Editorial | Seek more than EPA Light
Some of the uncertainties surrounding trade relations between the Caribbean and post-Brexit Britain have been eased, but Jamaica and her regional partners must not be lured into complacency by which the United Kingdom's (UK) assurance that it will be business as usual when it exits Europe.
Indeed, we remind Kamina Johnson Smith, Jamaica's foreign affairs and foreign trade minister, of the saying about the possibility of slips between cup and lip, as well as of the even greater uncertainty that still hangs over trade/economic deals with which the UK will leave the EU.
In other words, Jamaica, as the Caribbean Community's lead on global trading negotiations, has to remain vigilant against the unexpected. In any event, Ms Johnson Smith should view the UK's proposal to maintain the Economic Partnership Agreement (EPA), as at best, an interim arrangement while a long-term deal is fashioned.
The EPA is a free-trade agreement signed in 2008 between the 28 members of the EU and the 15-member CARIFORUM, comprising of CARICOM's independent members, plus the Dominican Republic. The fear, until last week, was that when Britain exits the EU sometime after 2019, it would have no structured trading mechanism with CARIFORUM, causing a disorderly return to a tariff-based system, governed by WTO rules. However, at a meeting in Brussels, Greg Hand, the UK's junior minister with responsibility for trade policy, told CARIFORUM that post-Brexit Britain intends to have things remain as they now are.
Said a joint statement: "The two sides agreed to progress discussions to explore ways to ensure that the existing trade arrangement between the UK and CARIFORUM states, currently governed by the CARIFORUM-EU EPA, will not be disrupted by the UK's departure from the EU. This will be a technical exercise to ensure continuity in their preferential trading relationship, rather than an opportunity to renegotiate existing terms."
In 2016, that trade was valued at £2.1 billion (€2.35 billion), or 22 per cent of EU/CARIFORUM bilateral deals. Its disruption would be of concern, especially to the Caribbean.
But while Jamaica and others in the region have cause to welcome Mr Hand's undertaking, they should be wary about locking themselves into any deal that merely slavishly mimics the trade aspects of the EPA, without more, including strengthening weaknesses in the current pact, and incorporating some of the unique features related thereto.
The EPA, and similar pacts in other regions, is an outgrowth of, and was in some respects, a corollary to the Cotonou agreement between the EU and the African, Caribbean and Pacific (ACP) group of countries. Cotonou is undergirded with significant amounts of development assistance.
The EU, we expect, will seek to lessen such aid commitments when the current Cotonou pact expires, especially with the absence of new UK contributions to the fund. What, however, is not clear from Mr Hand's proposal is whether there will be a one-to-one transfer of what would have been Britain's expected obligations to a Cotonou-style scheme to its EPA Light. Further, the values of CARIFORUM exports to the EU, including the UK, have tumbled 40 per cent since 2008, against a 10 per cent decline in bilateral trade. Over the same period, Europe's exports to the Caribbean grew 22 per cent, having slowed and meandered during the period of the Great Recession.
The Caribbean is yet to recover from that recession. That, however, isn't the sole cause of the region's poor trade performance as a five-year review of the EPA indicated. Regional economies and their firms face structural impediments, which weaken export competiveness. Mechanisms in the EPA and the Cotonou financing schemes were aimed to address these a factor that should be part of EPA Light.
Yesterday's editorial said public sector workers were now coming off a three-year wage freeze. That freeze, in fact, ended in 2015, when government employees were awarded hikes of seven per cent over two years, plus increases in allowances.