Strategy and opportunity
5 priority areas for a Caribbean international trade agenda in 2021
The year 2020 was a torrid year for international trade. But, as the dust settles — somewhat — it is with some clear-sightedness (and hope) that I put forward the five negotiating priorities for the Caribbean in the international trade sphere:
1) Use trade rules to respond to COVID-19
The most critical issue on the global health and economic agenda remains COVID-19. While the pandemic continues to bring economies to a standstill, the immediate concern remains the morbidity and mortality associated with the disease. For that reason, access to vaccines is paramount. Although the COVAX facility was set up under the World Health Organization (WHO) to promote the equitable distribution of vaccines, most countries in the developing world have not yet been able to receive vaccines for most of their populations. And, even if they do, COVAX only guarantees supply for 20 per cent of populations, meaning developing countries will have to procure from elsewhere.
Meanwhile, developed states that can pay top dollar have entered into bilateral agreements with pharmaceutical companies to procure their supplies directly. The situation has led the head of the WHO to voice concern about inequitable access and catastrophic moral failure. To address the inequitable distribution some developing countries at the World Trade Organization (WTO) have proposed a waiver of intellectual property rights that would make generic manufacturing of the vaccine possible. This would boost production and alleviate some of the problems with access in the developing countries. Caricom should engage the proponents at the WTO and provide their support for the waiver.
Beyond the immediacy of the health issue, COVID-19 will impact the trade agenda in more enduring ways and Caricom negotiators should participate in these discussions. It has already exposed to WTO negotiators the intersection between health and trade agendas; the vulnerability of many countries’ supply chains in food and medical products; and the ease with which rules can be bypassed and unilateral action taken in times of emergency. It also led to the unleashing of massive stimulus packages by many developed countries that would normally qualify as illegal subsidies under current WTO rules. The movement of people who have been “vaccine certified” may lead to greater collaboration on standards for acceptance across national borders. Beyond the external dimension, Caricom must use this opportunity to introspect about how our regional integration process, in particular our food security, can recover strong after the pandemic.
While the US remains among Caricom’s most important international import and export markets, as well as investors, the Caribbean is not high on the US trade negotiating list. Outside of the WTO agreement, the only formal trade arrangements between the US and Caricom are non-reciprocal in nature — the Caribbean Basin Initiative, which was recently reauthorised; and the Generalised System of Preferences. Although there is a Trade and Investment Framework Agreement (TIFA) in force, it has not been utilised much. Despite the lacklustre trade and investment relations to date, the region remains important to the US because of its geographical placement and the growing influence of China.
With the Joe Biden Administration there is an opportunity to re-engage with the US and forge a more meaningful and reinvigorated economic relationship. One idea has been to rekindle a Free Trade Area of the Americas (FTAA) as a response to other mega-regionals happening across the Pacific (Comprehensive and Progressive Agreement for Trans-pacific Partnership [CPTPP]), Africa (African Continental Free Trade Area [AFCFTA]), or Asia-pacific (Regional Comprehensive Economic Partnership [RCEP]). At a more bilateral level, Caricom may wish to engage the US in new areas, beyond the goods sector, and expand to more creative and dynamic issues such as services (financial, professional), the digital economy, renewable energy, and climate change initiatives. In addition, the Caribbean should redouble its commercial diplomacy and advocacy efforts through greater use of regional embassies, US Agency for International Development (USAID), and other agencies whose work intersects with the trade and investment agenda in the region.
The region must propose a clear mandate for action on trade and investment at
regional summits like the Summit of the Americas. We should also, where possible, align interests and agendas in fora of common engagement like the WTO, InterAmerican Development Bank, World Bank, and Paris Accord. Finally, given the size of the Caribbean Diaspora in the US, the region should begin leveraging them to promote greater trade and investment opportunities, including through existing associations like the Caribbean American Chamber of Commerce and Industry and bespoke firms which specialise in Us-caribbean relations.
3) Develop a post-brexit agenda
Now that the UK and EU have formalised the terms of their ‘divorce’ through a trade and cooperation agreement, the Caribbean must have a strategy for its trade and economic relationship with each. For that it must reappraise the relative value of each in economic and political terms.
Post-brexit, the EU and Caricom continue to frame their trading relationship primarily through the EUCARIFORUM Economic Partnership Agreement (CEPA). Given that the UK was traditionally the main market for our goods and services under the CEPA we will have to consider how best to promote and grow trade with the remaining EU members. The CEPA also remains an important avenue for addressing trade concerns like non-tariff market access barriers and the effects of its EU blacklisting practices.
Beyond the CEPA, the Caribbean’s relationship with the EU is also shaped by the Post-cotonou Agreement which was concluded last year between the EU and the ACP, but will be signed later this year. Lauded as an agreement that is predicated on an “equal partnership” concept, and one that furthers the UN Sustainable Development Goals (SDGS), climate change, and the blue economy, the PostCotonou Agreement might be more relevant to their immediate development needs than a strictly trade-oriented CEPA. To promote these goals it would be highly desirable if the region were to obtain a tangible project with the EU, such as the Comprehensive Strategy with Africa to promote partnerships in Green Transition and Energy Access; digital transformation, sustainable growth and jobs, peace security and governance, migration and mobility.
As for the Caribbean’s relationship with the UK, the rollover agreement concluded prior to Brexit has meant that the preferential access for our commodity products — sugar, bananas — to the UK market has been retained. I have long felt that the Caribbean should have used the opportunity of the roll-over negotiations to seek a more bespoke, dynamic relationship that reflects areas of actual interest between the UK and the Caribbean, such as tourism, green investments, and trade in professional services. While the agreement has a built-in review mechanism, it is unlikely that the opportunity will present itself again any time soon, given the UK’S current trade negotiating priorities.
4) Begin more strategic engagement with africa
If the region wanted to ‘experiment’ with one new trading partner I would recommend Africa. Besides the obvious historical and cultural connection, and the increased overtures for engagement at the political levels, the time has come for the region to pursue a more direct economic engagement with the continent.
Africa has the youngest population in the world and, prior to COVID-19, it had been experiencing steady growth. Africa is also in the process of forming a single market among its 54 separate countries through the creation of the AFCFTA that came into force on January 1, 2021. As a result, it has created a larger market for goods and services that Caribbean entrepreneurs and businesses can trade in. Moreover, given Africa’s attractiveness to all major countries — the UK, US and the EU are hotly pursuing trade and investment agreements with the continent — Caribbean businesses could leverage any relationship with African companies for increased opportunities in these developed country markets.
That said, it would be foolhardy to pursue an ambitious negotiating agenda with Africa without first promoting a greater understanding of each other. This can be facilitated by “softer” action on the institutional fronts. For instance, trade institutions and universities can continue to develop links to promote educational exchanges, as well as reach out to generate ideas and exchanges on best practices for regional integration. On the economic front, Caricom could also identify key sectors of potential interest in which to start discussions; for instance, agreements for movement of skilled labour, like nurses and doctors. Or, given Africa’s innovations in e-commerce and fintech services that promote micro payments for the poor and unbanked, financial regulatory cooperation agreements can be agreed to learn from each other and facilitate trade between our economies.
5) Be part of the answer to fix the rules of the wto
The WTO, despite its parlous state, remains the avenue of choice for Caribbean countries because it has the widest reach and most of our trade resources and skilled persons — outside of capitals — reside in trade embassies in Geneva.
There are several fronts on which the Caribbean can continue to lend its voice, both in terms of sharing experiences as well as in shaping the rules. One is by providing leadership on how developing countries’ needs can be best accommodated under the rules. As is evident from the dead Doha Development Agenda, the strategy for promoting development — and the advocacy around it — has failed to engage minds. Traditional accommodation of the needs of developing countries through special and differential treatment provisions has been challenged by both developed and developing countries, and new approaches that consider, for instance, the relative vulnerability of countries, or other objective criteria, have been proposed. That said, there remains a challenge to agree on the agenda and common approach towards promoting development at the WTO. The Caribbean must lead the thinking in this debate.
Linked to that is the engagement of the Caribbean in discussions about the SDGS. As a region that is highly indebted, and among those most heavily impacted by climate change and other forces of nature, we must be leading advocates for introducing new impetus into the WTO trade and the environment negotiations. There are two main structured negotiations taking place in the WTO now that aim to promote sustainable goals through trade. The Caribbean here should also prioritise these issues.
Similarly, the region can hardly afford to sit by without taking part in negotiations on the newer issues that have relevance to the region, like e-commerce, MSMES, and investment facilitation.
Finally, on the matter of dispute settlement, the region has an obvious interest in maintaining a dispute system that promotes the rule of law, is independent, and provides access for all its members. On issues such as the crisis at the WTO Appellate Body, and on its reform, the region should have more active participation. We certainly have some capacity given the fact that region has had people involved in WTO dispute settlement who have served as panellists, negotiators, secretariat personnel.
So, the region clearly has its work cut out for it.