caribbean negotiating agenda crnm: caribbean negotiating agenda cariforum negotiation of an epa:...

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CARIFORUM Negotiation of an EPA: Issues and Challenges

Junior LodgeBrussels Representative

Caribbean Regional Negotiating Machinery (CRNM)

TRALAC 2005 Annual Conference

Cape Town, South Africa

October 13-14, 2005

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Structure of PresentationStructure of Presentation CARIFORUM Technical Co-CARIFORUM Technical Co-

ordinationordination

CARIFORUM Economic Challenges CARIFORUM Economic Challenges

Issues in CAR-EC EPA NegotiationsIssues in CAR-EC EPA Negotiations

CARIFORUM EPA DemandsCARIFORUM EPA Demands

Challenges of EPA NegotiationsChallenges of EPA Negotiations

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CARIFORUM Technical Co-CARIFORUM Technical Co-ordinationordination

Context informing establishment of Context informing establishment of Regional Negotiating Machinery (RNM) Regional Negotiating Machinery (RNM) on April 1, 1997:on April 1, 1997:

Launch of FTAA negotiations (1994), Launch of FTAA negotiations (1994), Lome IV MTR (1995) and conclusion of Lome IV MTR (1995) and conclusion of Uruguay Round and establishment of Uruguay Round and establishment of WTO (1995)WTO (1995)

Issues of Caribbean regional Issues of Caribbean regional institutional governance (see institutional governance (see recommendations of West India recommendations of West India Commission, for example) Commission, for example)

Advance of Caribbean regional Advance of Caribbean regional integration process culminating in integration process culminating in Revised Treaty of Chaguaramas in 1992Revised Treaty of Chaguaramas in 1992

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a CARIFORUM Technical Co-CARIFORUM Technical Co-ordinationordination

RNM’s MandateRNM’s Mandate

Provide technical advice to, and Provide technical advice to, and negotiate on behalf of, Caribbean negotiate on behalf of, Caribbean countries on international trade countries on international trade negotiations.negotiations.

Co-ordinate the formulation of Co-ordinate the formulation of Caribbean positions on trade Caribbean positions on trade negotiationsnegotiations.

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a CARIFORUM Technical Co-CARIFORUM Technical Co-ordinationordination

RNM is headed by a Director-General who RNM is headed by a Director-General who acts as Caribbean’s Chief Negotiator and acts as Caribbean’s Chief Negotiator and Chief Technical Advisor. Chief Technical Advisor.

RNM technical experts are in thematic RNM technical experts are in thematic areas, e.g. market access, agriculture, areas, e.g. market access, agriculture, SPS, IP, GP, services, investment and SPS, IP, GP, services, investment and trade facilitation.trade facilitation.

RNM technical expertise also grouped RNM technical expertise also grouped around arena-specific negotiations, e.g. around arena-specific negotiations, e.g. WTO, FTAA, EPA and bilateral talks.WTO, FTAA, EPA and bilateral talks.

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Technical Working Groups (TWGs) Technical Working Groups (TWGs) comprise officials from member states, comprise officials from member states, experts from regional secretariats, experts from regional secretariats, NSAs, private sector, academics and NSAs, private sector, academics and serviced by RNM technical advice.serviced by RNM technical advice.

Role of the TWG is to develop regional Role of the TWG is to develop regional negotiating positions and mandates that negotiating positions and mandates that are submitted to COTED for are submitted to COTED for consideration and action.consideration and action.


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EPA College of Negotiators headed by EPA College of Negotiators headed by RNM DG and CARIFORUM Chief RNM DG and CARIFORUM Chief Negotiator and comprising Lead and Negotiator and comprising Lead and Alternate Negotiators in specific Alternate Negotiators in specific thematic subjects; OECS and CARICOM thematic subjects; OECS and CARICOM Sects. and the RNMSects. and the RNM

Mandated to provide strategic oversight Mandated to provide strategic oversight of the negotiations at the technical level of the negotiations at the technical level in terms of treatment of horizontal in terms of treatment of horizontal issues.issues.


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CARIFORUM-EC Plan and Structure CARIFORUM-EC Plan and Structure provides the overarching architecture provides the overarching architecture and orientation in the treatment of and orientation in the treatment of substantive issues in the negotiations. substantive issues in the negotiations.

The Joint Plan and Schedule draws The Joint Plan and Schedule draws heavily from CA’s objectives, heavily from CA’s objectives, complementarity of trade and complementarity of trade and development and is infused with goals of development and is infused with goals of Caribbean regional integration. Caribbean regional integration. processesprocesses..

CARIFORUM EPA CARIFORUM EPA NegotiationsNegotiations

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CARIFORUM Economic CARIFORUM Economic ChallengesChallenges

CARIFORUM members are characterized CARIFORUM members are characterized by small economic size and vulnerabilityby small economic size and vulnerability

Highly diverse in terms of physical Highly diverse in terms of physical conditions, level of development and conditions, level of development and cultural and historical backgroundcultural and historical background

Need for a strategic repositioning of Need for a strategic repositioning of region’s economies, leading to a shift region’s economies, leading to a shift towards new types of economic activities towards new types of economic activities and harnessing sustainable economic and harnessing sustainable economic growthgrowth

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Statistical Overview (2003 data)Statistical Overview (2003 data)

Population: 24 millionPopulation: 24 million Poverty Indicator: 25% below poverty linePoverty Indicator: 25% below poverty line GDP per capita: US$5366 GDP per capita: US$5366 Annual GDP growth: 1.8% (1984-2004)Annual GDP growth: 1.8% (1984-2004) Annual GDP per capita: 1.4% (1998-2003)Annual GDP per capita: 1.4% (1998-2003) Public Debt: 97% of GDPPublic Debt: 97% of GDP Openness: 123% of GDPOpenness: 123% of GDP Trade Taxes: 8.5% of GDPTrade Taxes: 8.5% of GDP

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Trade PerformanceTrade PerformanceCARIFORUM Export Destination: North CARIFORUM Export Destination: North

America (48%); EU(19%); CARIFORUM (15%)America (48%); EU(19%); CARIFORUM (15%)

CARICOM Export Destination: EU (31.3%); CARICOM Export Destination: EU (31.3%); US (25.7%); CARICOM (26.4%)US (25.7%); CARICOM (26.4%)

1993-2003: Extra-regional exports grew 7.4% 1993-2003: Extra-regional exports grew 7.4% annually; 8.9 % to the US; 9.1% intra-annually; 8.9 % to the US; 9.1% intra-regionally and 3.4% to the EUregionally and 3.4% to the EU

If Trinidad and Tobago exports are excluded, If Trinidad and Tobago exports are excluded, CARIFORUM exports decline to 3% annually. CARIFORUM exports decline to 3% annually.

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EPA Technical PreparationsEPA Technical Preparations

May 2003: Meetings of region’s trade May 2003: Meetings of region’s trade experts, officials and Ministers concluded experts, officials and Ministers concluded in the drafting of CARIFORUM in the drafting of CARIFORUM Negotiating Guidelines for EPANegotiating Guidelines for EPA

May and October 2005: Meeting of May and October 2005: Meeting of Caribbean Trade and Legal Experts Caribbean Trade and Legal Experts

TWGs on RI, MA, Services and TRITWGs on RI, MA, Services and TRI EPA National ConsultationsEPA National Consultations Market Access Simulation ExercisesMarket Access Simulation Exercises

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Merchandise exports made up an average of Merchandise exports made up an average of 52 percent of total exports of Caribbean 52 percent of total exports of Caribbean countries in 1990, this fell to about 45 countries in 1990, this fell to about 45 percent in 2001percent in 2001

The decline in the share of merchandise The decline in the share of merchandise exports has been compensated by the exports has been compensated by the increase in service exports, primarily tourismincrease in service exports, primarily tourism

Negative merchandise trade balance offset by Negative merchandise trade balance offset by positive services account, but diminishing!positive services account, but diminishing!

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Steady decline in CARIFORUM’s market Steady decline in CARIFORUM’s market share in export of goods in North America share in export of goods in North America from 0.71% in 1985 to 0.27 % in 2000. from 0.71% in 1985 to 0.27 % in 2000. Same decline in the EU.Same decline in the EU.

In the 1980s, exports of goods grew at 3.7 In the 1980s, exports of goods grew at 3.7 %, while services grew at 10.7 %. %, while services grew at 10.7 %. However, in the period 1991-2002, goods However, in the period 1991-2002, goods export growth declined to 2.9 %, while export growth declined to 2.9 %, while services declined to 5.3 %. services declined to 5.3 %.

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Caribbean Economic Caribbean Economic ChallengesChallenges

Top 5 CARIFORUM Exports to the EU, Top 5 CARIFORUM Exports to the EU, 20042004

HS 8901 Excursion BoatsHS 8901 Excursion Boats 12.9%12.9% HS 2818 Aluminium oxideHS 2818 Aluminium oxide 10.3%10.3% HS 2208 Undenatured ethanolHS 2208 Undenatured ethanol 9.9%9.9% HS 8903 YachtsHS 8903 Yachts 9.6%9.6% HS 1701 Sugar CaneHS 1701 Sugar Cane 7.77.7

Top five exports items contributed to Top five exports items contributed to 50.4% of total exports with top ten 50.4% of total exports with top ten accounting for 73.9% accounting for 73.9%

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Services have been the most important Services have been the most important driver of growth in the Caribbean, with an driver of growth in the Caribbean, with an average growth rate of almost 5 percent average growth rate of almost 5 percent per year from 1961-2000 per year from 1961-2000

Resultantly, the share of services in GDP Resultantly, the share of services in GDP increased from 50 percent in the 1960s to increased from 50 percent in the 1960s to 62 percent in the 1990s 62 percent in the 1990s

Dominated by tourism, but this sector is Dominated by tourism, but this sector is declining in growth, hence the emergence declining in growth, hence the emergence of new sectors such as ICT, educational, of new sectors such as ICT, educational, cultural, financial and business services.cultural, financial and business services.

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CARIFORUM ObjectivesCARIFORUM Objectives

Facilitate Caribbean’s efforts to secure Facilitate Caribbean’s efforts to secure sustainable development, structurally sustainable development, structurally transform itself at an appropriate pace transform itself at an appropriate pace of adjustment, and improve its of adjustment, and improve its international competitiveness. international competitiveness.

Development should infuse all aspects of Development should infuse all aspects of an EPA and should therefore be inherent an EPA and should therefore be inherent to its very conception. It should not be to its very conception. It should not be separate and distinct from the trade separate and distinct from the trade provisions. provisions.

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Issues Emerging from the Negotiations:Issues Emerging from the Negotiations:

Nature of CARIFORUM Economic Space: Nature of CARIFORUM Economic Space: EC has drifted from insistence on the EC has drifted from insistence on the formation of CARIFORUM customs union formation of CARIFORUM customs union and now advances the establishment of a and now advances the establishment of a “single trade regime”“single trade regime”

Development: EC has mechanistic Development: EC has mechanistic demand- driven approach that ignores the demand- driven approach that ignores the inherent structural weaknesses and inherent structural weaknesses and supply rigidities of CARIFORUM supply rigidities of CARIFORUM economies.economies.

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Second Phase (Sept. 2004 – Sept. 2005)Second Phase (Sept. 2004 – Sept. 2005) Twin objectivesTwin objectives

(a)(a) Understanding the nature of respective Understanding the nature of respective economic spaces to assume EPA economic spaces to assume EPA commitments in January 2008commitments in January 2008

(b)(b)Identifying CARIFORUM RI priorities to Identifying CARIFORUM RI priorities to be supported by an EPAbe supported by an EPA

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Concept of an EPA: EU views EPA as a Concept of an EPA: EU views EPA as a programme of radical trade liberalization programme of radical trade liberalization imbued with TRTA to facilitate ACP imbued with TRTA to facilitate ACP regions’ assumption of the highest level regions’ assumption of the highest level of commitmentof commitment

CARIFORUM instead conceives EPA as a CARIFORUM instead conceives EPA as a trade and development agreement that trade and development agreement that imports all of relevant language and imports all of relevant language and instruments of the Cotonou Agreementinstruments of the Cotonou Agreement

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CARIFORUM views EPA negotiations as a CARIFORUM views EPA negotiations as a means of dynamizing its two streams of means of dynamizing its two streams of regional integration processes i.e. CSME regional integration processes i.e. CSME and CARICOM–DR FTAand CARICOM–DR FTA

CARIFORUM has tabled eleven requests CARIFORUM has tabled eleven requests in the following areas to bolster its RI in the following areas to bolster its RI processes that are now considered by the processes that are now considered by the RPTFRPTF

Areas include Areas include TBT and SPS Measures; TBT and SPS Measures; Trade Facilitation; Investment Promotion; Trade Facilitation; Investment Promotion; Competition Policy; Intellectual Property Competition Policy; Intellectual Property Rights and Government ProcurementRights and Government Procurement

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Trade and development Trade and development complementarity: The EU seeks to complementarity: The EU seeks to balkanize EPA negotiations by sealing balkanize EPA negotiations by sealing trade negotiations from requisite trade negotiations from requisite development support.development support.

EPA negotiations are binding yet EPA negotiations are binding yet discussions in RPTF are best discussions in RPTF are best endeavour linked to infamous delayed endeavour linked to infamous delayed delivery of promised resourcesdelivery of promised resources

Concept of justiciable commitmentsConcept of justiciable commitments

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EPA Implementation: the EC seeks EPA Implementation: the EC seeks to recycle resources already to recycle resources already committed in the RIP or calls for committed in the RIP or calls for the use of unused balances to fund the use of unused balances to fund EPA implementationEPA implementation

Case of CRIP with 85% of resources Case of CRIP with 85% of resources dedicated to advancing regional dedicated to advancing regional integration with a integration with a €€20 million work 20 million work programme for CSMEprogramme for CSME

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Differentiation in CARIFORUM RI Differentiation in CARIFORUM RI Processes:Processes:

CARIFORUM argues that its RI processes are CARIFORUM argues that its RI processes are based on twin concepts of variable geometry based on twin concepts of variable geometry and differentiation. and differentiation.

EU argues that its integration process EU argues that its integration process encompasses member states that are encompasses member states that are differentiated in terms of both levels of differentiated in terms of both levels of development and size of economies without development and size of economies without special trade provisions.special trade provisions.

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Tasks to be pursued in Phase III:Tasks to be pursued in Phase III:

forging an agreement on the structure forging an agreement on the structure of an EPA; of an EPA;

consolidating the outcome of consolidating the outcome of discussions on the priority issues for discussions on the priority issues for CARIFORUM regional integration; andCARIFORUM regional integration; and

agreeing on an approach to trade agreeing on an approach to trade liberalizationliberalization with special focus on with special focus on treatment of CARIFORUM sensitive treatment of CARIFORUM sensitive productsproducts

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CARIFORUM Market Access Interests:CARIFORUM Market Access Interests:

Binding of CARIFORUM’s current access Binding of CARIFORUM’s current access to the EU market; to the EU market;

Immediate access for agricultural Immediate access for agricultural products under Cotonou Declaration XXII; products under Cotonou Declaration XXII;

More favourable rules of origin;More favourable rules of origin; Securing regional SPS compliance Securing regional SPS compliance

capacity;capacity; Elimination of EU subsidies and domestic Elimination of EU subsidies and domestic

support measures that negatively affect support measures that negatively affect specific Caribbean products.specific Caribbean products.

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CARIFORUM Market Access Interests:CARIFORUM Market Access Interests: EC waives its WTO rights to apply EC waives its WTO rights to apply

safeguardssafeguards Computation of SAT based on CARIFORUM Computation of SAT based on CARIFORUM

regional aggregation, hence more flexibilityregional aggregation, hence more flexibility Computation of SAT based on hybrid of tariff Computation of SAT based on hybrid of tariff

lines and value to afford greater flexibilitylines and value to afford greater flexibility Flexibility with number of sensitive lists Flexibility with number of sensitive lists

reflective of streams of CARIFORUM reflective of streams of CARIFORUM regional integration regional integration

Liberalization schedule linked to EC support Liberalization schedule linked to EC support for the reform of taxation regimesfor the reform of taxation regimes

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Services Offensive Interests:Services Offensive Interests: Asymmetrical and progressive liberalization Asymmetrical and progressive liberalization

of trade in servicesof trade in services Mode IV quotas for both skilled and unskilled Mode IV quotas for both skilled and unskilled

CARIFORUM professionalsCARIFORUM professionals Recognition of CARIFORUM certificates and Recognition of CARIFORUM certificates and

qualificationsqualifications Portability of EU medical insurance schemes Portability of EU medical insurance schemes

to cover treatment in CARIFORUM member to cover treatment in CARIFORUM member statesstates

EU offers extensive market access EU offers extensive market access commitments in cultural products including commitments in cultural products including AVAV

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Investment:Investment: An Investment Agreement (IA) that seeks to An Investment Agreement (IA) that seeks to

balance of rights and obligations between balance of rights and obligations between EU investor and Caribbean governmentsEU investor and Caribbean governments

IA should also create opportunities for all IA should also create opportunities for all parties through the elimination of all parties through the elimination of all discriminatory barriers to market access discriminatory barriers to market access and national treatmentand national treatment

IA seeks IA seeks a more proactive focus on a more proactive focus on investment promotion, rather than investment promotion, rather than exclusively on investment protection as exclusively on investment protection as currently with BITs.currently with BITs.

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Overarching Issues:Overarching Issues: Creation of a Regional Investment Facility Creation of a Regional Investment Facility

anchored within CDB and funded by EIBanchored within CDB and funded by EIB

Adjustment Facility to fund the transition Adjustment Facility to fund the transition of uncompetitive industries with need for of uncompetitive industries with need for poverty alleviation and retraining measurespoverty alleviation and retraining measures

Adjustment Facility also addresses drive Adjustment Facility also addresses drive towards enhanced competitiveness of local towards enhanced competitiveness of local firms via a Lisbon-type programmefirms via a Lisbon-type programme

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Challenges:Challenges: Retaining integrity of ACP self-designed Retaining integrity of ACP self-designed

regional integration process in the context of regional integration process in the context of EPA negotiationsEPA negotiations

Synchronizing EPA negotiations with the Synchronizing EPA negotiations with the release of EU development support, i.e. CA release of EU development support, i.e. CA coherence coherence

Balancing pursuit of EPA negotiations without Balancing pursuit of EPA negotiations without prejudging Cotonou review of EPAs in 2006prejudging Cotonou review of EPAs in 2006

Formulation of EPA development benchmarksFormulation of EPA development benchmarks Coherence between EPA and DDA negotiationsCoherence between EPA and DDA negotiations January 2008 timetable for EPA implementationJanuary 2008 timetable for EPA implementation

caribbean negotiating agenda crnm: caribbean negotiating agenda cariforum negotiation of an epa:...

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