The more one reads about the Economic Partnership Agreement
(EPA) between the European Union (EU) and African, Pacific
and Caribbean (ACP) countries, the greater the bewilderment.
Even those advocating that the Caribbean sign the EPA on September
2 admit that it is no great agreement arguing, however, that
a “bad agreement is better than no agreement.”
The basic reason is that the European Union has threatened
to remove preferential tariffs if the Caribbean does not sign.
It is ironic the same advocates of signing have attempted
to demonise those proposing a delay by accusing them of wishing
to keep the region perpetually in the mendicant grip of preferential
arrangements.
In other words, the reason being advanced for signing is simultaneously
being used as a stick to beat those opposing any hasty rush
to sign!
WTO plus
The second, and reinforcing, argument put forward by those
supporting the September 2 signing is that this is necessary
to comply with World Trade Organisation (WTO) requirements.
As background, the WTO provided an initial “breathing
period” for the former EU-ACP Lome Agreements to be brought
in line with the decisions made in global trade negotiations.
Yet, one of the most compelling reservations on signing is
that it will commit the Caribbean to open our markets for
goods, services and foreign investment beyond the levels that
have been agreed upon at WTO negotiations!
On this score, a July, 2008, report of the European Parliament
itself points out that:
“The example of the CARIFORUM EPA is not very positive.
The Caribbean EPA has opened up to 75 per cent of services
sector for European service providers, even for services such
as telecoms, banking, retail and courier services.
“EU companies have to be treated in general equal to
domestic service providers.”
The implication is that the Caribbean (and other ACP countries
that sign) would be throwing away any negotiating leverage
(small, though it may be) that we may have at the WTO level.
As a result, other trading partners, such as the USA and Canada,
will naturally demand the same access as that provided to
the European Union.
The question is who has most to lose in the long run from
such an opening up?
Clearly, it would be the Caribbean countries with the highest
level of national/regional ownership of enterprise.
Trinidad and Tobago would be first in line here, followed
by Jamaica and Barbados.
Yet, it appears as if it is only the Barbados Manufacturers
Association that has “smelled the rat,” and called
on its government to take a “fresh look” at the
EPA.
The implications are not only in terms of ownership of enterprise,
but also relates to access to regional markets.
T&T manufacturers, for eg, have done extremely well within
the Caribbean. The EPA will increase the competition coming
from EU firms for established market shares (and no doubt
soon from US and Canadian exporters demanding EPA-equivalent
treatment).
The T&T Manufacturers Association has been backing the
EPA, on the grounds that it will continue preferential access
for existing T&T exports to the EU.
One wonders if this position has taken into account the implications
for smaller T&T manufacturing operations selling predominantly
within the region?
Waiver of safeguards
The implications extend beyond the direct interests of regional
business owners. The July European Parliament report also
notes:
“While regional and EU investors are obliged to respect
environmental and labour standards, the Caribbean countries
have in general given up their rights to introduce investment
safeguard measures to limit or influence regional and EU investors,
in case their actions may harm domestic markets or living
conditions.”
This can be interpreted to imply the signing away of safeguard
measures protecting jobs or human health.
Economics or psychology?
The critical pre-condition for any successful negotiation
is the willingness to walk away if the other party is not
offering sufficient concessions to justify an agreement.
Yet, from my observation of State decision-making in the region,
particularly, T&T, there appears to be another factor
at work.
During the 1980s, for example, someone involved in negotiating
purchase of Texaco’s moribund Pointe-a-Pierre oil refinery
told me the brief was:
“Buy; otherwise it would be a bad signal to foreign investors.”
This, then, was not a negotiation, but a discussion of the
“least bad” conditions for capitulation to Texaco.
The question is why did the political directorate of the time
hold such an absurd position?
My suspicion and speculation is that the answer lies not in
economics, but psychology.
In the case of the EPA, the EU could be interpreted to have
“invoked imperial might” and touched the irrational,
raw nerve of the class that dominates State and “big
business” decision-making in the region.
