Was CARIFORUM wise in rushing into a 'full' EPA?

By Norman Girvan


Recent news on the stalemate in the EPA negotiations in Southern Africa raises fresh questions about the wisdom of CARIFORUM countries in rushing to sign on to a ‘full’ EPA with Europe in October 2008.

According to an article in one of the region’s leading newspapers, the EPA negotiations with SADC -- the Southern Africa Development Community -- are unlikely to meet the latest deadline for conclusion at the end of 2010.

That will make three years since the expiry of the original deadline of December 31, 2007 for conclusion of a trade agreement to rake the place of the Lome/Cotonou arrangements. We in the Caribbean had been told that this deadline was cast in stone.

One of the main sticking points in the EU-SADC negotiations is EU insistence that “new generation issues” be included in the EPA, even though this is not required under WTO rules. New generation issues include investment, government procurement, competition policy and expansion of intellectual property rights and of trade in services.

The article quotes Namibia’s Director of International Trade as saying that “if we agree to EU demands on new generation issues we would be opening up our economies to very serious problems”. Two major concerns mentioned are the restriction of the right of SADC nations to pursue their own development strategies and the undermining of their regional integration schemes.

Inclusion of these issues was one of the controversial features of the Caribbean’s EPA. Critics had argued that more time was needed to consider the implications of the EPA for development and regional integration.

SADC has apparently also forced the EU to concede ground on its demands for a ‘Most Favoured Nation (MFN) Clause’ whose effect would be to hinder South-South cooperation. The MFN clause was bitterly opposed by CARIFORUM, but the position of European negotiators was ‘take it or leave it’.

Now it seems the Caribbean might have won that battle had they made common cause with the Africans.

CARIFORUM negotiators have always argued that being the first to conclude a ‘full’ EPA with Europe would be an advantage in securing additional development assistance and enhanced access to EU service markets.

It is an open secret, however, that implementation of the EPA by most CARIFORUM countries is well behind schedule because of the onerous legislative, regulatory and administrative obligations and the limited financial means of many countries.

Nearly three years after the conclusion of negotiations, some reassessment of the Caribbean strategy may be necessary; comparing the Caribbean and African experiences.

In addition, the fall-out from the global economic crisis has devastated the financial resources of EU states, which must impact their aid budgets.

And how accessible will European service markets really be, with slow economic recovery and rising unemployment in Europe?

October 30, 2010

caribbeannewsnow

Bahamas Blog International

CARICOM chairman says poor regional production contributes to impact of global crisis

GEORGETOWN, Guyana -- Guyana's President Bharrat Jagdeo has called on Caribbean Community (CARICOM) countries to increase their levels of productivity, which is key to economic advancement.

Jagdeo, who also chairs the regional grouping, said on Monday at an event in Port-of- Spain that the region’s laid back approach may be one of the factors responsible for it not being able to deal with the financial crisis.

“Our (Caribbean) inability to deal with this crisis, I am not speaking about every country, but we have for a long time in this region been less productive. If you look at the productivity in our overall economy it has been declining steeply,” Jagdeo said

He believes poor production, along with high debt overhangs, has caused many countries to face hardship due to the global economic crisis.

He noted too that Caribbean countries have borrowed so much from the lending agencies that every year the servicing of their external debts has been racking up and is now getting to a stage where some countries are using too much for this purpose.

Jamaica, he says, is one such country, which at one point has been using over 100 percent of its gross domestic product (GDP) to service external debts.

Jagdeo noted that such a situation spells trouble for the regional economy.

“How can you build a viable medium term strategy with a debt overhang in the region that is about 90 percent of GDP and includes commercial debts at high interest rates?” the president asked, adding, “It's almost impossible, sucks the life out of the economy.”

Jagdeo, who also chairs the CARICOM economic task force, noted that it is now time to create a new model, which he says will place heavy emphasis on debt relief for Caribbean countries.

He noted that Guyana was no exception from this high debt overhang as at one stage this country was using over 90 percent of its GDP for this purpose.

This has changed and the country is now using just about 4 percent of its GDP for servicing of external debts.

December 4, 2009

caribbeannetnews

Bahamas Caribbean Blog International

CARICOM must adopt new economic model, says Guyana president

PORT OF SPAIN, Trinidad (GINA) -- The Caribbean Community (CARICOM) is seeking international support for a new economic model which President Bharrat Jagdeo says is needed to meet the peculiarities of the region.

Backing for the new model is being canvassed and United Nations Secretary General Ban Ki-moon and the heads of several multilateral financial institutions are to join CARICOM leaders in Dominica in March to discuss it, President Jagdeo told reporters here.

Jagdeo, current CARICOM Chairman and head of the regional economic task force addressing the impact of the global economic crisis on the 15-member community, maintains that the model of economic development the region has been pursuing is not sustainable given its peculiarities.

The impact of the global crisis and climate change were the two major issues before Commonwealth leaders at their 20th summit here, the President told reporters late Saturday.

He said the huge debt overhang and massive sums spent to service debt have affected the community’s capacity to intervene in the crisis which has had a major impact on its members.

He noted that the two largest industries in the region – tourism and the financial sector – have been affected and capacity and fiscal space to do anti-cyclical spending has been limited because of the debt overhang.

“There is no way we are going to build a viable medium term economic strategy without a change in the model”, Jagdeo insisted.

He said that CARICOM heads Saturday advocated a deferential approach to a global economic system.

Most of the large countries were speaking about their efforts to support demand at the global level through the G20 and that’s vital for the future and for those countries to pursue free trade as a way of expanding global GDP, he acknowledged.

“But for countries like ours, many of those things would have sometimes a negative impact – the impact of reciprocity and removal of preferences which have led to the destruction of two major industries in the Caribbean – sugar and bananas.”

He said CARICOM has argued that the model that would be viable for the Caribbean would be one that sees debt relief for middle income countries; special and deferential treatment in the global trading system; dedicated instruments from the multilateral financial institutions (MFIs) to target the special vulnerabilities of the region – like a contingent line of credit to deal with hurricanes and other natural disasters which have a systemic impact on their societies.

The new economic model and climate change were the two big issues for the region, he said, adding, “It was important that we advocated for both and that we seek the support of this broad range of countries across the world because this support would be vital when we get to the WTO (World Trade Organisation) or when we take specific measures to address these issues at the boards of the multilateral financial institutions.”

Jagdeo said the President of the World Bank, the Deputy Managing Director of the International Monetary Fund (IMF), the President of the Inter-American Development Bank (IDB) and the UN Secretary will be at the CARICOM intersessional meeting in Dominica in March.

“I hope that with their support plus the political support, particularly from the countries in the G20, we may be able to get some progress in this regard”, he said.

The President chaired a meeting Saturday between CARICOM and British Prime Minister Gordon Brown and said he dealt with the impact of the global financial crisis on the Caribbean.

“We asked for support of this model that we intend to pursue”, he announced.

He noted that two current British initiatives are counter to the region’s efforts to develop its crucial financial sector and tourism sectors.

The Air Passenger Duty (APD) implemented by the United Kingdom has had a discriminatory impact on the Caribbean by making it far more expensive for British tourists to visit the Caribbean while it is cheaper for them to go to Hawaii or Vancouver which are almost twice as far from London as Barbados.

Jagdeo said CARICOM asked Brown for a rebranding of the Caribbean and he advised that the community work with the British Chancellor of the Exchequer on this matter.

CARICOM states have also encountered difficulties in many parts of the world on signing the tax information exchange agreement to get off the `grey list’ and urged Brown to help get these countries to move swiftly to resolve those issues, he said.

Some CARICOM members are facing an adverse impact because of being `grey listed’ and some financial institutions have already moved from those jurisdictions.

He stressed that the continuing global crisis is not splitting CARICOM although several member states are in difficulties because of reductions in tourism flows, revenue from the financial sector and remittances from developed countries.

“These are real problems and while we have to deal with the long term structural issues – debt and its future servicing, the structure of our economies -- we also have an immediate problem of finding enough cash resources to meet the day-to-day needs of the countries.”

“We have to find a source of bilateral funding. Given what’s happening in the world and the difficulties facing many countries, the only access available is through the multilateral financial institutions and many countries did not have any recourse but to turn to these institutions”, he said.

“We have decided to act in concert and I think there’s a greater sense of urgency”, the President added.

He said CARICOM leaders at one time were too complacent and felt that the current crisis was inevitable – whether there was a global recession or not -- because some were accumulating unsustainable levels of debt and using a larger share of the recurring budget to service that debt.

Total factor productivity in the economies was also declining for several years, he said, adding that this was unsustainable in itself.

November 30, 2009

caribbeannetnews

Caribbean Blog International

Number of poor in Latin America to rise by 9 million this year, says UN report

19 November 2009 – Nine million more people in Latin America will fall into poverty this year due to the global economic crisis, bringing the total number of poor in the region to 189 million, or 34 per cent of the population, according to a United Nations report released today.

The UN Economic Commission for Latin America and the Caribbean (ECLAC), which produced the report, stated that the new estimates depart from the trend towards poverty reduction that was prevalent in the region thanks to greater economic growth, the expansion of social spending and better income distribution.

“We can’t say that all that was attained between 2002 and 2008 has been lost,” said ECLAC Executive Secretary Alicia Bárcena, as she presented the report, Social Panorama of Latin America 2009.

“However, the rise in poverty calls us to action. We need to rethink social protection programmes with a long-term, strategic perspective and measures that make the most of human capital and protect the income of vulnerable families and groups,” she added.

ECLAC recommended, among other things, reforming social protection systems and adopting both urgent short-term measures as well as strategic long-term ones.

“In doing so, governments should avoid fiscal irresponsibility and rigid labour markets, increase taxes progressively, redistribute social spending and extend coverage of social services,” the Commission stated.

The Commission also noted that the projected increase in poverty for 2009 will impede efforts to achieve the Millennium Development Goals (MDGs), the globally agreed targets to slash poverty, hunger and a host of other social ills, all by 2015.

At the same time, the impact of the current crisis on poverty in the region is not expected to be as great as with previous crises, such as the Asian financial crisis in the late 1990s, it pointed out.

UN News

Bahamas Caribbean Blog International

Climate and economic crises taking heavy toll on Caribbean, leaders tell UN

While climate change and the global economic crisis are a challenge for all, they are particularly difficult for the small, island nations of the Caribbean, several leaders from the region told the United Nations General Assembly today.

“It is a fact that when global crises occur small vulnerable economies tend to pay a disproportionately high price,” Prime Minister Denzil L. Douglas of Saint Kitts and Nevis said, as he addressed the Assembly’s annual high-level debate.

He pointed out that, in the case of the economic crisis, the circumstances which precipitated the virtual collapse of several financial institutions were not created by small States such as Saint Kitts and Nevis – the smallest nation in the Western Hemisphere.

“Yet, as in the case of climate change, their consequences are forced upon us and we are left to fend for ourselves.”

Despite the recent downturn, small economies like his continue to display resilience and make the necessary sacrifices to sustain themselves, he said.

Saint Kitts and Nevis is investing in its people through education and retraining, and working to attract international investments in critical sectors to generate employment and other business opportunities. “By doing this, we hope to prepare for the future when the global economy eventually rebounds,” said the Prime Minister.

Secretary-General Ban Ki-moon today reaffirmed the UN’s commitment to working with the region, which has been “especially hard-hit” by both the global financial crisis and climate change.

“I am well aware of the heavy toll the global economic crisis is taking on your countries,” he told leaders gathered for a mini-summit on the Caribbean Community (CARICOM). “Oil prices are high, remittances are down, tourism is severely depressed and foreign direct investment has slowed.

“There is talk of recovery – but the impact of the crisis could reverberate for years. Your economies are more fragile than many others,” he said.

The Prime Minister of Trinidad and Tobago, Patrick Manning, also highlighted the vulnerabilities of small economies in his address to the Assembly’s debate.

“We of the smaller countries and the developing world have always been the most vulnerable and the worst affected,” he said. “It is happening again… especially in the Southern Hemisphere, the prospects have grown for increase in poverty, unemployment and general slippage in the development process.”

Like many others in the debate, Mr. Manning said that the crisis has made clear the urgent need to reform the global economic system.

“We clearly cannot take our eye off the ball. We must not return to business as usual… We must be very wary of the level of adventurousness in leading financial institutions, which contributed very significantly to driving the world to the edge of an economic precipice, from which we are just starting to pull back.

“We must now capitalize on the opportunity of this crisis and, without delay, reform our international economic system,” he stated, adding that the global architecture must be transformed to take into account the new realities.

Kenneth Baugh, Deputy Prime Minister and Minister for Foreign Affairs and Trade of Jamaica, noted that the consequences of the economic crisis – plunging inflows of financing and investment, weak exports, low commodity prices and diminished aid – are reflected in his country and throughout the CARICOM region.

“Countries like ours now face the daunting challenge of protecting the most vulnerable of their citizens in a responsible and sustainable manner in the context of declining export demand, contraction in services, including tourism, and lower remittances,” he stated.

He added that for the majority of developing countries, the impact of the crisis “will be deep, it will be prolonged and it will be painful.”

26 September 2009

UN News

Bahamas Caribbean Blog International

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Assembly President urges Latin America, Caribbean to support economic summit