food production. In hindsight, we are also able to see the wisdom of Forbes Burnham who as President of Guyana, sought to instill in his people the value of growing and producing most of what they needed. Many branded him as communist then, however, looking at our current predicament, much can be learnt from Burnham’s approach then.

Finally, there were recent food riots in Haiti that at times, turned violent. These riots brought home the gravity of the situation confronting us in the Caribbean whilst other riots in Burkina Faso, Cameroon and Egypt along with other countries point to the global nature of the issue. Such riots also indicate that what is currently a food security problem could easily result in a broader breakdown in national security. The Caribbean, in particular CARICOM, needs to get its act together and act swiftly before our situation worsens much more than it is now. Therefore, in moving forward, CARICOM needs to get production integration going as called for in the Revised Treaty of Chaguaramas. We need to start organising our food production and processing amongst ourselves and whilst doing that, simultaneously do what is necessary to improve our sea and air linkages in order to facilitate the expedient and cost effective movement of goods.  

 

In Disagreement with Edward Seaga

After thirty-five years of existence, Edward Seaga, former Prime Minister of Jamaica and now Distinguished Fellow of the University of the West, Mona Campus, believes that CARICOM ‘has still not gained sufficient traction’. In an article published by the Jamaica Gleaner on Wednesday, February 13^th, 2008, Mr. Seaga was further credited with saying the following:

1.       CARICOM should push for greater cooperation as opposed to integration;

2.       The CARICOM Single Market and Economy (CSME) will not come to pass due to the difficulty with establishing a single regional currency;

3.       The region needs to find new approaches in moving forward; and

4.       Opportunities for cooperation lie in marketing the region as a health tourism destination, the development of music and fashion design, sports, agriculture and biotechnology.

While I agree with Mr. Seaga that CARICOM has not gained ‘sufficient traction’ after thirty-five years of existence, I fundamentally disagree with him on just about everything else credited to him in the article. I shall now examine the four points highlighted above in greater detail. 

Cooperation versus Integration

One of the successes of CARICOM over the past thirty-five years has been its ability to deepen and maintain a high degree of cooperation in areas such as health and education and foreign policy and trade to a lesser extent. However, given the realities of the current global context, I dare say that CARICOM can no longer be comfortable with the sort of superficial existence it has thrived on over the past three and a half decades. It is ill-advised at this moment in history for CARICOM countries to further their functional cooperation agenda in the absence of strong and meaningful economic, social and political integration. This lack of integration is certainly one of the huge factors contributing to the lack of traction rightly identified by Mr. Seaga. For small countries, the majority of which are small island territories, to continue to exist as separate economic and political entities at a time of growing global uncertainties is definitely folly. What CARICOM needs right now is a set of leaders who have the political will and the urgency of action to move beyond the current level of cooperation and piece-meal integration efforts to a sound economic and political integration platform. The Member States of the European Union are much bigger and wealthier than CARICOM countries and will be able to thrive outside of the current European integration framework. However, these states have recognised the value of integration and have therefore taken numerous steps toward deepening their levels of integration over the years. One must wonder why the CARICOM region has not demonstrated the same or similar kind of urgency as Europe.  

The CSME

The CSME is much more than a currency union. Whilst a single currency will no doubt be a great symbolic and practical gesture within the CARICOM space, one cannot cast doubt on the move towards establishing the CSME simply because there will be difficulty in moving towards a single currency. The CSME is supposed to be an exercise in which the region will harmonise its fiscal and monetary policies; create a single seamless economic space which will allow for the free movement of people, goods and capital as well as an exercise designed to carry the region further along the path of sustainable economic growth and development. Most Member States have already made the necessary provisions through national legislation for the realisation of many of the different components of the CSME and while one acknowledges that it has not been smooth sailing and there have been delays galore; one must nonetheless applaud Member States for demonstrating some intent where the CSME is concerned. However, as I have always maintained, the CSME should not be pursued in the absence of serious political integration. It is probably this lack of effort towards political integration that will hamper the chances of success for the CSME in the long run as opposed to any difficulty in establishing a currency union.

Finding New Approaches

 I agree with Mr. Seaga that CARICOM needs to be revisited and that there is a need to find new approaches supposedly in moving the region forward. I am not sure what Mr. Seaga means by new approaches, but CARICOM does not need new approaches as much as it needs to do a great deal of what it is doing a whole lot better. There must be greater efficiency, there must be less bureaucracy and there must be less insularity. Probably a more resolute exercise in political integration is one of the new approaches we need to move CARICOM forward.  

Opportunities for Cooperation

Mr. Seaga also outlined a number of opportunities for cooperation as previously mentioned. However, the fact remains that there has been cooperation in many of these areas before CARICOM and since CARICOM and without CARICOM, such cooperation will continue. The region has been cooperating in sports for much longer than CARICOM has been around and the West Indies cricket team is testimony to this. Furthermore, institutions such as CARDI indicate that there is already cooperation in agriculture. There has also been some cooperation in culture on a whole throughout the region. However, while cooperation in these areas can certainly be improved, the region needs much more than this if it is to endure beyond mere survival in this era. Moreover, deepened levels of integration will not negate further cooperation in these areas and will even advance such cooperation.  

Conclusion

Edward Seaga represents the ‘old guard’ as far as Caribbean politics is concerned. Whilst one respects seniority and experience, the fact remains that Edward Seaga had his opportunity both as Prime Minister and as leader of the Opposition in Jamaica to advance the cause of CARICOM. However, after so many years in the political life of Jamaica and the Caribbean by extension, Mr. Seaga has very little by way of a track record to show where CARICOM is concerned. In fact, Mr. Seaga and the Jamaica Labour Party (JLP) which he once led have traditionally been viewed as anti-CARICOM and regional integration on a whole. It is this very JLP that campaigned against the West Indian Federation and it is the same Mr. Seaga and the JLP that more recently demonstrated utter contempt for the Caribbean Court of Justice, another instrument of regional integration. Therefore, for these reasons and more, I will continue to view with suspicion any pronouncements made by Mr. Seaga with respect to regionalism within the CARICOM space.  

Rising Cost of Living

The upward trend in cost if living is not a situation that is unique to St. Vincent and the Grenadines; but throughout the CARICIOM region, the situation is pretty much the same. Such is the gravity of the situation that Grenadian Prime Minister, Dr. Keith Mitchell, wrote to his counterpart in Barbados, who is also the Chairman of CARICOM, the Honourable Owen Arthur, inviting him to call a special summit of CARICOM Heads of Government to address the problem.In St. Lucia, Barbados and St. Kitts and Nevis, those governments have already sought to temporarily address the problem by either placing a price cap on certain food items or reducing the tax placed on certain imported goods.

Unfortunately, much of the debate on the rising cost of living throughout the region has been highly emotional and in many instances, used by opposition parties to score cheap political points. However, the truth is, irrespective of the government of the day, very little can be done at the national level on a long term basis to alleviate the problem. True, governments can reduce import duties on some goods for importers and increase the basket of non-taxable goods for consumers. However, governments rely heavily on taxes to fund a wide range of national programmes and this approach will never suffice on a long term basis.

Outside of food, the high cost of utilities throughout the region has also been a source of much debate, especially as it relates to electricity. However, as it stands now, this is an issue beyond the reach of most governments throughout the region. In Barbados, there has been talk of government subsidizing the cost of electricity. However, this approach can never be feasible in the long run. Subsidizing electricity would require governments to cut back on spending in some areas and may even lead to increased taxes, most likely hidden taxes, in other areas as governments would need some other way of generating income. Therefore, this approach will be ill-advised.  

The views articulated thus far must in no way be misconstrued as attempts to defend the regional body politic. However, such views are based on the realization that the international scenario has been so dramatically altered that small, vulnerable, open economies such as those within CARICOM have not been able to ward off the effects of rising oil prices and the implications of a weaker United States Dollar.

Apart from this, organizations like Oxfam International and even our very own Prime Minister, Dr. Gonsalves have also cited the use of corn and cane to produce bio-fuel as contributing to higher food prices. These are realities beyond the reach of CARICOM governments to address.

However, there are a number of steps that consumers can take to ease the burden of a growing cost of living. First of all, shopping on a needs basis is essential at a time like this. Persons need to be able to make the critical distinction between needs and wants and allow the former to take precedence. Furthermore, with respect to utilities, consumers should also be willing to give up a few luxuries, especially for the moment, in order to exist beyond mere survival. In this regard, persons should start spending less on phone cards and the like and recognize that utilities such as Cable are luxuries and not needs. Therefore, it is not essential to have such services, again, at least for the moment.

In terms of electricity, there are a host of steps that consumers can and should take to minimize cost. Using fewer appliances, reducing time spent on computers, watching less television and turning off lights when not in rooms are steps that many of us are fully aware of but refuse to take.

The current situation demands that we think again.Apart from the consumers, governments too can begin putting measures in place that will yield results in the medium to long term future. Many of our governments in the region have been selling crown land and in some instances land previously used for agricultural purposes for hotel and other types of service oriented development. However, the current situation of a rising food import bill clearly demonstrates that we are having a food security crisis and such is the case primarily because we have seen it fit to shift our development priorities away from agriculture to services. Governments need to realize that agriculture is critical to sustainable development and that the region would be much better off when it can grow and produce most of its food.

With respect to electricity and the high cost of oil, it must be made abundantly clear that there is no shortage of alternatives to oil in the region for energy purposes. The region is endowed with sunlight all year round (the source of solar energy); possibilities exist for geo-thermal energy and much more can be done in the area of hydro-power. The region therefore needs to seriously consider these options, especially with respect to solar energy. Research and innovation in this field can save generations to come millions of dollars and while it may not be a quick fix solution to problems being encountered now, it can very well “save the day” in years ahead. Had investments been made in this area a decade or so ago, we would not have been as hard hit by the rising cost of oil as we are now. Our governments failed to act decisively then and should not make the same mistake now.

Finally, the problems being encountered now underscore the need for national and regional unity. Very few, if anyone, are exempt from the challenges being encountered and we would be much better off if we confront the issues together as a people within a nation and as nations within a broader regional context.

Another Look at the IMF Article IV Consultation on SVG

 I had opportunity to read the Unity Labour Party’s (ULP) take on a recent release by the International Monetary Fund (IMF) primarily on the current state and future prospects of and for the economy of St. Vincent and the Grenadines (SVG) in the News Newspaper of Friday November 23^rd, 2007. Having had access to the said report online http://www.imf.org/external/pubs/ft/scr/2007/cr07367.pdf), I was forced to write as I thought that the ULP had omitted a number of important observations that the IMF made on the economy of SVG. In essence, while one cannot charge that the ULP’s account was indifferent to the truth, it was nonetheless the product of much ‘spin doctoring’ and hopefully, in the following sentences, one can present a much more balanced account to the ULP’s efforts last week.  

In the ULP column, the compliments highlighted by the IMF on the state of the Vincentian economy were noted. The column identified the fact that macro-economic outcomes such as GDP growth have strengthened significantly; that the country’s fiscal position had strengthened; that tax reform was commendable as was banking supervision and growth as well as poverty reduction efforts. These are all well and good and important milestones that all Vincentians, regardless of party persuasion must be proud of.

The IMF report even recognized that despite being the poorest country in the Eastern Caribbean Currency Union, SVG had strong social indicators such as near universal adult literacy; access to free education up to the secondary level; and provision of low income housing. Again, after a mere post independence period of 28 years, these are significant achievements.

However, there are equally worrying trends developing in the country’s socio-economic landscape that all Vincentians must also be concerned with.First of all, the IMF report also noted inter alia, that the fiscal situation has continued to deteriorate since the late 1990s, with a rapid rise in debt levels; that there was a need for stricter spending discipline; that the social security scheme was weak; and that raising the country’s growth potential would be a challenge. While these are considerable concerns, one of the most worrisome issues raised by the IMF report was the country’s debt situation. According to the IMF, in the absence of strong fiscal adjustment, public debt would reach 107 percent of GDP by 2011, well above the 75 percent of GDP specified in the government’s Debt Strategy. This, according to the IMF would boost central government’s debt servicing to more than 8 percent of GDP (about 28 percent of current revenues); raise the government’s vulnerability to rollover risk; and constrain its ability to undertake poverty alleviating expenditures.  

To address its concerns, the IMF has recommended that the government of SVG pursue a number of initiatives, many of which the organization itself has deemed as “painful”. These include cutting public sector jobs in a bid to reduce the government’s wage bill which presently accounts for roughly half of all current expenditures; and prioritizing and “properly” phasing infrastructure-enhancing projects while ensuring in the process that these projects are funded with grant financing and highly concessional loans.  Bearing these IMF prescriptions in mind, as much as the government owes it to the Vincentian people to highlight the laudable aspects of the report in an effort to boost public confidence in the government; it also owes it to the people to explain what measures are being contemplated to address the problems facing the economy. The Vincentian people may actually have more confidence in a government that is straightforward on matters of national significance as opposed to one hiding behind the veil of propaganda and rhetoric. Essentially, results are much more important than talk.

However, while one acknowledges the need for the government to put measures in place to address the concerns raised by the IMF, the government must nevertheless approach the IMF’s prescriptions with much caution. After all, it is the same IMF that prescribed policies to developing countries throughout the 1980s and much of the 1990s, the implementation of which had disastrous consequences for the economies of many of those countries. The need to be cautious becomes an even more potent issue when one realizes that inherent in some of the IMF prescriptions is a set of contradictions. For instance, how does the IMF propose to reconcile the need to reduce poverty while at the same time calling on the government to cut public sector jobs? Is it not evident that to take someone out of a job without the possibility of an alternative is to effectively place that person in poverty? Therefore, the government needs to let the people know whether or not it has already devised home grown measures specific to our reality as a people; or whether or not it would be pursuing the measures proposed by the IMF.  

Finally, I was hoping that the Opposition would have sought to shed some light on the IMF report under consideration. I am not sure if it is a situation where the Opposition New Democratic Party (NDP) was not aware of the report at the time of writing their article last week. However, if it is that they were not aware of the report, this would only add to an already strong case against the opposition which virtually renders it politically irrelevant. These are issues that the Opposition should be in tune with, but one cannot be surprised. After all, they have already demonstrated to the Vincentian people that they are pretty much an “after the fact” bunch as opposed to being a proactive grouping.  

The EPA in Context

“We succumbed…the pressure was too much….” These were the words of a Namibian diplomat after that country signed an Economic Partnership Agreement (EPA) with the European Community (EC) on December 12^th, 2007. In the wee hours of Sunday morning, December 16^th, 2007, CARIFORUM (CARICOM + the Dominican Republic) followed suit and initialed an EPA with the EC. Word is that the actual signing of the agreement is to come sometime during the first quarter of 2008.

While one cannot be certain that the pressure alluded to by the Namibian diplomat above featured in CARIFORUM’s decision to initial an agreement with the EC; there are a number of unmistakable truths about the EPA that cannot be denied.  Undeniably, there are a number of positives inherent in the agreement. First of all, CARIFORUM will enjoy continued duty free access to the EC market and not be subject to what could have potentially been an onerous Generalised System of Preferences (GSP) regime had there not been some initialing of an agreement by January 1^st, 2008. Further to this, CARIFORUM seems to have been able to secure some commitments from the EC in the area of Development Cooperation. While the exact value of this Development Cooperation has not been revealed, one can only hope that it will be adequate and used prudently by governments to offset any socio-economic fallouts resulting from the implementation of the EPA. Of interest too are the incorporation of cultural cooperation and more flexible rules of origin into the agreement. These inclusions can bring about positive results for CARIFORUM’s exports to the EC.

However, whilst there are a number of positives that one can identify within the EPA, one cannot help but be afraid that the agreement can potentially harm CARIFORUM and the other African and Pacific States that have agreed to adopt the EPA. First of all, a number of the commitments undertaken by CARIFORUM and other countries have been classified as World Trade Organisation (WTO) plus. In fact, some regard the entire EPA as WTO-plus. This essentially means that these countries have adopted a number of measures that go beyond the scope of the commitments they were expected to undertake at the level of the WTO. In essence, this can very well undermine CARIFORUM’s and other countries in Africa and the Pacific’s defensive posture within the WTO. Therefore, the insistence of these countries on the need for special and differential treatment at the multi-lateral level can very well be ignored due to the extent of the commitments they have now undertaken within the EPA.

Moreover, by adopting the EPA as presently configured, CARIFORUM countries have basically ceded whatever autonomy they had left over their trade policy. If CARIFORUM were to enter into any future free trade agreement with a country whose share of world trade is 1% and above or a group of countries which has a share of world trade of  1.5% and above, they will be obliged to offer them the same treatment as they have offered the EC. If better treatment is offered, they would then be obliged to offer same to the EC. This leaves the region with very little flexibility in determining its future trade agreements and has grave implications for its trade policy. Therefore, as we prepare to engage in free trade negotiations with Canada scheduled to begin sometime in 2008, we have very little room for creativity as the EPA already serves as a blueprint for all of CARIFORUM’s future trade agreements with all major trading partners. 

One must also bring into focus the impact that the EPA negotiating process will have on the relationship between the countries of Africa, the Pacific and the Caribbean that were involved in the negotiations. Traditionally, these countries have tended to be allies in many fora ranging from the United Nations, the WTO and relations with Europe. However, the manner in which the negotiations were conducted could have potentially placed a huge and irreparable dent in the relations between the countries of the Africa Caribbean and Pacific (ACP) grouping. The fact that there was little or no solidarity amongst the ACP grouping during the negotiations and the fact that some adopted the agreement while some did not could have potentially sowed seeds of mistrust and ill-feelings that could remain irreconcilable for years to come.    

It is also disappointing to note that parliamentarians and other segments of society throughout the region seem not to have a good grasp of the EPA. One would hope that the technical personnel in the various ministries of foreign trade will begin an aggressive process of public education on the EPAs targeting politicians, the business community, civil society and institutions of learning. One of the major shortfalls of the process in negotiating the EPA was that there was very little information being made available to the public. As has become the norm in the region, public education, impact assessment and the like can now only be ‘after the fact’ initiatives. Hopefully, the same mistake would not be repeated during our negotiations with Canada.

Finally, while the EPA has demanded that CARIFORUM make a number of far reaching commitments, CARIFORUM was fortunate to be allowed an adjustment period spanning some twenty five years before fully implementing its commitments under the EPA. One can only hope that the process of readjusting the economies of the region would begin in earnest so that we can be better positioned to confront the realities of liberalisation.

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