Seek WTO waiver for trade with post-Brexit UK, CARICOM told
The Caribbean Community (CARICOM) is being urged to consider getting a waiver from relevant obligations under the World Trade Organization (WTO) to avert the loss of preferential access to the United Kingdom (UK) following that nation's vote to leave the European Union (EU).
But a technical note submitted to the leaders of CARICOM, whose conference in Guyana ended yesterday, said, "Such discussions with the UK, along the lines suggested above, should be instituted as soon as practicable but need not immediately follow the 'leave' vote."
CARIFORUM - CARICOM and the Dominican Republic - currently has an economic partnership agreement (EPA) with the EU, which was negotiated in 2008.
Under the agreement, the EU allows CARIFORUM duty-free and quota-free access to its market in all goods and services, with CARIFORUM agreeing to open 80 per cent of its market to the Europeans.
Noting that "Brexit is a matter of grave concern for CARICOM", the note to the regional leaders explained that a UK outside of the EU would mean that that nation is no longer governed by the terms of the EPA.
It added that "until and unless a new preferential trade arrangement is put in place between the UK and the CARIFORUM states, the trading relationship likely would have to be governed by multilateral rules".
Negotiating free trade agreements
However, CARICOM nations are being told that the next step would involve the negotiation of free trade agreements (FTAs), which it describes as "the most secure" legal mechanism under trade rules to get preferential access.
But until that is done, the region is being encouraged to seek waivers from the WTO, the global body that enforces trade rules and settles disputes, to continue benefiting from the preferential terms of trade granted under the EPA.
"A waiver from the relevant WTO obligations would be required for the CARICOM states to enjoy the preferential access to the UK market with respect to goods, services, investment, and temporary entry of business persons that they are accorded presently under the EPA," said the technical note, which is not an official CARICOM position.
It continued: "The CARICOM states and the UK could seek a waiver for the continuation of the reciprocal preferences accorded under the EPA as a transitional arrangement pending the conclusion and application of an FTA."
Recognising that the CARICOM's position could be strengthened with an even wider lobby, the note is also proposing that "CARICOM States should consider engagement within the Africa Caribbean and Pacific (ACP) on the possibility of the ACP countries, which have concluded regional EPAs collectively seeking a waiver with the UK".
The WTO says a waiver is "a permission granted by WTO members allowing a WTO member not to comply with normal commitments".
"Waivers have time limits and extensions have to be justified," it explained.
Consider all options
Dr Warren Smith, president of the Caribbean Development Bank (CDB), told The Gleaner that he had not seen the report, but noted that all options had to be considered.
"I think that everything that is in our interest needs to be on the table. We have responsibility, as a region, for the protection of our own economies, to insulate them as much as is
possible given that we're very open economies. That is the responsibility of all leaders, myself included," he said.
For the United Kingdom to formally leave the EU, it must first invoke Article 50 of the Lisbon Treaty, which gives the EU its constitutional authority.
Having invoked the article, which it is yet to do following the June 23 vote, the process itself could take up to two years.
That is why CARICOM is being advised that while the issue is serious and demands attention, it does not need to do so in a hurry as until the process ends, the UK is bound by its EU treaty and WTO obligations to guarantee preferential access under the EPA.
CARICOM exports to the UK up to 2014 were valued at US$495.9 million. They were US$839.3 million back in 2008.
Meanwhile, exports for 2014 to the remaining 27 countries of the EU amounted to US$2.3 billion, compared to 2008 figures of US$3.9 billion.
However, according to the report, "while there has been a general pattern of decline in CARICOM's exports to the UK, that market remains a valuable one for CARICOM".