Trade with the European Union (EU) following the new Cotonou Agreement presents a unique challenge for the Caribbean Community (CARICOM) according to the Caribbean Trade and Investment Report, 2000 just released by the Economic and Intelligence and Planning Unit of the Caribbean Community (CARICOM) Secretariat. However, the Report cautions that the package also poses an imminent threat to the commodity producers of the Region.
The European Commission’s Trade Directorate, four months after the signing of the Cotonou Agreement, proposed that the least and less developed countries of the world should have immediate quota and duty-free access to the EU market. This new development for the Caribbean, while laudable, does not favour the prospects for the Region’s commodity producers.
The Caribbean Trade and Investment Report (CTIR), 2000, has argued that while the new agreement may not on the surface be radically different from its predecessors in substance, some underlying principles have changed and the proposed introduction of reciprocity post-2007 will constitute a totally new reality.
The Report observed that CARICOM’s Commodity imports from the EU are somewhat diversified with some 46 items accounting for 77 per cent of the value of imports. All of the items identified are in the intermediate or final goods stage, reflecting the dependence of CARICOM on external sources, in this case the EU, for machinery, transport equipment and other industrial goods, chemical products and even food products. CARICOM’s imports from EU in 1998 have been estimated at US$1.6 billion with eleven countries reporting. The more developed CARICOM Countries – Barbados, Guyana, Jamaica, Suriname and Trinidad and Tobago – accounted for 82.8 per cent of imports from the EU.
The Report further indicated that while the EU ranks second to the USA in importance as a source of CARICOM’s imports, its relative position has also remained virtually unchanged dating back to the pre-independence era of the Region. In 1980, 15.8 per cent of CARICOM’s imports were sourced from the EU, and after eighteen years, the records indicate roughly 13.7 per cent. The most important EU trading partner in that regard remains the United Kingdom.
It was reported that on the imports side, the EU is ranked second to the USA as a destination of CARICOM’s export commodities. Between 1980 and 1998, the EU has been the destination of 17 per cent of the Region’s exports or US$1.7 billion in 1998 with only eleven countries reporting. Excluding the countries with unavailable data during the period, it has been estimated that CARICOM’s exports to the EU grew at an annualised rate of 3.2 per cent in nominal terms over the period 1980-1998. Again the MDCs are significant beneficiaries, accounting for some 82 per cent of CARICOM’s exports to the EU in 1998.
According to the Report, the largest four items have been aluminum ores and concentrates, sugar, bananas and methanol. These four items together are of significant importance to 10 CARICOM Member States. To these could be added rum and tafia, which are of importance to Barbados, Guyana, Jamaica and Trinidad and Tobago; and rice, which is of importance to Guyana. That these items account far in excess of 80 per cent of CARICOM’s exports to the EU is testimony to the importance of both the items and the EU as a market for regional products.
The new partnership Agreement that was signed on 23 June 2000, in Cotonou, as a successor to Lomé IV, provides for trade and economic development.It is also aimed at gradual and full integration of the ACP States into the world economy by enhancing their production, supply and trading capacity, as well as their capacity to attract investment. The objectives are underlined by certain principles and objectives such as WTO conformity; building on regional integration initiatives; and progressive removal of trade barriers between the EU and ACP.
The Report observed that together the provisions of the new agreement pave the way for fundamental changes in the ACP, and by extension CARICOM’s, relationship with the EU. The reciprocity and WTO conformity principles are expected to significantly altar the way of doing business with the EU after the preparatory period. The preparatory period will expire on December 31, 2007, by which time reciprocal arrangements will have been negotiated. However, according to the evaluation of the Report, the transitional period of non-reciprocity will prevail and the commodity protocol arrangements as amended will continue.
The financial envelope of the new agreement is set at EURO 15.2 billion for the period up to February 2005. An additional amount of EURO nine billion of un-disbursed resources from previous European Development Funds (EDFs) will be added to extend the financing period to cover 2000-2007.
