Strong Talk too late for the Caribbean

There is now some strong talk by Caribbean governments and the Secretariat of the Caribbean Community and Common Market (CARICOM) about relations with the European Union (EU) and Latin American countries.

But, it is strong talk that has come too late to help Caribbean banana-producing countries which will suffer under a new deal struck between the European Commission (EC) and Latin American countries.{{more}}

The leverage that Caribbean countries had in protecting their banana interests resided in the negotiations for an Economic Partnership Agreement (EPA) between individual Caribbean countries and the EC signed last year. But, it was lost, when Caribbean governments signed an unequal treaty with the EC that is to the detriment of the region as whole, and particularly those countries which export very little to Europe.

Caribbean governments have agreed to remove tariffs on EU goods entering their countries, albeit on a phased basis, and to open their economies to European companies to compete on an equal footing with national firms, but there are few benefits they will get in return. The notion that reciprocity opens the EU market to goods and services from Caribbean countries is already proving to be a fallacy – national restrictions in individual European nations on movement of people and rights of establishment have exposed the emptiness of this undertaking in the EPA.

When the EPA was being negotiated the Caribbean should have held out for iron-clad guarantees on bananas and sugar. They did not. Instead they succumbed to the EC threat to apply GSP to their exports and they accepted an undertaking that they would not be excluded from the EU banana market.

Before, during and after the negotiations on the EPA, the EU proclaimed the principle of “partnership”. But there was no evidence of “partnership” when the EC barred the African, Caribbean and Pacific (ACP) countries from their negotiations with the Latin American banana producing countries.

At a press conference in Geneva, Caribbean countries complained that they had not received the full text of the agreement between the EU and Latin American countries. Yet, EU representatives said that they expect the ACP countries to endorse the agreement on Friday December 4th.

Since this commentary is being written on December 3rd, it is not known whether the ACP countries endorsed the agreement or not. But

one lesson that has come out of this so far is the strength that determined unity of the ACP can bring to its member countries. If the ACP had not been tough with the European Commission, the deal with the Latins would have been sealed already.

Regrettably, the ACP has not been consistently unified and tough.

Reports from Geneva indicate that the deal struck between the EU and the Latin American banana producers is as follows: the EU will cut its current most-favoured-nation tariff from 176 Euros (US$262) to 148 Euros per tonne, and, over the next seven years, the tariff would be further reduced to 114 Euros (US$ 170) per tonne. In exchange, the Latin American producers will drop all outstanding World Trade Organisation (WTO) arbitrations on the matter.

This arrangement would kill exports of Caribbean bananas to the EU market since the reduced tariff on Latin American bananas would allow them to land bananas in Europe at a price that would squeeze out Caribbean banana producers. This development is particularly unfair because the Latin Americans have already cornered 80% of the European market; the paltry 18% enjoyed by all the ACP countries poses little threat to them.

In return for accepting this deal, the EU is offering all ACP banana producing countries 190 million Euros (US$283.6 million) for restructuring and adjustment. However, the ACP countries are holding-out for an increase in the compensatory sum. They are arguing for 250 million Euros (US$373.2 million) to ensure that there is adequate compensation to each of the banana producing countries. I suspect that an increase in the sum of money is all they will get.

But if the EU has been less than a genuine “partner” with the Caribbean countries than they pledged in the EPA, there is also evidence of insincere behaviour toward the Caribbean from Latin American countries.

CARICOM Secretary-General Edwin Carrington pointed out the Latins were continuing to push the Caribbean out of the EU market even as they were attesting to desire for a closer relationship with the Caribbean. Carrington is quoted by the Caribbean Media Corporation as saying: “It does really raise some serious questions in my mind as to how we are going to reconcile those two positions. We, in Jamaica on the sixth of November, agreed to a meeting in Mexico in February at the level of heads to bring about coordination and harmonization between the Rio Group of Countries and CARICOM. We are to be moving into a united way. All I have to say is: we can only unite; can all accommodate each other if we provide scope for one another to survive. That to me is a fundamental issue that has to be put frankly on the table”.

What all of this underscores is that in international relations – and especially in economic international relations – national interest comes first.

The Caribbean cannot depend on Europe to be a gratuitous “partner”, nor can it rely on Latin American countries to be concerned with Caribbean interests.

Essentially the treatment of CARICOM countries in international trade has to be resolved in the WTO, and not by the whims and fancies of other countries and regions. And the achievement of this boils down to winning acceptance in the WTO that CARICOM countries (and especially the small members of the Organisation of Eastern Caribbean States) should be entitled to special and differential treatment because of their remoteness, their small populations, their limited resources, their openness and their vulnerabilities both to natural disasters and deleterious events in the bigger countries with which they trade.

To achieve it, CARICOM countries have to become serious about investing assets and intellectual rigour into persistently and convincingly arguing for a change in the WTO rules that accords them special and differential treatment.

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Sir Ronald Saunders is a business consultant and former Caribbean diplomat.
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