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Full EPA Paper FORMULATING SUSTAINABLE DEVELOPMENT BENCHMARKS FOR AN EU-CARIFORUM EPA: CARIBBEAN PERSPECTIVES Jessica Byron and Patsy Lewis, University of the West Indies, Mona, Jamaica June 2007 1 Acknowledgements The authors of this study wish to express their sincere appreciation to the officials of the Caribbean Regional Negotiating Machinery and the Coordinadora Nacional de Negociaciones Comerciales in the Dominican Republic, and to all the individuals, representatives of governments, private sector organizations or civil society, who either assisted them with the arrangements for their research or who participated in the interviews that took place in Barbados, Dominica, the Dominican Republic, Guyana and Jamaica, November 2006 – April 2007. They also acknowledge the vital inputs and support of the International Centre for Trade and Sustainable Development (ICTSD) and the Association of World Council of Churches related Development Organisations in Europe – (APRODEV), the sponsoring organizations for this project, with whom they have enjoyed fruitful collaboration. 2 CARIFORUM Development Benchmarks Paper: Contents Page Nos. Executive Summary 3 - 18 1. Introducing Sustainable Development Benchmarks 19 2. Size and its implications for trade and development 26 3. Development, Trade Liberalization and Competitiveness 32 4. CARIFORUM and Regional Integration 46 5. History of CARIFORUM – EU Relations: the Lome and Cotonou Predecessors to the EPA 60 6. The CARIFORUM-EU EPA Negotiations 67 7. Sustainable Development Benchmarks for a CARIFORUM-EU EPA 78 8. Assessing CARIFORUM/EU EPA Negotiations using benchmarks 91 9. Bibliography 99 Annexes 1- 4 (presentation of country case-studies) 107 Dominica Guyana Dominican Republic Jamaica 3 FORMULATING SUSTAINABLE DEVELOPMENT BENCHMARKS FOR AN EU- CARIFORUM EPA: CARIBBEAN PERSPECTIVES Executive Summary The European Commission’s (EC) thrust to negotiate Economic Partnership Agreements (EPAs) with the Africa Caribbean Pacific (ACP) group of countries on the basis of regional groupings, represents a fundamental departure from the traditional basis of EU/ACP relations. EPAs signify a shift from aid and preferential, non-reciprocal trade as fundamental features of the relationship to one centred on the liberalization of trade between the two groups, with financial assistance appearing to occupy a subordinate role. EPAs, which are underpinned by neo-liberal approaches to development, which locate free trade at the centre, are the means for bringing the EU/ACP relationship into conformity with the WTO, which now provides the umbrella framework for such arrangements. This shift has fuelled concerns, both within government and non-government circles in both the ACP and European Union, that the development goals of ACP countries are not subordinated to trade liberalization imperatives. The suggestion for using a benchmarks approach, based on the identification of a series of benchmarks by which to measure the developmental effect of EPAs, first emerged from the Cape Town Declaration adopted by the ACP and EU in 2002, and has since been developed by the Association of World Council of Churches related Development Organisations in Europe (APRODEV) and the International Centre for Trade and Sustainable Development (ICTSD). Benchmarks would serve as a tool for ensuring that EPAs live up to sustainable development goals embraced in the CPA mandate for EPAs, and that ACP countries are no worse off than before. This study, which was commissioned by APRODEV and ICTSD, represents an attempt to apply the approach to the CARIFORUM-EC negotiations, which are the most advanced of the ACP-EU negotiations. The specific terms of reference of the study were that the benchmarks developed should cover the categories of (a) Market Access and Fair Trade; (b) Policy spaces within the EPA commitments for promoting the competitiveness of CARIFORUM productive sectors, growth with equity and sustainable development; and (c) Access to development support for realizing these objectives. The study was also to pay attention to the following issues specific to the CARIFORUM group:- The impact of EPA negotiations on the regional integration processes in the Caribbean; 4 suggestions for support measures for Small and Medium Sized Enterprises (SMEs); specific benchmarks to articulate the interests of family farmers; specific recommendations on gender equity and female poverty; and the impact of the EPA on selected Caribbean countries. In addition, given that most CARIFORUM countries fit the Commonwealth/World Bank’s definition of small states, the authors gave specific considerations to the development challenges that arise from their small size, as well as to the structure and process of the EU-CARIFORUM EPA negotiating process, and the degree to which it took account of these constraints. At the heart of the study is information gathered from a wide range of sources across five CARIFORUM countries -- Barbados, Dominica, the Dominican Republic, Jamaica and Guyana – which form the basis for analyzing the consultation processes which should underpin the negotiation, and which also provided the basis for defining the benchmarks suggested. The study comprises nine chapters which seek to contextualize the CARIFORUM region, characterize its relations with the EC, present and apply benchmarks, and present case studies of four CARIFORUM countries. Chapter One, ‘Introducing Sustainable Development Benchmarks’, discusses the utility of the benchmarks approach and the specific objectives of the Cape Town Declaration in proposing their usage. It also discusses APRODEV’s and ICTSD’s development of the idea. Central to the ACP-EC’s concerns were transparency and inclusiveness of the EPA process (Paragraphs B, D, E). Benchmarks were thus a means of encouraging debate and discussion among groups and individuals interested in promoting sustainable development and reducing poverty in ACP countries. They were expected to assess the extent to which any agreement being negotiated can fulfill the main objectives of the Cotonou Agreement, which included promoting the sustainable development of ACP countries, including reducing poverty; promoting the structural transformation of ACP economies as the basis of their integration (presumably on more favourable terms than currently exist) into the world economy; and increasing women’s access to economic resources. They were also to monitor the negotiations to ensure that they accorded with these salient principles: that they do not lead to the ACP being worse off than under current trade arrangements; that they respect LDCs’ right to non-reciprocal trade preferences; that they address the needs of small island and single commodity dependent countries. Finally, they were also to monitor the negotiations to ensure that they addressed specific issues of market access, supply-side constraints, fiscal adjustments (addressing loss in customs revenue, providing budgetary support), and the effects of the review of the EC’s Common Agricultural Policy (CAP). 5 ICTSD’s and APRODEV’s interest in identifying and applying benchmarks to EPA negotiations was to ensure that EPAs were constructed as an instrument which would assist ACP countries to achieve Millennium Goals and broad sustainable development goals. They were also concerned that asymmetries in trade agreements should not thwart sustainable development goals – environmental, economic and social, particularly poverty reduction. Benchmarks would thus provide a tool to be used by interested groups in both the ACP and EU as a basis for assessing ‘the substantive progress of the EPA negotiations towards the development goals they should serve’ (ICTSD 2007). For ICTSD and APRODEV the treatment of competitiveness and equity in EPAs were of particular concern. They identified three broad categories of issues for identifying priorities for monitoring EPA negotiations: market access and fair trade, policy space or space for achieving sustainable development policies, and the availability of EU resources for development, particularly financial inflows. Chapter Two, ‘Size and its implications for trade and development’, discusses the environment in which benchmarks are being proposed, particularly the primacy of neo-liberalism and globalization and the role of the rules-based WTO in setting out the rules of the game and ensuring that signatories play by them. The chapter examines the particular challenges that CARIFORUM countries face, operating within the constraints of a system that promotes the general application of rules irrespective of differences in size, resource endowment and levels of development. The particular challenges presented by their small size were discussed in terms of limitations of physical, natural and human resources and their implications for capacity and supply-side constraints to competitiveness. In respect of their relationship with the EU, the main feature identified was their declining competitiveness. This was evident in their declining exports to EU market, even in situations of preferential market access; their difficulty in taking advantage of market access opportunities that already exist; and the structure of their trade, which is characterized by a concentration on primary products, particularly agricultural, and their declining competitiveness Their particular challenges for competitiveness in an EPA were identified as: • Limited ability to take advantage of EU market access opportunities; 6 • Limited competitiveness in respect of larger, more
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