Trade Watch: EU makes moves in ACP countries

The Caribbean started the new year with a new trade and aid pact courtesy of the European Union.

From IPS:

The negotiations were wrapped up in Barbados with just days left before a yearend deadline that, if missed, would have meant disaster for the Caribbean -- as most of its key export products would have faced duties of up to 30 percent entering the EU. That was the threat from the EU that Jagdeo and other leaders were uncomfortable with, but had to respect just in case the Europeans were not bluffing.

Under the new EPA, which replaces the 2001 Cotonou Agreement signed in Africa, the Caribbean will now have to open 86.9 percent of its market to duty free imports of EU products over the next 25 years. It calls for 82.7 percent to be liberalised in the first 15 years. There will be a moratorium of three years on all tariffs except those on motor vehicles, spare parts and gasoline coming into the region. Other duties and charges are to be kept during the first seven years and then phased out in the following three years.

For sugar, which governments so zealously guarded during negotiations, the Caribbean gets an additional 60,000 tonnes on top of the 410,000 it is allowed to export under the old arrangements. But the quota now has to be split between a new exporter -- the Dominican Republic -- and the English- speaking producers that traditionally sold the commodity to European destinations. Fixed quotas and duty free access are set to be removed by late 2009, meaning that exports from the region will no longer be protected and would have to compete with cheaper products from third party exporters.

Additionally, the two sides agreed that those able to take up the slack would share any shortfall by a sugar-producing nation. A 41,000 tonne Trinidad shortfall will go to its neighbours. St. Kitts has also quit sugar production, but it is unclear what has happened to its quota if not divided among bloc members already.

One thing has clearly emerged from the talks that began when the EU decided to split up the 79-nation African, Caribbean and Pacific (ACP) umbrella group into six separate regions, with each having to battle for its own EPA. Leaders say the new liberalised environment means that the region has to produce more efficiently as competition would come from countries with cheaper labour and production costs.

"We have to increase our productivity and competitiveness. That is the lesson we have to imbibe now. We have to start now. And the quicker we get that message out in an unvarnished fashion the better," said Edwin Carrington, secretary general of CariForum, under which the 15 negotiating nations fall.

Jamaican Prime Minister Bruce Golding, who is responsible for external negotiations for the Caribbean trade bloc, echoed Carrington’s sentiments.

"It is now for us to get our act together, to demonstrate efficiency in the goods we produce and the services we provide and competitiveness in how we price our goods," he told Jamaica's parliament this week.

The Caribbean pact is believed to be the most comprehensive and fair so far. As for pacts with African nations, that is a whole different issue.

Senegalese President Abdoulaye Wade, who is staunchly against signing a free trade agreement with the EU, staged a rally in Brussells today, urging an alternative "partnership deprived of paternalism and without prejudice" be made. While the December 31 deadline to participate in EPA, only 35 countries in African, Caribbean and Pacific (ACP) countries have actually signed on as tensions continue into the new year.