IT’S BEEN IN FORCE FOR A DECADE, BUT ARE CARIBBEAN BUSI­NESSES MAK­ING THE MOST OF THE ECO­NOMIC PART­NER­SHIP AGREE­MENT?

The Star (St. Lucia) - Business Week - - FRONT PAGE - BY CATHER­INE MOR­RIS, STAR BUSINESSWEEK COR­RE­SPON­DENT

This year marks a decade since CARIFORUM joined with the Eu­ro­pean Union to sign the Eco­nomic Part­ner­ship Agree­ment (EPA), a land­mark piece of leg­is­la­tion that ush­ered in a new era of trade re­la­tions. The over­ar­ch­ing goal of the EPA was to cre­ate a part­ner­ship that would not only im­prove mar­ket ac­cess, but also en­cour­age sus­tain­able de­vel­op­ment and pro­mote greater re­gional and in­ter­na­tional in­te­gra­tion. It was an im­por­tant step into the world econ­omy for CARIFORUM States, but many feel that busi­nesses are still not fully ex­ploit­ing the leg­is­la­tion and miss­ing out on all the Eu­ro­pean mar­ket has to of­fer.

CHANG­ING THE TRADE DY­NAMIC

When the EPA came into force in 2008, the global mar­ket­place was a very dif­fer­ent en­vi­ron­ment. Trade re­la­tions be­tween the Caribbean and Europe were gov­erned by the Cotonou Agree­ment which granted duty-free, non-re­cip­ro­cal pref­er­en­tial ac­cess to the Eu­ro­pean mar­ket. This drew the ire of the World Trade Or­gan­i­sa­tion (WTO), how­ever, which voiced op­po­si­tion to this kind of dis­crim­i­na­tory trad­ing. If cer­tain Caribbean na­tions were given favourable terms to trade with Europe then all mem­bers should re­ceive those same al­lowances, ac­cord­ing to the WTO.

It was ob­vi­ous that a new trade dy­namic was needed so dis­cus­sions be­gan to de­cide on a way for­ward that would sat­isfy all eco­nomic and po­lit­i­cal in­ter­ests. Ne­go­ti­a­tions con­cluded in De­cem­ber 2017, and the WTO-com­pat­i­ble EPA was of­fi­cially signed into law the fol­low­ing year. More lib­eral than the trade pro­vi­sions of Cotonou Agree­ment, the EPA is a re­cip­ro­cal agree­ment that keeps the level of dis­crim­i­na­tion at a min­i­mum to sat­isfy WTO re­quire­ments. It also has a broad re­mit - al­though its core is trade in goods, the EPA also cov­ers ser­vices, in­vest­ment, trade-re­lated is­sues and de­vel­op­ment.

MAR­KET RE­SEARCH

By widen­ing the scope of the EPA, law­mak­ers aimed to help the par­tic­i­pat­ing Caribbean na­tions di­ver­sify their economies and pur­sue sus­tain­able growth but, a decade later, many are ques­tion­ing whether it has had the de­sired ef­fect.

“The main aim of the EPA was to se­cure pref­er­en­tial mar­ket ac­cess treat­ment for prod­ucts and ser­vices from CARIFORUM states. It has not gen­er­ally achieved its ob­jec­tive due to the lim­ited pro­duc­tion ca­pac­ity of the Caribbean coun­tries who signed the agree­ment and the global fi­nan­cial and eco­nomic cri­sis that fol­lowed its sig­na­ture,” says Vir­ginia Paul, Head of the Or­gan­i­sa­tion of East­ern Caribbean States (OECS)’s Trade Pol­icy Unit.

While global in­sta­bil­ity and po­lit­i­cal change is un­avoid­able, build­ing ca­pac­ity in the re­gion is achiev­able - and must be a top pri­or­ity if Caribbean busi­nesses want to ex­pand and grow. Up­take of EPA op­por­tu­ni­ties among smaller busi­nesses how­ever is not where it should be, ac­cord­ing to economists from both Caribbean Ex­port and the OECS (both of which reg­u­larly host work­shops to raise aware­ness of how firms can use the EPA). SMEs are of­ten dis­suaded by the thought of ship­ping prod­ucts to a farflung con­ti­nent which en­com­passes around 28 coun­tries, each with their own lan­guage, cul­ture and reg­u­la­tions.

“It is not as in­tim­i­dat­ing as you think,” Caribbean Ex­port con­sul­tant Dr Noel Wat­son told par­tic­i­pants at a work­shop held last year in Trinidad and Tobago. “You just need to have the proper guid­ance.”

Mar­ket re­search is key, ac­cord­ing to Dr. Wat­son who ad­vises com­pa­nies to spend time find­ing buy­ers, mak­ing strate­gic al­liances with re­gional part­ners and get­ting to know the coun­try they’re tar­get­ing - what are its trans­porta­tion routes like? Is there a rep­re­sen­ta­tive on the ground to ad­vise on cus­toms du­ties and other reg­u­la­tions? Do prod­ucts meet Eu­ro­pean stan­dards?

Paul high­lights the im­por­tance of mar­ket­ing and wants to see busi­nesses in­vest in get­ting the word out about their

prod­ucts. She says: “Caribbean SMEs can turn mar­ket ac­cess into mar­ket pres­ence by un­der­tak­ing pro­mo­tional ac­tiv­i­ties and meet­ing the re­quired stan­dards, reg­is­tra­tions, and other reg­u­la­tions. This usu­ally re­quires an in­vest­ment of time and money.”

Con­sid­er­ing the con­sumers is also cru­cial. Buy­ers in Europe are not nec­es­sar­ily look­ing for a bar­gain but pri­ori­tise qual­ity over price, says Dr. Wat­son. De­mand for nat­u­ral, hand­made and en­vi­ron­men­tally-friendly prod­ucts is grow­ing - giv­ing the Caribbean a prime op­por­tu­nity in terms of agri­cul­tural goods and crafts. “They want flavours and in­gre­di­ents that we have in our cui­sine,” says Dr. Wat­son. “The Caribbean is ex­otic.”

GET­TING READY TO COM­PETE

The Caribbean may be a dis­parate group of na­tions, but there’s strength in num­bers. Dr. Wat­son urges firms to come to­gether to tar­get Europe ef­fec­tively, say­ing: “One of our prob­lems in this re­gion is that we’re small, but if small busi­nesses got to­gether they would be able to do a lot more.”

Com­pa­nies can re­duce costs by shar­ing pack­ing cen­tres and con­tain­ers. They can also pool to­gether to get dis­counts and deals. These economies of scale and scope can give smaller firms the help they need to com­pete.

Busi­nesses can also take ad­van­tage of sup­port from re­gional or­gan­i­sa­tions. Both the OECS and Caribbean Ex­port reg­u­larly host work­shops, pre­sen­ta­tions and round­table meet­ings on the EPA and how it can be ap­plied. Paul says there is al­ways more to be done and wants to see in­creased ac­tiv­ity at the do­mes­tic level. “The sup­port re­quired to ex­ploit the EPA is typ­i­cally tech­ni­cal in or­der to un­der­stand and meet the reg­u­la­tory re­quire­ments,” she says. “There is still need for aware­ness build­ing on the EPA, par­tic­u­larly by na­tional gov­ern­ments. Re­gional agen­cies can­not do it all.”

As the EPA looks ahead to an­other decade, there is a lot of un­cer­tainty on the hori­zon. The EU is set to lose a ma­jor trad­ing part­ner soon as the UK moves ahead with BREXIT - a shift that will un­doubt­edly have far-reach­ing im­pli­ca­tions for the en­tire trad­ing bloc. In the mean­time, firms are ad­vised to make full use of the tools avail­able to them. These in­clude the EU’s free on­line ex­port helpdesk which gives in­for­ma­tion on EU im­port re­quire­ments, tar­iffs and trade pref­er­en­tial agree­ments.

The OECS con­tin­ues to spread the word, through ac­tiv­i­ties un­der­taken by its Com­pet­i­tive Busi­ness Unit, and looks for­ward to greater par­tic­i­pa­tion by all stake­hold­ers in the fu­ture. “The next ten years will be a time for a re­view of the im­pact and value of the EPA,” says Paul. “Ef­forts will con­tinue to pen­e­trate the Eu­ro­pean mar­ket.”

Head of the OECS Trade Pol­icy Unit, Vir­ginia Paul, de­liv­ers re­marks at the CARIFORUM EU Eco­nomic Part­ner­ship Agree­ment work­shop

Par­tic­i­pants take part in the Caribbean Ex­port Pro­mo­tion Agency hosted work­shop de­signed to show­case mar­ket op­por­tu­ni­ties cre­ated through the EPA.

Hon­or­able Bradley Felix, Saint Lu­cia’s Min­is­ter for Com­merce dis­cuss mar­ket ac­cess and value chains re­lated to the EPA.

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