The EU today signed a long-discussed and controversial trade deal that will eventually give EU companies access to almost all areas of the Caribbean market.
Under the terms of the agreement signed on 15 October, over the course of the next 25 years the 14 Caribbean states who signed up to the Economic Partnership Agreement will almost entirely liberalise their markets for both goods and services.
EU exporters would have duty-free access to 61.1% of Caribbean markets for goods within the first ten years, rising to 82.7% after 15 years and finally to 89.9% in 2033.
In return, the EU will immediately remove all tariffs and quotas on all Caribbean produce, except for sugar and rice.
In the services sector, the EU would only gradually open up its market, as would the Caribbean.
Louis Michel, the European commissioner for development, called the deal “ground-breaking”. The deal, which has taken four years to negotiate, will create “new opportunities for the region in terms of stronger growth and exports, and more jobs”, he said.
The European Commission also argues that the EPA will help Caribbean economies diversify and strengthen.
However, Oxfam, a leading non-governmental voice on development issues, said the trade pact will hurt poor people and undermine development in the region. “The European Union has failed to translate its rhetoric of development into a trade deal which puts the interests of the developing countries first,” Luis Morago, head of Oxfam’s EU unit, said.
“In a fair deal, Europe would fully open up its markets to all exports without demanding reciprocation,” argued Mouhamet Lamine Ndaiye, Oxfam’s head of economic justice. Such an approach would “assist these countries to become more competitive, generate decent jobs and access new technologies”.
The Commission said the countries will be better off under the EPA deal, since failure to sign it would have resulted in the region having to accept the EU’s alternative system of ‘generalised preferences’, under which their exports to the EU would have been subject to tariffs.
The EU previously had a more advantageous tariff system for a grouping of mainly former European colonies in Africa, the Caribbean and Pacific (ACP), but in 2001 the World Trade Organization (WTO) ruled that that system was illegal as it discriminated against developing countries outside the ACP grouping. The WTO then gave the EU and ACPs a seven-year waiver in which to find an alternative. The seven years expired at the end of last year.
The Commission also said that the pact includes financial support from the EU’s Aid for Trade scheme to help Caribbean countries implement the EPA, which comes in addition to €165 million that Caribbean countries will be able to draw on from the EU’s Development Fund between 2008 and 2013.
Both Haiti and Guyana chose not to sign up to the EPA. Guyana’s president, Bharrat Jagdeo, said he wanted the EPA to include a clause that would allow Caribbean states to revise the EPA within five years if they decided that the impact of the agreement did not match their developmental needs.
Haiti already benefits from free access to European markets as a Least Developed Country, giving the country less to gain from signing up to the EPA. The Commission, however, said it will try to find the “right conditions” to allow Haiti to sign up as soon as possible.
African and Pacific states have refused to sign up to an EPA, arguing that the EU’s attempts to gain access to services markets goes far beyond WTO requirements and would harm their economies. The WTO’s stipulations related only to goods.
The Caribbean countries to have signed the deal are: Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, the Dominican Republic, Grenada, Jamaica, Saint Lucia, Saint Vincent, the Grenadines, Saint Christopher and Nevis, Surinam, Trinidad and Tobago.