making the epa work for caricom businesses...cariforum (i.e. the 15 states of caricom plus the...

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he CARIFORUM–EU EconomicPartnership Agreement (EPA) isnow in its sixth year of existence,yet this Agreement, which evoked

such intense emotions and opinions as to itsintentions and real benefits to CARICOMcountries, now seems to be on most countries’“backburners” as they focus on new tradeagreements with other partners. The EPAprovides a host of opportunities for CARICOMexporters yet there appears to be little interestin penetrating the European Union (EU)market, whether on the goods or servicesfronts, leaving the region in the samepredicament it was in before the EPA.CARICOM governments have been busynegotiating new trade agreements withcountries of Latin America and Asia amongothers, ostensibly to facilitate market expansionand stimulate exports which hopefully willdrive economic growth, but there has beenlittle export activity to the EU. This begs thequestion: how useful are negotiated agreementswithout the interest of the business sector?More specifically, how can already negotiatedagreements such as the EPA work for regionalbusiness?

What is the EPA?Simply put, the EPA is a trade partnershipaimed at promoting development amongst itsCARIFORUM (i.e. the 15 states of CARICOMplus the Dominican Republic) and EUmembers. It subscribes to the model that freetrade is the principal vehicle for growth anddevelopment and so is deemed WTO (WorldTrade Organization) plus, as it covers goods,services, investment and E-commerce, as wellas trade-related issues such as competition,procurement, innovation and intellectualproperty rights and the environment. TheAgreement also provides a developmentcomponent to assist CARIFORUM countriesin building trade capacity and developingrequisite scale and product diversity though

Making the EPA work for CARICOMBusinesses

stronger regional integration. The EPA is seenboth as a tangible manifestation of the newtrading system in which preferential trade willno longer be tolerated by a global communitycommitted to free trade, as well as the“success” of this partnership to include acomprehensive list of issues/sectors whichthe WTO has been unable to negotiate to date.

Export PerformanceThe emphasis on a trade partnership andconnotations of reciprocal trade has not beenlost on certain sectors including academia,labour unions and business. The EPA, whichreplaced decades of preferential trade and aidto CARICOM countries under the LoméConventions with a commitment toprogressively liberalize all sectors, has beena source of contention from the beginning.For many businesses, moving beyond thepredictable business model of quotas andguaranteed prices, or expanding beyond theCARICOM market, requires new businessstrategies, uniquely different iatedproducts/services and incorporation ofrequisite EU standards and regulations whichare viewed as both costly and risky.This is not to suggest that some major regionalbrands e.g. Angostura, S.M Jaleel &Company, El Dorado Rum and GraceKennedy, have not utilized the EPA. However,the contention is that these large firms werealready exporting to the EU market prior tothe EPA and so the real value in the EPA hasto be its ability to attract new/other exportersin a diverse range of goods and servicessegments. A recent report notes that the overallperformance of CARIFORUM goods exportsto the EU has declined when compared tooverall terms of trade under the Lomé andCotonou periods. In fact, CARIFORUM stateshave recorded negative balances of trade withthe EU under the EPA, except for 2008 whena positive balance of US $118.m was achieved.In the area of services where CARICOM

governments, trade negotiators and businessfelt the greatest potential existed, the overallexport pattern has also been disappointing.Some national service associations such asthe T&T Coalition of Service Industries andregional organizations such as CaribbeanExport have organized trade missions to theEU in segments such as tourism and creativeindustries which have yielded positive results.The T&T Chamber of Industry and Commercealso conducted a Trade Mission to three EUcountries - UK, Germany and Netherlands,which was funded by the Trade.com facility.The Sectors included ICT Services,construction and food and beverage. However,these are more exceptions than the norm, andso there have been little marked serviceexports in a range of industries and translatingto consistent exports.

The poor export performance of mostCARIFORUM countries and efforts made toaddress specific contributory factors willundoubtedly take centre stage at the stipulated5-year EPA review carded for late 2014.Difficulty accessing funds under the EuropeanDevelopment Fund (EDF) has been identifiedas a major factor impeding timely EPAimplementation at the national level.Reduction in aid for trade funds has alsonegatively impacted the scale of EPAimplementation while domestically, supplyside challenges including transportation,innovation, productivity, efficiency and privatesector financing challenges are identified askey inhibitors in exporting to the EU markets.These tend to be the typical explanationsadvanced by both private sector andgovernment as they coyly play the blamegame. The business sector appears less proneto venturing outside of the domestic orCARICOM markets and continues to relyheavily on governments for sectoridentification and development. Governments’slow pace of streamlining procedures, such

Contact • Vol.14 No.3 2014

TDr. Debbie Mohammed (Lecturer in International Trade at the IIR and Arthur Lok Jack Graduate School of Business)

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Trinidad and Tobago Chamber of Industry and Commerce • www.chamber.org.tt

as customs, standards/testing and improvinginfrastructure - particularly transportation -adds to the cost of doing business whichfurther pigeonholes an already risk-averseprivate sector.

Making the EPA work for businessThere are specific roles for both thegovernments and private sectors of the regionto play in extracting benefits of the EPA orany other trade agreement.

Government: Careful consideration must begiven when negotiating trade agreements tothe types of goods and services beingnegotiated to ensure there is 1) tradecomplementarity and 2) that supply sidefactors support a consistent, competitivesupply. It makes little sense to secure trade

agreements which essentially involve a one-way flow of goods and services.

There are several assistance programmesunder the EDF which can be utilized tofacilitate trade, including upgrade of customsfacilities and procedures, establishment ofSPS testing labs, introducing the latestindustry-specific regulations, standards andlabeling requirements as well as legalrequirements for doing business in EUmarkets.

Private sector: The private sectors mustreorganize themselves more along the linesof North American and European businessentities. While it is true that businesses inthe region are very small, this does notpreclude them from utilising and

strengthening industry associations to sharelatest information on industry standards orinvest in areas such as testing. In this era ofincreased competition, expansion of marketsand improving competitiveness is essentialfor the sustainability of businesses.

The opportunity afforded to exporters to meetthe higher standards of the EU facilitatespreparation for other world markets.Businesses wil therefore have to 1) developthe confidence to look beyond thedomestic/regional markets and the securityof government protection; 2) identify newproducts or customize existing products and3) devise new business strategies, includingalliances and partnerships in order tosuccessfully withstand the competitions whichaccompany such trade agreements.

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