THE EPA AND CARIBBEAN DEVELOPMENT A Critical Perspective

1. THE EPA AND CARIBBEAN DEVELOPMENTA Critical Perspective Norman Girvan Prepared for Civil Society Forum, Jamaica May 1, 2008 http://normangirvan.info

2. EPA—democratic governance? The EPA is • More than a trade agreement—will impact many aspects of lives of Caribbean peoples • Legally binding, difficult to amend once legally in force and of indefinite duration • Wide in scope, covering several areas of national and regional policy • Limits governments’ ability to change future policies in several areas • Little known and understood by the public Girvan EPA 27/04/08

3. Part I. Trade Partnership For Sustainable Development Part II. Trade And Trade-Related Matters Title I. Trade In Goods Chapter 1. Customs Duties Chapter 2. Trade Defence Instruments Chapter 3. Non-Tariff Measures Chapter 4. Customs And Trade Facilitation Chapter 5. Agriculture And Fisheries Chapter 6. Technical Barriers To Trade Chapter 7. Sanitary And Phytosanitary Measures Title II. Investment, Trade In Services And E-Commerce Title III. Current Payments And Capital Movement Title IV. Trade Related Issues Chapter 1. Competition Chapter 2. Innovation And Intellectual Property Chapter 3. Public Procurement Chapter 4. Environment Chapter 5. Social Aspects Chapter 6. Protection Of Personal Data Part III. Dispute Avoidance And Settlement Part IV. General Exceptions Part V. Institutional Provisions Part VI. General And Final Provisions Girvan EPA 27/04/08

4. Annexes, Protocols and Joint Declarations • Schedule of Cariforum commitments on liberalization of trade in goods • Schedule of Cariforum commitments on liberalization of trade in services • Schedule of Cariforum commitments on liberalization of investment (commercial presence) in non-service sectors • Protocol I on Definition of "Originating Products" (Rules of Origin) and Methods Of Administrative Cooperation • Protocol II on Mutual Administrative Assistance in Customs Matters • Protocol III on Cultural Cooperation • Joint Declaration on Development Cooperation • Joint Declaration on Bananas • Joint Declaration on Used Goods • Joint Declaration on Rice • Joint Declaration on Undelivered Quantities Under the Sugar Protocol Girvan EPA 27/04/08

5. Does the EPA support development?’ • The Cotonou Partnership Agreement, under which EPAs are negotiated, says that their principal objectives are poverty reduction & sustainable development • In order for a reciprocal trade agreement between unequal partners, such as the EU-CF EPA, to contribute to sustainable development of the less developed partners, there must be adequate resource transfers for the development of their economic infrastructure and the supply capabilities of their firms. The EU has recognized this in their own internal arrangements by the provision of ‘Structural Funds’ and ‘Social Cohesion Funds’ for their poorer member states. • There are no additional funding commitments provided through the EPA to facilitate adjustment to the liberalization of imports from the EU and to take advantage of export opportunities in goods and services from CF • Without such additional resources, existing inequalities between unequal partners are likely to be worsened. Girvan EPA 27/04/08

6. EPA AsymmetryThe Caribbean gets • Preservation of existing duty-free quota-free access in Europe for 97% of exports of goods, with certain temporary exceptions, and eventual coverage of 100% (but WTO and bilateral FTAs will expose CF to more competition) • Slight improvement in Rules of Origin but no change in other trade barriers • Opening of EU service sectors subject to many conditions • No binding commitments from EU on development support to build up supply capacityy Girvan EPA 27/04/08

7. In return for… • Phased liberalization of CF markets to the majority of EU goods over a 15-year period; 13% of imports permanently excluded from liberalization • Liberalization of the majority of services in the CF market for EU firms and service providers • Binding commitments on policies in investment, competition, public procurement, intellectual property and e-commerce; requiring new institutions and laws. • Dispute Settlement and Implementation machinery leading to indefinite, institutionalized involvement in Caribbean forum decision-making processes in trade, development and regional integration • Establishment of a precedent of a ‘WTO-plus’ FTA to be used in negotiations with other ACP countries, other developing countries and in the WTO • On Girvan EPA 27/04/08

8. Services: market access for EU firms an regulatory framework • 75% of CF service sectors in MDCs and 65% in LDCs will be liberalized to EU • Each CF country has made market access commitments for service sectors, as set out in Annex 4. • It is necessary to assess the potential impact on the development of CF service industries; e.g. what will happen in banking and to SMEs in the tourist sector? Will local firms be displaced or acquired by larger EU firms? How will investment of EU firms affect national and regional development plans for services industries? • A Regulatory Framework is specified for computer, courier, telecommunications, financial, international maritime transport and tourist services. How will this affect government’s ability to regulate these sectors in the public interest? Girvan EPA 27/04/08

9. Legal advisory services in international public law and foreign law Accounting and bookkeeping 3) Taxation advisory 4) Architectural 5) Urban planning and landscape architecture 6) Engineering 7) Integrated Engineering 8) Medical and dental 9) Veterinary 10) Midwives 11) Services provided by nurses, physiotherapists and paramedical personnel 12) Computer and related 13) Research and development 14) Advertising 15) Market Research and Opinion Polling 16) Management consulting 17) Services related to 16 18) Technical testing and analysis 19) Related scientific and technical consulting 20) Maintenance and repair of equipment, including transportation, 21) Chef de cuisine 22) Fashion model 23) Translation and interpretation 24) Site investigation work 25) Higher education services (privately-funded) 26) Environmental 27) Travel agencies and tour operators' 28) Tourist guides 29) Entertainment services other than audiovisual services Services liberalized for Contractual Service Suppliers from the Caribbean (Art 83) Girvan EPA 27/04/08

10. Employees of CSS – conditions of access • Must be working with a firm with a service contract in an EU member state not exceeding one year’s duration • Must have at least 1 year’s working experience with the supplying firm as well as 3 years’ professional experience • With certain exceptions*, must possess a university degree or equivalent qualification and professional qualification required in receiving state. Mutual recognition agreements necessary. • Stay limited to cumulative period of six months in any 12-month period or duration of contract, whichever is less • Access limited to performance of contract • Number limited to what is necessary to fulfill contract as determined by local laws • Other ‘discriminatory limitations’ are allowed, including limitations on the number of employees permitted entry as a result of ‘economics needs tests’ in the receiving countries. • Other conditions are specified in Annex 4. * Fashion model services, chef de cuisine services, and entertainment services other than audio-visual . Girvan EPA 27/04/08

11. Services liberalized for Independent Professionals (IPs) ( Art 83) 1) Legal advisory services in international public law and foreign law 2) Architectural services 3) Urban planning and landscape architecture services 4) Engineering services 5) Integrated Engineering services 6) Computer and related services 7) Research and development services 8) Market Research and Opinion Polling 9) Management consulting services 10) Services related to management consulting 11) Translation and interpretation services Girvan EPA 27/04/08

12. Conditions of access of IPs (Art 83) • Must be engaged in the supply of a service on a temporary basis in the other Party and must have obtained a service contract not exceeding 12 months. • At least 6 years professional experience. • A University degree or equivalent qualification and professional qualification required by local regulations. Mutual recognition agreements necessary • Stay limited to cumulative period of 6 months in any 12 month period or duration of contract, whichever is less. • Other ‘discriminatory limitations’ are allowed, including limitations on the number of employees permitted entry as a result of ‘economics needs tests’ in the receiving countries. • Other conditions are specified in Annex 4. Girvan EPA 27/04/08

13. Mutual Recognition AgreementsNecessary for all individuals providing services (CSS and IPs) Article 85) • Caveat: Nothing in EPA shall ‘prevent Parties from requiring necessary qualifications and/or professional experience in territory concerned’ • Professional bodies to be encouraged to jointly develop recommendations on MR for Trade and Development Committee (TDC) within three years • Priority to accounting, architecture, engineering and tourism. • TDC reviews to determine consistency with EPA • If approved by TDC, Parties negotiate MRA ‘through their competent authorities’ • Agreement must conform with WTO particularly Article VII of the GATS. Girvan EPA 27/04/08

14. Possible asymmetries in Movement of Natural Persons • Most firms establishing ‘Commercial Presence’ are likely to be EU firms setting up business in CF countries. • Such firms will be allowed to bring in in ‘Key Personnel – Managers and Specialists – for up to 3 years and Graduate Trainees for up to 1 year. The qualifications for these categories are stated in general terms with few conditions attached. • Most of the CF interest in services is in the ‘Movement of Natural Persons’ into the EU. • The required qualifications and experience related to this category are very precisely stated, with many more reservations and conditions applying. • Contractual Service Suppliers and Independent Professionals have no right to bring in ‘Graduate Trainees’ • Existing immigration, visa, work permit and residency regulations will continue to be in force. • Thus on balance, the flow of Natural Persons from the Caribbean to Europe may be much more difficult than in the other direction Girvan EPA 27/04/08

15. ‘WTO-plus’ provisions in the EPA The EPA includes binding commitments on • Competition – policy, practice, regulations • Public Procurement - transparency • Investment – treatment of • Services - beyond WTO commitments • Additional Intellectual Property protection • E-commerce The first three are known as the ‘Singapore Issues’ and were rejected for inclusion in the Doha Round negotiations of the WTO by developing countries, as this would mean additional restrictions on their development policy options and impose onerous implementation obligations Girvan EPA 27/04/08

16. Impact of WTO-plus provisions • Pre-empt and proscribe government policies in key areas of development • Pre-empt CSME regimes in services, investment, competition, public procurement, intellectual property, e-commerce which have not yet been completed • Involve changes in laws, regulations and implementations and compliance costs • Compromise the region’s negotiating positions in the WTO and in bilateral trade agreements with Canada, the US and other trading partners Girvan EPA 27/04/08

17. Why WTO-plus? • The EC argues that these provisions enhance the development potential of the EPA • This argument derives from the ideology of neo-liberal globalisation position, which leads to the use of ‘trade’ agreements to ‘lock in’ neo-liberal policies by sovereign states, giving them the force of international treaty law • Critics argue that this method of securing policy changes is undemocratic and non-transparent. • Note that securing WTO-plus provisions in bilateral trade agreements (BTAs) is a major objective of the EU’s ‘Global Europe Project’ Girvan EPA 27/04/08

18. Competition – Example “The Parties and the Signatory CARIFORUM States shall progressively adjust, without prejudice to their obligations under the WTO Agreement, any State monopolies of a commercial nature or character, so as to ensure that, by the end of the fifth year following the entry into force of this Agreement, no discrimination regarding the conditions under which goods and services are sold or purchased exists between nationals of the Member States of the European Communities and those of the CARIFORUM States, unless such discrimination is inherent in the existence of the monopoly in question” (Article 129.4, emphasis added) Girvan EPA 27/04/08

19. The Public Procurement Chapter • General Objective • Definitions • Scope • Transparency of Government Procurement • Methods of Procurement • Selective Tendering • Limited Tendering • Rules of Origin • Technical Specifications • Qualification of Suppliers • Negotiations • Opening of tenders and award of contracts • Information on contract awards • Time Limits • Bid challenges • Implementation • Review Clause • Cooperation Girvan EPA 27/04/08

20. National Treatment’ in the EPA Prevent policies fostering development of local/regional firms Examples Article 27 1. “2. Originating imports shall be accorded treatment no less favourable than that accorded to like domestic products in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. ..(Art 27.2) 3 No Party or Signatory CARIFORUM State shall establish or maintain any internal quantitative regulation relating to the mixture, processing or use of products in specified amounts or proportions which requires, directly or indirectly, that any specified amount or proportion of any product which is the subject of the regulation must be supplied from domestic sources.” Exceptions: (i) payment of subsidies to national producers (ii) public procurement (iii) provisions of Art. 23 Girvan EPA 27/04/08

21. National Treatment in Investment and Services (Article 68) “In the sectors where market access commitments are inscribed in Annex 4 and subject to any conditions and qualifications set out therein, with respect to all measures affecting commercial presence, the EC Party and the Signatory CARIFORUM States shall grant to commercial presences and investors of each other treatment no less favourable than that they accord to their own like commercial presences and investors’ Girvan EPA 27/04/08

22. JOINT CARIFORUM-EC COUNCIL TRADE AND DEVELOPMENT COMMITTEE Implementation Committee COMMITTEE ON CUSTOMS CO-OPERATION AND TRADE FACILITATION PARLIAMENTARY COMMITTEE CONSULTATIVE COMMITTEE Girvan EPA 27/04/08

23. Reading the EPA (Art 233) • ‘Party’ or ‘Parties’ refer to • European Community (EC), representing 27 member states of EU or • CARIFORUM States “acting collectively” • “Signatory CARIFORUM States” refer to individual states that have assumed rights and obligations as separate entities • CARICOM as a juridical entity not a Party • Many references to Committees with wide powers (see Implementation Committee slide) Girvan EPA 27/04/08

24. Joint EC-Cariforum CouncilPart V Articles 227-229 • Composition: Members of the Council of the EU, members of the EC, and representatives of the CF states. • In matters where CF states agree to act collectively “One representative of the CF states will act on their behalf” • Responsible for operation and implementation of the Agreement and to “ensure that the Objectives are fulfilled” • Decisions are by consensus and are binding and Parties “shall take measures to implement them” • Other responsibilities set out in 19 paras. Read ‘Institutional Machinery of the EPA’ at http://normangirvan.info Girvan EPA 27/04/08

25. Trade and Development CommitteeArticles 230-231, references in several other Articles • Composed of Senior Officials – CF one representative in matters of collective action • 56 functions and responsibilities set out in Article 230 and other references • Special Committee on Customs Cooperation and Trade Facilitation – 13 functions, powers and responsibilities Further details in ’Institutional Machinery of the EPA’ Girvan EPA 27/04/08

26. Towards regional disintegration? • Parties to the EPA are the EC, CF states ‘acting collectively’ and 15 Signatory CF states. Neither Caricom nor Cariforum is juridically a Party • Most binding obligations are with ‘Signatory CF states’, implying that they are treated as individual juridical entities for purpose of compliance with these obligations • In implementation, this will tilt bargaining power even more heavily in favour of Europe. • Dominican Republic will be a major player • Cariforum states may end up competing with one another in implementation, possible widening of intra-regional inequalities and regional disintegration. Girvan EPA 27/04/08

27. Marginalization of CSME? • EPA is EU-DR-Caricom ‘Single Market’ for Goods, Services, and Capital and ‘Single Economy’ in Intellectual Property, Competition, Public Procurement, e-commerce, Environment and Social Aspects • The EPA organs of governance may rival those of Caricom e.g., • What will the authority of the Conference of Caricom Heads of Government, or the Caricom Council for Trade and Economic Development (COTED) vis-à-vis that of the Joint EC-CF Council and the Trade and Development Committee? • The purpose of the CSME was • to create a single economic space to enhance competitiveness and foster the development of regional firms and production networks for successful exporting to world markets; and • pool bargaining power. • Is this path effectively foreclosed by the EPA ? Girvan EPA 27/04/08

28. How did we get to this?Critical points in the EPA negotiations (1) 2000-2004 • 2000 – Cotonou Partnership Agreement sets out EPA objectives, architecture & time-table for ACP • 2000 – EU gives duty free quota free access to its market to all Least Developed Countries including non-ACP • 2001 – Doha WTO meeting agrees to waiver for EU-ACP non-reciprocal trade preferences to 12/2007 • 2003 - Phase 1 negotiations with all ACP concluded without binding agreement on Phase 2 • 2003 – Cancun WTO Ministerial ends with rejection of ‘Singapore Issues’ from scope of Doha Round. • 2004 – Phase 2 negotiations begin with 6 separate ACP groups; Cariforum negotiations within a ‘WTO-plus’ framework that includes some of the Singapore Issues Girvan EPA 27/04/08

29. The second phase: 2004--2007 • 2004: EC determines that GSP tariffs are the only alternative for countries that don’t wish to sign EPAs. Bargaining power shifts decisively towards the EC. • 2005-2007 Doha Round at WTO deadlocked; EC adopts its ‘Global Europe’ project focusing on bilateral agreements that are WTO-plus. • 2006-2007 CF negotiations proceed on a WTO-plus agreement; the main stumbling block is scope and speed of import liberalization • End 2007 – EC pressures several African and Pacific countries to sign ‘Interim EPAs’ using threat of imposition of GSP tariffs; • CF makes last-minute concessions in market access and initials WTO-plus agreement Girvan EPA 27/04/08

30. So what happens now? • Option 1: Review, Revise & Re-negotiate • Option 2: Sign now, make the best of it, and try to change it later if necessary Girvan EPA 27/04/08

31. Implement, then revise? The Revision Clause relates to • extending the scope of commitments (e.g. in services, public procurement, investment) • including Europe’s Overseas Countries and Territories, • varying of specific measures by the implementation committees Girvan EPA 27/04/08

32. The renegotiation option A Commonwealth-ACP High Level Technical Meeting held in Cape Town, S.A. April 8-9, 2008 included several ACP Ministers, senior officials, NGOs, resource persons: some conclusions: • To ensure that EPAs are pro-development EC and ACP should review and renegotiate contentious issues. • There is still legal space to do so • ACP unity needs to be maintained/restored • ACP should engage with other stakeholders in Europe Girvan EPA 27/04/08

33. Decision of Caricom Heads 7-8 March 2008 • Heads ‘noted that a number of Member States were still examining the text of the EPA which in some cases would require the tabling of this Agreement in national parliaments’. • ‘They committed themselves to take the necessary steps to complete these internal consultations in a timely manner to facilitate signature and provisional applications of the agreement by 30 June.’ Girvan EPA 27/04/08

34. Report – ‘EPA signing delayed – Golding’ "For a number of reasons including the time that needs to be allowed for individual member states to carefully examine the text of the agreement, (and) recognizing that there have been two changes of government since the start of this year, it was felt that it was necessary for new governments to advise themselves properly before committing to the agreement," said Mr. Golding at the 19th Inter-sessional CARCOM heads of Government meeting in the Bahamas. http://www.radiojamaica.com/content/view/6209/26/ (9 March 2008) Girvan EPA 27/04/08

35. Prime Minister Thompson of Barbados on CSME and EPASpeech to TTMA 15/04/08 • ‘Powerful case’ built against the signing of the EPA • ‘We must recommit ourselves as a region to the full implementation of the Single Market and Economy while negotiating in WTO and bilaterally’ • ‘There is still room for negotiation on the EPA, within the 3-year moratorium before formal ratification of the Agreement’. • The EPA ‘constitutes an imperfect basis from which to move forward into the brave and unknown world of the 21st century’. Girvan EPA 27/04/08