rnm update - 2000-02-04

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RNM UPDATEFebruary 4, 2000

Prepared by the Communications Division of the Caribbean RegionalNegotiating Machinery (RNM), this electronic newsletter focuses on the

RNM, trade negotiation issues within its mandate and related activities.************************************************************

- COMMUNICATIONS PARTNERSHIP STRATEGY- RNM DONORS MEETING- GRENADA NATIONAL CONSULTATION- ACTIVITIES IN JAMAICA- CARICOM-CUBA NEGOTIATIONS- CARICOM-DR NEGOTIATIONS

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COMMUNICATIONS PARTNERSHIP STRATEGY

The RNM was created by the Conference of Heads of Government of theCaribbean Community with a mandate to develop a cohesive tradenegotiating strategy for the Region under the political direction andsupervision of the Prime Ministerial Sub-Committee on ExternalEconomic Relations. The RNM is led by Sir Shridath Ramphal, theRegion's Chief Negotiator, with the assistance of Sir Alister McIntyre, itsChief Technical Advisor.

Within the context of its mandate the RNM has begun to implement itsCommunications Partnership Strategy (CPS), which is conceived as a two-way information flow between the RNM and its stakeholders --governments (including inter-governmental bodies), the private sector andthe rest of civil society (labour, academia, NGOs, etc.) -- both within theCaribbean and beyond.

In order to inform and educate stakeholders about the negotiationchallenges faced and the RNM's work, we will produce and disseminateon a regular basis a range of communication products to assist you inkeeping abreast of negotiations issues, developments and agendas invarious forums, as well as the RNM's involvement therein. As a first stepin systematizing its information outreach, the RNM has recently produceda brochure entitled The RNM in Briefwith essential information about theorganization, including the nature of its mandate, challenges faced,sources of funding, structure and functioning, collaborative partnerships,main activities and some achievements to date. The RNM is aiming to

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develop further its web site so that it can serve as a major information andcommunications vehicle.

The RNM is also seeking to glean information from stakeholders whichwill assist it in formulating policy positions and strategies. In this regard

requests for particular kinds of information will from time time be directedto specific segments of our stakeholders, for example, the businesscommunity. However, we also welcome general feedback, suggestionsand unsolicited information that may be deemed useful.

The CPS is one of five elements being implemented within the frameworkof the RNM's CARICOM Trade Project, which is funded through a grantfrom the U.K. Department of International Development (DFID). Theothers are technical studies; call-down expertise (whereby regional orinternational experts can be made available at short notice to undertakespecific short-term technical tasks and assignments; our ProfessionalTrainees Program (see next UPDATE); and a computerisation element.

RNM DONORS MEETING

The RNM is financed mainly by regional governments, donor agenciesboth regional and external, and with some input from the region's privatesector. Donor assistance has contributed in a significant way to capacitybuilding and is responsible for training workshops and seminars,professional apprenticeships, technical studies, information technologyexpansion and upgrading, communications development, travel and otherareas. The main sources of such funding to date have been the CaribbeanDevelopment Bank, DFID, USAID, CIDA and the Inter-AmericanDevelopment Bank.

As part of its institutional planning efforts, the RNM convened a Meetingof Donors on January 12, 2000 hosted by the the Caribbean DevelopmentBank and co-chaired by Sir Neville Nicholls, CDB President, and SirShridath Ramphal. Also in attendance were representatives of theGovernment of Barbados, the UK and Canadian Governments, USAID,IDB and UNDP. The meeting reviewed current partnerships and examinednew areas for cooperation. Donor response was very encouraging and afollow-up meeting is to take place to discuss detailed project proposalsand accompanying budgets to be prepared by the RNM in relation to thevarious areas identified for donor cooperation.

GRENADA WORKSHOP

At the request of Prime Minister Dr. Keith Mitchell, the Chief Negotiator

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and other RNM personnel participated in a national consultation inGrenada on January 14, 2000 involving the social partners on the statusand future direction of the three sets of external negotiations in which theregion is involved -- negotiations towards a successor agreement to theLom Convention, the Free Trade Area of the Americas (FTAA) and

continuing WTO Negotiations. The RNM also took the opportunity toinform the participants about the status of the region's bilateral tradenegotiations, e.g. CARICOM/Dominican Republic, and the negotiatingstrategy being pursued.

The Chief Negotiator indicated that a framework agreement of futurecooperation between the African, Caribbean and Pacific states (ACP) andthe European Union (EU) should be finalised at the next ACP/EUministerial session on February 2-3, 2000 (for full results, see next week'sUPDATE). The new agreement would:

-provide for current Lom preferences to be rolled over for eight years andwould be defined as a "preparatory period", during which the ACP Stateswill have the opportunity to consider all possible alternative tradearrangements, including the regional economic partnership agreements orREPAs (the EU proposal). The EU would seek a WTO waiver for therollover period.

-The new financial envelope would be approximately 13.5 billion Eurosand a further 9 billion Euros of unspent funds from previous EuropeanDevelopment Fund (EDF) allocations.

-A new investment facility to provide financing directly to the privatesector with an interest rate subsidy of at least 3 percent below marketrates.

The private sector was strongly encouraged to take advantage of the considerablefinancial resources available under the investment facility to assist the private sector inexpanding productive capacity and achieve international competitiveness in thepreparatory period. Similarly, governments would need to utilise the resources of theEDF to enhance and build capacity to meet the challenges and take advantage of theopportunities offered by liberalisation.

With respect to the WTO negotiations in Seattle, it was agreed that their breakdown had a

positive outcome for developing countries. It demonstrated the solidarity amongdeveloping countries not to agree to further negotiations in the WTO until there is"review, repair and reform" of existing agreements. Furthermore, it forced theindustrialised countries to recognise that the negotiating process in the WTO must bemore democratic with the full participation of developing countries. Future negotiationscould not proceed until this is done.

The FTAA was seen as an imponderable and would be greatly influenced by domestic

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US politics. It was recognised that the region made considerable progress in advancingthe case for special and differential treatment for small states at the FTAA Ministerials inToronto (November 1999) and this was reflected in the Ministerial Declaration. Theregion will continue to participate in the negotiations pursuing the case for smalleconomies.

Finally, there was strong support for concluding trade agreements with the DominicanRepublic and Cuba. These were seen as providing an opportunity for firms to expandexports of goods and services and diversify the regions export base.

ACTIVITIES IN JAMAICA

On Tuesday, January 18th 2000 the RNM was involved in two important activities inJamaica which coincided with the meeting of its College of Negotiatiors. The College,comprising the Region's lead and alternate negotiators for each subject within the FTAAprocess, meets periodically in order to review developments within that negotiatingforum and to plan strategy and positions for upcoming meetings.

The first activity was organized in collaboration with the Private Sector Organization ofJamaica (PSOJ), which hosted a Breakfast Seminar to discuss Trade Negotiations AfterSeattle. The Seminar was addressed by Chief Negotiator Sir Shridath Ramphal, ChiefTechnical Advisor Sir Alister McIntyre and Ambassador Peter King, Lead Negotiator forMarket Access In the FTAA Negotiations. Other members of the panel included the Hon.Anthony Hilton, Minister of State in the Ministry of Foreign Affairs, AmbassadorRichard Bernal, and Mr. Peter Moses, Managing Director, Citibank Jamaica. TheSeminar examined the outcome of the Seattle WTO Ministerial Meeting and theprospects for future trade negotiations involving CARICOM countries.

The second activity involved a workshop convened within the framework of theCRNM/IDB Technical Cooperation Project, which was attended by government officialsand other participants. The purpose of the workshop was to discuss the preliminaryfindings of two consultancy studies on "Smallness as a factor in the Lom, FTAA andWTO Negotiations" by Dr. Anthony Gonzales, and "Preparing the Caribbean for Joiningthe FTAA" by Dr. David Lewis.

CARICOM-CUBA NEGOTIATIONS

Preparations are underway for eventual bilateral trade negotiations between CARICOMMember States and Cuba. Following an earlier proposal, on 10 September 1998 Cubasubmitted for CARICOM consideration a "Trade Development Agreement between theCaribbean Community (CARICOM) and the Government of the Republic of Cuba".Acting on the recommendation of the Seventh Special Meeting of the Council for Tradeand Economic Development (COTED), the Prime Ministerial Sub-Committee onExternal Economic Relations and subsequently the Special Meeting of the Conference of

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Heads held on 26-27 October 1999 agreed to include Cuba on the priority list fornegotiation of trade agreements with CARICOM and entrusted the RNM to coordinate asmall working group in order to design the Region's approach to the proposednegotiation.

Accordingly the RNM has taken steps to carry out this mandate. On December 12, 1999the Chief Negotiator and the Chief Technical Advisor visited Havana for an initialexchange of views with Mr. Orlando Hernndez Guilln, Cuban Deputy Minister ofForeign of Trade Policy in the Ministry of Foreign Trade and his team concerning theframework and possible scope of an agreement, as well as a possible time frame fornegotiations.

The RNM also undertook a statistical study of trade flows between CARICOM and Cuba,including an examination of bilateral trade potential, as well as a tourism study focussingon Cuba's tourism development and the potential for tourism cooperation. The findings ofthese studies were presented at two one-day meetings which the RNM convened inKingston, Jamaica, on January 16-17 of private sector representatives and public sectorofficials, respectively, in order to learn experiences, consider opportunities and identifyconcerns.

These meetings benefited from the participation of Caricom's Assistant Secretary GeneralAmbassador Albert Ramdin, representatives of Caribbean Export, including the officer incharge of its Havana office, university academics, as well as (in the case of the formermeeting) Messrs. John Bell and Jean Holder, CEOs of the Caribbean Hotel Associationand Caribbean Tourism Organization, respectively. Additional in-house work is beingdone on investment aspects and, in collaboration with Caribbean Export, a study is beingcompleted on trade control measures in Cuba. Work on payments arrangements is alsoplanned.

The RNM expects to present to the March 12th Intersessional Meeting of CARICOMHeads of Government in St. Kitts its proposal in respect of the approach the Regionshould adopt for these negotiations.

CARICOM-DR NEGOTIATIONS

Another round of negotiations between CARICOM Member States and the DominicanRepublic took place in Santo Domingo from 24-26 January 2000, under the co-chairmanship of Mr. Edwin Carrington, CARICOM Secretary General, and Mr. FredericEmam-Zad, Ambassador-in-Charge of Trade Negotiations in the Ministry of ForeignAffairs of the Dominican Republic. As a result of these discussions conclusion of anagreement appears within closer reach although some sticky points remain.

The RNM participated in these talks through its Chief Technical Advisor, Sir AlisterMcIntyre, pursuant to the October mandate from the Heads of Government that it shouldprovide strategic guidance to the negotiations, ensure that they be concluded in a timely

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manner, and use its good offices to facilitate an outcome which would permit the processto move forward. The RNM has consequently held diplomatic-level discussions withDominican representatives and searched for technical-level solutions, including areduction of CARICOM's negative list which had been stalling progress in these bilateraltalks.

Representatives of CARICOM and the Dominican Republic had previously met inJamaica (5-7 January 2000) on Rules of Origin and will reconvene in Trinidad andTobago on 9-12 February. The outcome of these discussions will facilitate progress indiscussions on the products to be subject to Most Favoured Nation Treatment and PhasedReduction of Duty. A meeting of the Policy Group will also take place in Kingston on26-27 February.

Other outstanding matters are the treatment of trade agents in the Dominican Republic asa consequence of its Law No. 173 on Protection of Importer Agents of MerchandiseProducts and the subsequent revision contained in the Foreign Investment Law, No. 16-95, as well as the treatment to be accorded goods and services produced in Free TradeZones.

Finally, it should be noted with respect to Trade in Services that, while CARICOMfavours the commencement of negotiations in this area, it has nevertheless indicated thatit could not do so before the full implementation of its internal regime on trade inservices, in accordance with Protocol II on Establishment, Services and Capital.Consequently, the agreement between CARICOM and the Dominican Republic will notfor the time being encompass trade in services.

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Recipients of RNM UPDATE are authorized to forward this newsletter to otheraddresses.

----------------------------------------------------------------------------------------Communications DirectorCaribbean Regional Negotiating Machinery (RNM)"Windmark", First Avenue, Harts Gap,Hastings, Christ Church, BarbadosTel: (246) 430-1673Fax: (246) 228-5264http://www.caribrnm.net

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Prepared by the Communications Division of the Caribbean Regional NegotiatingMachinery (RNM), this electronic newsletter focuses on the RNM, trade negotiation

issues within its mandate and related activities.************************************************************************

Special Issue: EU-ACP Agreement Concluded

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After eighteen months of in-depth negotiations between the 71 ACP countries and theEuropean Union, just before midnight on February 3 a two-day ministerial meeting inBrussels resolved issues remaining from last December's ministerial, thus ending thefirst phase of post-Lom IV negotiations .

The meeting was jointly presided over by the Portuguese President of EU and the Hon.John Horne of St. Vincent and the Grenadines serving as the President of the ACP.Indeed, Caribbean Ministers have made an inestimable contribution to the negotiations,holding the Presidency at the beginning and end of the process; they have served on theACP Bureau and spoken on all critical issues in the Pleanry Meetings of the ACP and thejoint ACP-EU Ministerial Counicls; led the Trade Negotiating Group in the person ofMinister Hilton throughout the negotiations, and the Central Negotiating Group throughDeputy Prime Minister Miller and Minister Horne at the beginning and end of thenegotiations.

Since 1975 successive Lom Conventions have assured ACP signatories, includingCARICOM members, preferential access to the EU market for the vast majority of theirmerchandise exports, as well as sizeable development funding. The present agreementexpires on 29 February 2000. No one ever expected the Lom era to be permanent andboth sides have been committed to reaching a successor agreement with a WTO-consistent trade regime, but CARICOM and ACP countries need suitable transitionalarrangements in order to avoid inevitable economic disruption from too sudden anexposure of their firms and economies to the full blast of international competition.

Difficult as this challenge was for our negotiators, the process was further complicated byEU objectives regarding political issues and its approach to the subject of migration,which were anathema to the ACP. What has been agreed to is a Framework Agreementfor the Successor Convention and the 'roll-over' of the present Lom Trade Regime,which are critical for providing the Caribbean breathing space to develop competitivenessin transiting to a more open trading system. In the words of the RNM's Chief Negotiator,Sir Shridath Ramphal, the agreement "is not the best that can be envisaged.but overall itrepresents a considerable advance on the arrangements contemplated by the EU at the

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start of the negotiations", as expressed in the European Commission's Green Paper.

The new 'Partnership Agreement' provides for an eight-year rollover of the present Lomarrangements. During this period a second post-Lom phase of negotiations will takeplace beginning in September 2002 on the subject of WTO-compliant alternative trade

arrangements, negotiations for which will be concluded by 2008. The new agreementswill then be implemented over a transitional period, the length of which is negotiable.Dialogue is at the very core of the Partnership, enabling the parties to discuss openlyfundamental development issues and any subjects of mutual interest. Other main featuresof the new agreement are summarised below.

Good Governance

EU insistence on the inclusion of "good governance" as an "essential element" of theConvention met with Caribbean resistance arising out of concerns about the high level ofconditionality and intrusiveness implicit in EU proposals, and eventually goodgovernance was included as merely a fundamental element, attracting sanctions only inrespect of "corruption" including "acts of bribery leading to corruption".

The Trade Regime

This was the centre-piece of negotiations and Minister Hilton of Jamaica lead the TradeNegotiating Group throughout the negotiations. The ACP overcame the EU's initial intentthat we choose the trade model for the Successor Convention in the FrameworkAgreement and rejected the Commission's insistence that in the Preparatory Period theACP should have no negotiating option save Regional Partnership Agreements (REPAs).Thus the right was secured to decide against REPAs and negotiate alternative tradearrangements. A joint ACP-EU Ministerial monitoring mechanism will function duringthe 8-year Preparatory Period to build ACP capacity and protect ACP developmentinterests.

With a view to ensuring that during the Preparatory Period of 8 years ACP access is noteffectively eroded by other arrangements made by the EU with third parties or even withACP LDCs, the EU and the ACP have agreed to examine all necessary measures inorder to maintain the competitive position of the ACP in the EU market during thepreparatory period. It is made clear that this will extend beyond tariffs to include, interalia, calendar requirements, rules of origin, sanitary and phytosanitary measures andimplementation of specific measures addressing supply constraints in the ACP countries.The Ministerial Trade Committee will act as a review mechanism. The stated objective ispreserving the benefits of the ACP-EU trade arrangements.

Bananas.The Trade Group was able to finalise agreement on the Second BananaProtocol in which the EU agrees to examine and where necessary take measures aimedat ensuring continued viability of (ACP) banana export industries aimed at ensuringcontinuing outlet for their bananas on the Community Market. This does not remove theuncertainties attendant on the WTO ruling and the negotiations still in train, but itpreserves the EU commitment for access for ACP bananas and reverses the EUs initial

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refusal to have the matter dealt with at the level of Protocol, but only of aDeclaration.

Rum. A package of measures has been secured to help ACP producers (mainlyCaribbean) in the transition from 'bulk' to 'branded' rums consequent on the 1997 EU/US

'White Spirits (zero for zero) Agreement'. The joint Declaration secured in December hasbeen concretised by agreements on machinery to ensure rumspecific funds to implementthe Declaration. Caribbean producers (WISPRA) contributed significantly to theseresults.

Rice. While the EU remained adamant in its refusal to entertain any increase in the quotaor decrease in the levy, they have agreed in a Joint Declaration on Rice to essentially thesame financial arrangements for support of the industry as were secured in December forrum. ACP rice producers (essentially Guyana and Suriname) have expressed theirsatisfaction with the outcome.

Tourism. At Caribbean insistence, specific language has been agreed acknowledging forthe first time the sector as an area for special assistance. The agreed paragraphs have beeninserted in the Framework Agreement itself rather than relegated to the Compendiumwhich is a new instrument linked to the text, but not part of it, and designed to containoperational details with the advantage of being more easily updated than the text bydecision of the Joint Council.

Intellectual Property Rights, Fishery Issues, Food Security and Rules of Origin. ADeclaration of major importance was issued preserving the principle of Non-Discrimination between ACP states as an overall EU commitment, notwithstandingspecial arrangements, in the context of the agreement of multilaterally, in favour ofLDCs.

Export Compensation. The agreement provides for compensation for shortfalls inexport revenue. For certain states (including island states and landlocked states) thethreshold for activating the facility is a 10% shortfall (down from the EU proposal of15%).

DurationThe new agreement will be in force for 20 years, an effective doubling of the level of theexisting Lom IV Convention; whereas earlier Conventions lasted only 5 years. Almostas important is the understanding reached that even this duration of 20 years does notconstrain the level of alternative trade arrangements to be negotiated during thepreparatory period, starting therefore in 2008.

Financing

Financial Envelope. The European Development Fund (EDF) envelope agreed to was13.5 billion Euros, in addition to European Investment Bank (EIB) funds of 1.7 billion, atotal of 15.2 billion Euros. There is, additionally, approximately 9 billion Euros ofuncommitted EDF funds which will carry over the new 9th EDF. The EU also heavily

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underlined its determination to quicken the pace of disbursement through its newprogramming, which could materially enhance ACP benefits.

Investment Facility. This remains one of the more innovative mechanisms in the newAgreement. The arrangement will be managed by the EIB and available to ACP private

sector entities, including 'commercially run public sector entities, including revenuegenerating economic and technological infrastructure critical for the private sector'.However the amount reserved for this facility is small2.2 billionwith an interest ratesubsidy that must not exceed 3%.

WTO WaiverIt is arranged that the agreed text will be forwarded prior to 29 February to the WTO bythe EU with a request for a waiver in relation to the rollover arrangements of the traderegime during the preparatory period. The EU also confirmed that it is putting in placearrangements to ensure that there would be no disruption in EU customs arrangements foraccess of ACP products under the new arrangements, notwithstanding the gap betweenthe end of Lom IV and the securing of the waiver.

Cuba

Although not a matter for the negotiations themselves, the ACP advanced the possibilityof Cuba becoming a signatory to the new Agreement. A resolution sponsored by theCaribbean and adopted by the ACP as a whole has been transmitted to the EU andpolitical action now needs to ensue with a view to accelerating procedures to enable thisto happen.

SigningThe signing of the new agreement is expected to be in late May and the venue will beFiji.

SequelThe next step is the beginning of the process of developing a strategy for the Caribbeanand the ACP as a whole in its approaches to the Preparatory Period bearing in mind thatnegotiations for alternative trade arrangements will begin in September 2002.

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Recipients of RNM UPDATE are authorized to forward this newsletter to otheraddresses.

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Henry S. GillCommunications DirectorCaribbean Regional Negotiating Machinery (RNM)"Windmark", First Avenue, Harts Gap,Hastings, Christ Church, Barbados

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Tel: (246) 430-1673Fax: (246) 228-5264http://www.caribrnm.net

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Prepared by the Communications Division of the Caribbean Regional NegotiatingMachinery (RNM), this electronic newsletter focuses on the RNM, trade negotiationissues within its mandate and related activities.

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- RNM PROFESSIONAL TRAINEES PROGRAM UNDERWAY- FTAA NEGOTIATIONS UPDATE- UPCOMING BILATERAL TALKS- REGIONAL TRAINING WORKSHOP FOR BELIZE

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RNM PROFESSIONAL TRAINEES PROGRAM UNDERWAY

Implementation of the first phase of the RNM Professional Trainees (PT) Program is

underway with six Trainees from CARICOM countries taking up assignments in differentcountries during the month of January. Trainees were selected from a long list ofapplicants by a panel comprising RNM personnel and the Head of the UWI ConsortiumGraduate School at Mona, Jamaica.

This fellowship program is aimed at enhancing the Region's trade negotiations capacityby exposing Trainees to a 10-month apprenticeship comprising: (a) an assignment at anRNM (or affiliated) office where the Trainee would be guided in trade policy andnegotiations-related research and be exposed to a negotiations environment; (b)participation in at least one major trade policy/negotiation course; (c) a short attachmentof variable duration (1-3 months) at an international institution actively involved in trade

negotiations. In addition, it is hoped to expose PTs to an actual international tradenegotiation (for example, within the FTAA or WTO contexts).

Trainees have been assigned individually to the RNM offices in Bridgetown, Kingstonand Washington D.C. (two in the latter), as well as to Geneva where the RNM currentlymaintains a presence, and to the Port-of-Spain office of the Inter-American Institute forCo-operation in Agriculture (IICA), which shares a collaborative arrangement with theRNM. In June-July two more Trainees will commence their assignments.

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The present PT Program is one of five elements being implemented within the frameworkof the RNM's CARICOM Trade Project (CTP), which is funded through a grant from theU.K. Department of International Development (DFID). Eight fellowships are availableover the two-year life of the CTP.

The RNM expects to increase substantially the availability of Professional Traineefellowships in the course of 2000, as a result of indications from international donors oftheir willingness to provide funding for this purpose.

FTAA NEGOTIATIONS UPDATE

Pursuant to the mandate provided by Ministers at the Toronto Ministerial in November1999, a new phase of FTAA negotiations commenced in January 2000, with the specificgoal of producing consolidated texts by March 2001 for submission to the Ministers inBuenos Aires. While acknowledging that the texts emanating from each of the ninenegotiating groups will have varying degrees of consensus, Ministers felt that it wascrucial to move forward in order to ensure that the process remains dynamic.

Thus far four negotiating groups and two consultative groups have met in Miami andhave agreed on their work programme for the next twelve months. It is expected thatdevelopments in the WTO discussions, particularly in the area of Services andAgriculture, will have an effect on the negotiations within the FTAA. The process willtherefore have to be conducted within the framework of developments taking place at thewider multilateral level.

CARICOM has also assumed the Chairmanship of the Negotiating Group on Investment(NGIN), in the person of Mr. Winston Dookeran, the Governor of the Central Bank ofTrinidad and Tobago. Mr. Dookeran, along with a support staff from the Tourism andIndustrial Development Company of Trinidad and Tobago Ltd. (TIDCO) and theMinistry of Trade and Industry, formally began his duties yesterday, February 15, 2000 inMiami. In addition to the Chairmanship of the NGIN, CARICOM also holds the ViceChairs for the Negotiating Group on Market Access (NGMA) and the Consultative Groupon Smaller Economies (CGSE). Mr. Samuel Chandler, Permanent Secretary in theMinistry of Foreign Trade of Barbados has been appointed as the Vice Chair of theNGMA and Ambassador Leonard Archer of the Bahamas has been appointed as ViceChair for the CGSE.

In keeping with the agreement to hold a special Trade Negotiations Committee (TNC) todeal with the issue of smaller economies, RNM's Washington Office has begun toprepare, for submission to the Heads of Government and Ministers of Trade, specificmeasures in each issue area which CARICOM will seek to negotiate in the context of theFTAA. It is likely that CARICOM will propose that the special TNC on smallereconomies coincide with the holding of the TNC in Barbados scheduled for mid-2000.

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UPCOMING BILATERAL TALKS

A Working Meeting of CARICOM-Cuba Trade Officials will be held in Kingston,Jamaica, on February 24-25, in order to advance preparations for the negotiation of a

CARICOM-Cuba Trade and Economic Cooperation Agreement. The RNM wasmandated to co-ordinate a small working group in order to design the Region's approachto the proposed negotiation and has taken steps (outlined in RNM UPDATE February 4,2000) in this regard. The Working Meeting will inter alia review the draft agreementproposed by Cuba and consider approaches to developing two-way trade in goods andservices, as well as examine the way forward and adopt a plan of action. The meeting willbe preceded by a CARICOM Preparatory Meeting on February 23.

This meeting will be followed on February 26-27 by the Second Meeting of theCARICOM-Dominican Republic Policy Group to conclude the Negotiations on the Planof Action Annexed to the Agreement Establishing the Free Trade Area between theCaribbean Community and the Dominican Republic. The Draft Agenda indicates amongthe items for discussion the Criteria to be applied under Rules of Origin, the SpecialSafeguard Mechanism to apply to certain agricultural products, treatment to be accordedgoods produced in free trade zones, treatment that trade agents will receive, adoption ofarrangements to govern Temporary Entry of Business Persons and other Services-relatedissues, as well as arrangements to deal with Government Procurement. The Meeting willbe preceded by a CARICOM caucus on February 25.

The RNM will be represented at the Sixth Meeting of the CARICOM-Cuba JointCommission to be held in Santiago de Cuba on 28-29 February. The Agenda includes aReview of Agreements adopted at the previous meeting of the Commission in such areasas Trade, Transport, Agriculture and Fisheries, Human Resource Development, Scienceand Technology, as well as Natural Disasters and Meteorology; in addition to anexchange of views on such topics as the ACS, Caribbean Follow-up to the EU/LatinAmerican Summit, preparations for the South Summit and Issues of concern toCARICOM and Cuba in the WTO.

REGIONAL TRAINING WORKSHOP FOR BELIZE

The RNM is organising a Training Workshop on Market Access and Rules of Origin tobe held in Belize from March 21-24. The Workshop is aimed primarily at senior officials,privates sector representatives and representatives of regional agencies. It will provideparticipants with a broad overview and understanding of issues relating to market accessand rules of origin in the context of international trade.

Detailed Terms of Reference include the definition and evaluation of the differentmethods and modalities for the reduction of tariffs in any programme of tradeliberalisation; detailed review and examination of the methods for dismantling Non-TariffBarriers, including the process of tariffication involving the computation of tariff

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equivalents; identification and evaluation of the various Rules of Origin Regimes thatcould be adopted in a Free Trade Agreement; examination of the critical trade policyissues arising in the FTAA Market Access negotiations; examination of the issue ofspecial and differential treatment for developing countries as it relates to Market Accessprovisions in FTAs and in Multilateral Agreements.

This Workshop is the third in a series of training activities devoted to important tradenegotiation subjects. Previous Workshops were held on Government Procurement inGuyana in September 1999 and on Intellectual Property Rights in St. Lucia in December1999.

These Training Workshops are being carried out within the framework of theCRNM/IDB Regional Technical Cooperation Project, which is funded by an IDB grant(including a contribution from the Japanese Special Fund) and by local counterpartfunding from CARICOM member states. The objective is to provide CARICOMcountries with the ability to participate effectively in, and negotiate, multilateral, regionaland bilateral trade and economic initiatives, by improving both the skills and knowledgebase available to the region in matters relating to external trade negotiations.

Persons wishing further information on the Workshop or the CRNM/IDB Project ingeneral may contact the Project Manager, Mrs. Jacqueline Wade, at [email protected]

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Recipients of RNM UPDATE are authorised to forward this newsletter to otheraddresses. We welcome suggestions for additions to our mailing list. If, on the otherhand, you wish to be removed from the list, kindly inform us.

---------------------------------------------------------------------------------------------Henry S. GillCommunications DirectorCaribbean Regional Negotiating Machinery (RNM)"Windmark", First Avenue, Harts Gap,Hastings, Christ Church, BarbadosTel: (246) 430-1673Fax: (246) 228-5264http://www.caribrnm.net

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Prepared by the Communications Division of the Caribbean RegionalNegotiating Machinery (RNM), this electronic newsletter focuses on the

RNM, trade negotiation issues within its mandate and related activities.************************************************************

Special Issue: Small States and Globalisation

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A global conference held in London on February 17-18, under thechairmanship of Prime Minister Owen Arthur of Barbados, marks animportant milestone in the struggle by small states to get the internationalcommunity to recognise that smallness, vulnerability and volatility are forthem not abstract matters, but are major impediments to their developmentand constitute a sound basis for claiming special and differentialtreatment.

At the opening of the conference the Barbados Prime Minister stated: "thisis the first time that [the international community] has shown the political

will to devise specific measures to deal with those vulnerabilities... The

timeliness and importance of this initiative on small states...cannot be

emphasised enough. We are now at a cross roads where the successful

integration of small states into the global economy is absolutely necessary

if most of them are not to become failed societies and historical footnotes" .

The Global Conference on the Development Agenda for Small States, as itis officially termed, is the result of an initiative by Commonwealth Headsof Government in establishing a Ministerial Mission on the challengesfacing small states. The Mission, led by Prime Minister Arthur, met withthe President of the World Bank in July 1998, with the result that the Bankand the Commonwealth Secretariat established a Joint Task Force onSmall States.

The purpose of the Task Force was to assess Bank instruments for smallstates and consider alternatives and adaptations to address these states'unique problems, which include their vulnerability to marginalisation,natural disasters and external economic shocks. A subsequent InterimReport was prepared and considered by the Commonwealth Heads ofGovernment in November 1999 in Durban, South Africa. The Londonconference was convened as part of the process for preparing the finaldraft report of the Task Force, which is to be considered by the WorldBanks Development Committee in April 2000.

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The Caribbean had engaged in an intensive process of deliberation on theInterim Report of the Task Force, and submitted a comprehensive set ofcomments on the report which were circulated at the conference, wherethey were considered and debated by a range of stakeholders. The RNM

has been actively involved in this process pursuant to a mandate in thisrespect from the Heads of Government of the Caribbean Community.

The process to date has identified a set of key policy issues that call for acontinuation of some current action, the introduction of proposed newinitiatives and the dynamic development of an ongoing agenda of futurework. These are summarised under the following four headings:

1. Tracking volatility, vulnerability and natural disasters

Recently concluded work of the Commonwealth demonstrates that most

small states are more vulnerable than larger developing countrycounterparts, and the analysis proposes that this vulnerability should betaken into account in programmes of assistance provided by themultilateral development, finance and trade institutions.

Small state vulnerability and special characteristics, coupled with weakprivate sector capacity, contribute to perceived riskiness and difficulty inattracting private investment, necessitating a relatively high level ofcontinuing official assistance and the continued application of flexiblegraduation procedures at the multilateral institutions.

In view of strong risks and the consequences of prevalent natural disasters,new approaches developed by the World Bank to disaster mitigation andinsurance in the Caribbean, as well as the intention to co-operate indeveloping and supporting risk pooling arrangements, were welcomed.

Many small states remain dependent on commodity production and theBank was encouraged to further work on commodity price riskmanagement and to pay attention to issues and commodities of relevanceto small states, bearing in mind that different kinds of risks require acombination of different approaches.

Many small states have vulnerable physical environments as well asvulnerable economies, and it is crucial to ensure sustainable developmentthrough protection fo the environment as well by supporting small stateswith both advice and finance.

2. Strengthening Capacity

Small state assistance must address their problems of limited capacity,both in the public and private sectors, in the context of which some of theissues to be highlighted are:

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The continuing need to accumulate knowledge about policies andapproaches that work and do not work for small states, and to shareknowledge and experiences among states within and across regionsthrough, for example, the Commonwealth Secretariat's dedicated smallstates web site.

Tackling limited capacity through regional approaches wherever feasible,which requires donors to enhance their lending and non-lending servicesto encourage and support such co-operation, particularly through assistingregional organisations dealing predominantly with small states.

Limited public sector capacity results in inadequate participation ininternational trade negotiations, a problem which can be tackled throughvarious forms of assistance and support from multilateral bodies anddonors, including aids such as the recent creation of an Advisory Centreon WTO Law and eventual representation innovations which would allowsmall states to be represented collectively at discussions where they sowish.

Multilateral institutions can help in dealing with utilities' regulation andcompetition policy, issues of considerable importance given theprevalence of monopoly and oligopoly suppliers in small states.

In order to minimise the burden of donor requirements on limitedadministrative capacity, donors are urged to join together country bycountry, in country-led partnerships to align their objectives, rationalisetheir support and simplify their procedures. Helping to build countrycapacity and forge closer working relationships with regionalorganisations would help in this regard.

3. Issues of Transition to the Developing Global Trade Regime

The work of the Task Force has shown that while small states need toadapt and transform their economies to benefit from globalisation and theincreasingly global trading environment (with trade policy regarded aspart of sound economic development strategy), many small states will facespecial difficulties in making this transition and will need time to adjust tochanges in the external trade environment and to sequence changes in theireconomies. While it would be hardly appropriate to accord them LDCtreatment, small vulnerable states merit special consideration in dealingwith crucial areas of economic transformation, including length oftransition period. The WTO also needs a fundamental review of its currentaccession process as it affects small states and the associated costs forthese countries.

There was recognition of the major fiscal consequences of tradeliberalisation for small states and a sense of encouragement that the IMF istaking a pragmatic approach to advice being given to small states that risklosing a major source of fiscal revenue with falling tariffs, agreeing thatfor some open, small economies low, flat-rate tariffs may be a component

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of an efficient tax system. Small states will need technical assistance fromthe IMF and others in tax administration.

4. New Opportunities and Challenges from Globalisation

As they seek to reposition their economies some small states will needexternal support and advice regarding enabling environments and the rightkind of public policy support to encourage new activities, includingservice sector ones.

The right to compete in international financial markets through theprovision of onshore and offshore financial services was recognised.Amidst concern about OECD positions on Harmful Tax Competition andon Financial Stability, the OECD's indication of willingness to engageconstructively with small states on tax competition issues was welcomed,in view of the importance of financial services to small economies.

Finally, it was affirmed that work on the opportunities that informationtechnology and electronic commerce can bring to small isolated statessuggests that these technologies can be a major source of help in theirdevelopment, but many small states need support in developing the correctpublic sector infrastructure and regulatory framework for high quality/lowcost telecommunications services in order to make these opportunitiesreality.

It was concluded that as multilateral institutions and donors co-operate in helping to takethis work programme forward, they will need to continue to be guided by the views andexperiences of small states themselves, as the Task Force itself has been. The

continuation of the Task Force's work should be but a stepping stone to continuedattention to small state issues on the part of the international development community.

--Henry S. GillCommunications DirectorCaribbean Regional Negotiating Machinery (RNM)"Windmark", First Avenue, Harts Gap,Hastings, Christ Church, BarbadosTel: (246) 430-1673Fax: (246) 228-5264http://www.caribrnm.net

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RNM UPDATEMarch 17, 2000

Prepared by the Communications Division of the Caribbean Regional

Negotiating Machinery (RNM), this electronic newsletter focuses on theRNM, trade negotiation issues within its mandate and related activities.

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Special Issue: SERVICES TRADE NEGOTIATIONS

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Caribbean countries are in fact the most service-dependent of alldeveloping countries in the Western Hemisphere, based on indicators suchas the sector's contribution to gross national product, employment andoverall exports (that is, of goods and services). The traditional focus ontrade in goods may obscure the fact that, between 1989-97, CARICOM'sservice exports averaged approximately 54 percent of overall exports.Omitting Trinidad and Tobago, whose energy-based economy distorts theregional picture somewhat, the CARICOM average rises to 61 percent.These figures compare with a 23 percent average for Latin America andthe Caribbean as a whole over the same period, and 24 percent for CentralAmerica and service-reliant Panama taken together.

Though tourism accounts for the bulk of CARICOM services exports,diversification has been taking place, and the growing importance andpotential of other sub-sectors --financial services, information andprofessional services, transportation, telecommunications, entertainmentservices, health services, ship registry and others-- is now well recognised.Accordingly, the outcome of international negotiations will have asignificant impact on the sector's future.

RNM ACTIVITY IN THE FIELD OF SERVICES

Since the start of the current year the RNM has been devotingconsiderable attention to the subject of international trade negotiations inservices on various fronts. The subject is still a relatively "new issue" onthe international negotiating agenda and our region's experience in thisregard is limited. Yet the implications of such negotiations are far-reaching given the importance of the sector in its own right and linkageswith the goods sector. In this connection four aspects of RNM activity are

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summarised:

1. WTO Negotiations

The agreement reached at the end of the Uruguay Round of multilateraltrade negotiations included a "Built-in Agenda" for future negotiations,which included the subject of Services. This means that, nothwithstandingthe failure of last December's Seattle Ministerial to agree on a Declarationto launch a new round of negotiations, a mandate exists to continue thesenegotiations. This was due to the fact that not all services-related issueshad been resolved by the end of Uruguay Round and also because onlylimited commitments were undertaken by most countries in theirschedules.

Accordingly, on February 25 the special session of the WTO ServicesCouncil formally launched the new negotiations on Services. Membersagreed to work in the next few months on guidelines and procedures forthe new negotiations. Overall, the negotiations will comprise two phases:the "rules-making" phase during which Members will negotiate new rulesfor services on subsidies, safeguards and government procurement; andthe "request and offer" phase, where Members will negotiate furthermarket access. While work in the first phase will mostly take place in theexisting services committees - mostly in the Working Party on GATSrules - market access negotiations will take place in special sessions of theServices Council.

Work continues apace in different WTO bodies. The Committee onSpecific Commitments is currently drafting procedures for the certificationand modification of services schedules and continues its work on theclassification of services. The Working Party on Domestic Regulationscarries on its task of drafting disciplines for all services sectors. The weekof 10 April was agreed as the date for the next round of services meetings.

2. FTAA Negotiations

The sixth meeting of the FTAA Negotiating Group on Services (NGSV)took place in Miami, Florida from February 29th to March 3rd, 2000 withdelegates from twenty-five countries in attendance, includingrepresentatives of the Bahamas, Barbados, Jamaica, St. Lucia and Trinidad& Tobago. Mrs. Pamela Coke Hamilton represented the RNM asTechnical Advisor.

The CARICOM group held three caucuses to discuss negotiating strategy,positions and future action to be taken by CARICOM countries in order to

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be adequately prepared to negotiate. The CARICOM representatives alsomet with the new Chairman of the Negotiating Group on Services, Mr.Peter Allgeier of the United States. CARICOM representatives took theopportunity to raise the issue of smaller economies and their treatment inthe NGSV.

In addition discussions were held on the outstanding technical assistanceprojects which remained to be carried out in CARICOM countries,particularly with respect to the completion of the Questionnaire onMeasures Affecting Trade in Services, which had previously beencirculated. In this regard, it was agreed that the UN EconomicCommission for Latin America and the Caribbean (ECLAC) shouldensure that its planned training seminar for CARICOM officials would beheld before the deadline date of June 30, 2000 for submission of responsesto the Questionnaire. Discussions are underway between the RNM/IDBProject Manager and ECLAC representatives concerning the possibility ofholding this seminar in May. It is hoped that CARICOM countries will befully represented at this seminar. Maximum benefit will be derived ifofficials with direct responsibility for the completion of the questionnaireare sent.

Finally, CARICOM presented its views on the work program for the groupover the next year, highlighting the fact that there were issues of greatimportance to CARICOM countries which needed to be addressed in theNGSV before moving to the actual preparation of text. Included amongthese issues was the question of Movement of Natural Persons, Mobilityof Professional Service Suppliers, Recognition of ProfessionalQualifications, Smaller Economies, and Domestic Regulations.

3. Reflection Group Meeting on Services

As part of an ongoing effort to formulate the Region's Services negotiatingstrategy, the RNM will be holding a High-Level Reflection GroupMeeting on Services in Nassau on the weekend of March 25-26th. TheReflection will be inaugurated by the Rt. Hon. Hubert Ingraham, PrimeMinister of the Commonwealth of the Bahamas, and will be attended bythe RNM's Chief Negotiator Sir Shridath Ramphal and Chief TechnicalAdviser Sir Alister McIntyre.

The Reflection will bring together regional and international expertise,including government officials and trade negotiators; academics from theUniversity of the West Indies and other institutions; senior officials of theCARICOM and OECS Secretariats, UNCTAD, the WTO, World Bankand OAS Trade Unit; as well as independent consultants.

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The agenda comprises panels on the following themes: Evaluation of theGeneral Agreement on Trade in Services (GATS); GATS 2000 and NewDirections in Services Trade Liberalisation; the FTAA Process andServices in a Post-Lom Arrangement; Services Liberalisation andRegulatory Reform; the Services Sector in the Caribbean; as well as

sector-specific focus on telecommunications, maritime transport, financialservices and insurance, entertainment, information services and e-commerce. It is expected that discussions will result in the product of adocument outlining negotiating strategy proposals.

The holding of the Services Reflection has been facilitated throughsupport from the RNM's CARICOM Trade Project, which is funded by theUK Department for International Development (DFID).

4. CRNM/IDB Training Workshop on Services

Further activity is being planned with the framework of the CRNM/IDBProject in the form of a training seminar on Services, which will take placein May in Barbados. The workshop will target government officials andprivate sector participants. It will be the fourth within the this Project (aTraining Workshop on Market Access and Rules of Origin will be held inBelize from March 21-24; see RNM UPDATE February 16, 2000). Detailsof the Services workshop will be communicated in due course. Theseworkshops are supported jointly by IDB and counterpart regionalfinancing.

ANTIGUA AND BARBUDA'S PRIME MINISTER ALLOCATEDCARICOM SERVICES PORTFOLIO

The recently concluded Eleventh Inter-Sessional Meeting of theConference of Heads of Government of the Caribbean Community, held inBasseterre, St. Kitts and Nevis, on 13-14 March, in keeping with an earlierdecision in the Consensus of Chaguaramas of October 1999 to constitute aquasi-cabinet of individual Heads of Government in order to spearheadaction in sectors critical to the Region's integration and its vision ofdevelopment into the twenty-first century, has agreed to the distribution ofadditional portfolios. In this regard Prime Minister Lester Bird has been

given the portfolio of Services (including information technology andtelecommunications).

According to a press release issued by his office dated 16th March, PrimeMinister Bird has commented that "Services including informationtechnology and a knowledge-based society is the path to future economic

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development globally and for the region. In this connection, I am alert tothe great responsibility that has been given to me".

Mr. Bird has indicated that he will be "establishing a small, professionalunit of persons drawn from Caribbean countries to help him formulate

policy guidelines and undertake studies of key sectors". He said that theunit will benefit from the "negotiating expertise of the Caribbean RegionalNegotiating Machinery (RNM)", but the initial work will have to be doneby the unit".

Prime Minister Bird acknowledged that in the area of Services, there ismuch to be done "to ensure that the CARICOM area modernises quicklyand has the capacity to compete at a global level with other countries andregions of the world".

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Recipients of RNM UPDATE are authorised to forward this newsletter toother addresses. We welcome suggestions for additions to our mailing list.If, on the other hand, you wish to be removed from the list, kindly informus.

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Henry S. GillCommunications Director/Team Leader CARICOM Trade Project,Caribbean Regional Negotiating Machinery (RNM)"Windmark", First Avenue, Harts Gap,Hastings, Christ Church, BarbadosTel: (246) 430-1673Fax: (246) 228-5264http://www.caribrnm.net

* * *

RNM UPDATEMarch 22, 2000

Prepared by the Communications Division of the Caribbean Regional NegotiatingMachinery (RNM), this electronic newsletter focuses on the RNM, tradenegotiation issues within its mandate and related activities.

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CARICOM-DOMINICAN REPUBLIC FREE TRADE AGREEMENTREACHED

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On the night of Sunday March 19 representatives of the CaribbeanCommunity and the Dominican Republic finalised three days of intensenegotiations in Basseterre, St. Kitts and Nevis, with agreement on thespecifics of a bilateral free trade agreement (FTA).

The CARICOM side was led by Mr. Edwin Carrington, Secretary-Generalof the Caribbean Community and included representatives from Dominica,Guyana, Jamaica, St. Kitts and Nevis, Trinidad and Tobago, as well as the

Caribbean Regional Negotiating Machinery (RNM).H. E. Frederic Emam-Zade, Vice-Minister of Foreign Affairs andAmbassador-in-Charge of Trade Negotiations, led the DominicanRepublic's team.

This achievement culminates 16 rounds of negotiations over nearly fouryears since the initiation of bilateral talks in Kingston, Jamaica, in July1997. The entire process can be divided into two stages. The first resultedin an agreement to create a Free Trade Area that included Trade in Goodsand Services, Investment and Economic Co-operation.

This initial agreement, which was signed on August 22, 1998 by PrimeMinister Kenny Anthony of St. Lucia (on behalf of the Community) andPresident Leonel Fernndez, constituted the framework within whichspecific elements were to be negotiated subsequently, for example,product lists of goods that would be liberalised immediately on the entryinto force of the agreement, those that would be liberalised on a phasedbasis and those that would be granted Most-Favoured-Nation (MFN)Treatment, that is the same treatment enjoyed by all other WTO members;rules of origin and the status of free zone products; governmentprocurement rules; the use of trade agents in the Dominican Republic, andso on.For this reason a Plan of Action was annexed to the 1998 Agreement,defining the targets for the second (more technically difficult) stage ofnegotiations. The agreement reached at Basseterre is in essence, therefore,a Protocol (with its Attachments) to implement the previously signedFTA. The new texts were initialled by the leaders of the CARICOM andDominican Republic Negotiating Teams and appear in an Aide Memoireissued jointly.

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The Protocol contains inter alia Articles on Market Access with Respectto Trade in Goods; Treatment of Goods and Services Produced in FreeTrade Zones (FTZs)/Export Processing Zones (EPZs); SpecialArrangements for Trade in Selected Agricultural Products; Application of

Dominican Republic Law 173 to CARICOM Entrepreneurs; MarketAccess with respect to Trade in Services; Reciprocal Promotion andProtection of Investment; Government Procurement; and Temporary Entryof Business Persons. Six Attachments refer to the treatment accorded todifferent lists of goods, rules of origin criteria and the Certificate ofOrigin, the List of Agricultural Products subject to Special Arrangementsand an Annex on Temporary Entry of Business Persons.

The MFN list, one of the main bones of contention throughout, has beenconsiderably reduced. It comprises around 50 products/categories, ofwhich about 19 were submitted by the Dominican Republic. These are thegoods that will not receive special treatment under the FTA. They includesoft drinks, chocolate products, cosmetics, juices, some agricultural goods(including soaps) and oils and fats.

Products eligible for phased reduction of the MFN Duty will face zeroduty by 1 January 2004. They comprise about 20 product headings, andinclude such items as anthuriums, ginger lilies and orchids; coffee;sausage; bacon; pasta; biscuits; jams, jelly, passion fruit juice; rum;essential oils, perfumes and toilet waters; boxes and containers; tablewareand plastic items; certain footware items; and mattresses. The rate atwhich duties are phased out will depend on the date of entry into force ofthe agreement.

The tariff on all other items will be eliminated immediately.

Other salient aspects of the accord are that items produced in FreeZones/Export Processing Zones shall be imported within the FTA at theMFN rate unless otherwise agreed at some later stage, and the fact thathighly restrictive origin rules on apparel within Chapts. 61 & 63 wereestablished. However no agreement was reached regarding apparel UnderChapter62 (knitted items).

Indeed, a number of issues are still unresolved. Consequently, both sidesagreed that in advance of the entry into force of the Agreement,discussions would take place at the political level to resolve outstandingmatters concerning the treatment of certain waters, including mineralwaters and aerated waters containing sugar and other sweetening matter orflavoured, and certain other non-alcoholic beverages.

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With respect to assembly goods the Parties have agreed to develop, within12 months of the entry into force of the Agreement, criteria which wouldbe applicable under the Rules of Origin, pending which MFN rates willapply. This will be processed through the Joint Council established to

supervise the implementation and administration of the 1998 Agreement.In addition the schedule of Special Arrangements for Trade in SelectedAgricultural Products is to be completed. This category is included inrecognition of the need to avoid adverse impact on the demand for localproduction resulting in serious losses to producers/farmers, and havingregard to the seasonal and perishable nature of agricultural products. TheParties have therefore agreed with respect to listed products eligible forduty free treatment, that they may apply the MFN rate of duty during theperiod identified in the schedule.

Quite apart from such unresolved issues, the agreement itself defers thenegotiation of specific commitments on Trade in Services for a later stage.However a timetable has been established, including the commencement"without delay" of the exchange of information on the services sector ofeach Party and exchanges of views on possible elements for a serviceregime, followed by the drafting of the relevant documents. An indicativedate of 1 January 2001 has been set for the commencement of negotiationsfor the establishment of the services regime of the FTA with an indicativecompletion target of 30 June 2001. In this regard they have agreed to payspecial attention to Tourism and Entertainment; FTZs/EPZs; FinancialServices; Professional Services; Design; Construction (skilled workers);Informatics; Telecommunications; and Transportation.

The Protocol will be signed at a date and venue to be agreed after theSpanish and English texts are reconciled, and the agreement willeventually enter into force when internal procedures of both sides havebeen completed. The Dominican Republic indicated at the negotiatingtable that it was hopeful the agreement could gain congressionalratification by September, and that it would definitely do so by January2001.

Through this agreement the Caribbean Community has committed itself toits first full-fledged, bilateral free trade agreement of a reciprocal nature.An important feature is that the Less Developed Countries of CARICOMshall not be required to extend to any imports from the DominicanRepublic entering their territory treatment other than the MFN rate of dutyup to the year 2005. This provision will be reviewed by the Parties in theyear 2004. The CARICOM-DR agreement is substantially broader inrange of products and disciplines than CARICOM's only other existingreciprocal agreement, which was concluded with Colombia based on a

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limited "positive" product list. (This agreement is the DominicanRepublic's second full-fledged bilateral following its FTA signed on April16, 1998 with five Central American countries, which has not yet enteredinto force).

When implemented, the Caricom-DR FTA will allow CARICOMexporters to enjoy unrestricted, preferential access to the market of theDominican Republic for nearly all items exported and CARICOMconsumers will be able to obtain products originating in the DominicanRepublic more cheaply. Exporters will access a market that is in factnumerically larger than the entire CARICOM market (Haiti excluded) ofaround eight million consumers; it is a market with a high demographicgrowth rate. In addition rapid tourism growth in the Dominican Republichas been been fuelling internal demand, including for imported products.Tourism arrivals are expected to approach 2.5 million in 2000. TheDominican economy has, moreover, been the fastest growing in thisHemisphere for the past few years with average growth rates of 6-7 percent annually. In 1999 the Gross Domestic Product grew 8.3% comparedto 1998. The governor of the Central Bank, Hector Valdez Albizu, hasrecently forecast that the Dominican Republic's economy will grow 6-6.5% this year. Inflation has been kept low and is expected to remainwithin the 4-4.5% range.

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Recipients of RNM UPDATE are authorised to forward this newsletter to otheraddresses. We welcome suggestions for additions to our mailing list. If, on the otherhand, you wish to be removed from the list, kindly inform us.

------------------------------------------------------------------------------------------

Henry S. GillCommunications Director/Team Leader CARICOM Trade Project,Caribbean Regional Negotiating Machinery (RNM)"Windmark", First Avenue, Harts Gap,Hastings, Christ Church, BarbadosTel: (246) 430-1673Fax: (246) 228-5264http://www.caribrnm.net

rnm update - 2000-02-04

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