CARIFORUM/EU EPA: Implementation Review

By Elizabeth Morgan

It is now eleven (11) years since the Economic Partnership Agreement (EPA) between the Member States of the Caribbean Forum of the African, Caribbean and Pacific (ACP) Group of States (CARIFORUM) and the European Union (EU) and its Member States was signed in 2008. To date, the Caribbean remains the only ACP region which concluded a comprehensive EPA with the EU.

A second five (5) year review of the EPA’s implementation is now due. You may recall that at the time of concluding the negotiations, Guyana insisted that periodic reviews of implementation were necessary. The review was included to determine the impact of the Agreement including costs and consequences of implementation, which could lead to amendment of provisions and adjusting applications.

The first five year review became due in 2013, but the actual formal review took place in July 2015 at a meeting of the Joint CARIFORUM/EU EPA Council held in Guyana. The second review will be held at the Joint Council Meeting in 2020.

Note that the EPA has several institutions for monitoring its implementation. These are at the Ministerial level, the biennial Joint Council and at the senior officials’ level, the annual Trade and Development Committee (TDC). The TDC met in Brussels, Belgium this week. Other institutions are the Parliamentary Committee and the Consultative Committee composed of civil society representatives including the private sector.

EPA Effectiveness

The first five year review came after the 2009 economic crisis. This review showed the impact of the crisis on trade, which remained mainly in goods. Exports from the CARIFORUM countries contracted. Exports of agricultural products, bananas and sugar, subject to dispute settlement in the World Trade Organization (WTO), had declined. These products would be duty free and quota free under EPA. In trade in services, outside of tourism, there was hardly any discernible impact. In CARIFORUM, legislation was still required to implement certain other provisions of the Agreement. On both sides, while the EPA was being provisionally applied, there were still Member States which had not ratified it. The conclusion would be that the EPA was not very effective.

Brexit

Since 2015, there has been Brexit, with the United Kingdom (UK), a main CARIFORUM trading partner in the EU and gateway into the rest of the Union, still intending to withdraw from membership. With Brexit pending, CARIFORUM countries proceeded to negotiate and sign an EPA roll-over agreement with the UK in April. General elections scheduled for December 12 will signal the future of Brexit. As of now, with another extension, the UK is to leave the EU in January.

With Brexit, the EPA would thereafter be with 27 EU Member States. CARIFORUM needs to review its relationship with these 27 Members looking at how to strengthen trade with countries such as France, Germany, Ireland, and EU Commonwealth members, Malta and Cyprus.

The EU remains CARIFORUM’s second main trading partner. In 2018, EU statistics indicate that CARIFORUM goods exports were valued at 4.28 billion euros and imports at 7.55 billion euros, giving the EU a surplus of 3.27 billion euros. Consider that the full liberalization of duties on EU imports is still to take effect. Main CARIFORUM exporters are the Dominican Republic and Trinidad and Tobago. Jamaica moved from having a trade surplus with the EU to a deficit. The current trade environment, it must be recognized, is quite challenging.

I am expecting that the CARIFORUM/EU TDC meeting in Brussels looked at the procedures for the EPA review. More than likely, as in the previous review, a consultant will be contracted to examine the impact of the Agreement and prepare a report. The effectiveness of Caribbean Export as a regional trade promotion agency should also be examined.

With achieving economic growth a critical objective among CARIFORUM Member States, it will be necessary to examine carefully how the EPA can be fully utilized to increase trade in goods and services. They should consider whether aspects of the Agreement need to be reviewed and revised. It is also necessary to look at the link to the ACP/EU post Cotonou negotiations including the CARIFORUM/EU regional protocol.

Submitted by Elizabeth Morgan, Specialist in International Trade Policy and International Politics

Source: CARICOM TODAY