Norman Girvan, ContributorRECENTLY, a public disagreement emerged between CARICOM and the USA over recent FTAA negotiations. The issues are both substantive and procedural. Ultimately they relate to the treatment of small economies in the FTAA, and how far these economies will succeed in co-ordinating their negotiating positions in the process.
The substantive issue is the level of the base tariff to be fixed as the reference point for tariff reductions under the FTAA. The US-led proposal would result in a steep cut in the tariff for many CARICOM countries. The fiscal impact would be especially severe on the OECS countries, which depend heavily on import duties for government revenue. Last week, there were fresh reports of the acute financial difficulties already being experienced by Dominica as a result of shrinking banana exports.
The procedural issue relates to the time allowed for countries to provide notification of their actual base tariff. The proposed deadline of October 15, 2002, is designed to complete the process by the time of the Quito Ministerial FTAA meeting, scheduled for later that month. CARICOM, which asked for more time to accommodate the capacity constraints of the smaller countries, was granted an extended deadline of December 14, 2002.
Underlying the problem are differing interpretations of what constitutes fair treatment of small economies in the FTAA process. The Buenos Aires Declaration adopted by FTAA trade ministers in April 2001 reaffirmed a commitment "to take into account, in designing the FTAA, the differences in the levels of development and size" of economies and to recognise such differences in the FTAA negotiations.
The commitment was further underlined in the Declaration of Quebec adopted at the Third Summit of the Americas later that month, whereby the 34 hemispheric leaders agreed that they 'attach great importance to the design of an Agreement that takes into account the differences in the size and levels of development of participating economies".
This is also a basic principle of the 25-member Association of Caribbean States (ACS). Similar declarations were made at the First ACS Summit held in 1995 and the Second held in 1999. The Third Summit, held in December 2001, went further. The political leaders endorsed a declaration on Special and Differential Treatment for Small Economies in the Context of the Free Trade Area of the Americas (FTAA); available on the ACS website at http://www.acs-aec.org/III_summit/English/small_economies_eng.htm.
This document gives more substantive content to the broad principle accepted by political leaders and trade ministers by listing nine specific principles and nine types of measures that should be applied for small economies. Among the recommendations are flexibility of implementation and in the application of norms, lower levels of requirements in certain disciplines and longer implementation periods. The need for flexibility is basic to the case of the small economies.
One objective of the ACS Summit Declaration was to work towards co-ordinating the FTAA negotiating positions of ACS countries on these issues. Moreover, the majority of the smaller economies in the hemisphere are from CARICOM and Central America and at the CARICOM-Central America Summit in Belize in February this year, the leaders of the two sub-regions also agreed to work towards the co-ordination of positions in international trade negotiations.
Now these commitments are being subjected to a practical test. The issues that have surfaced will constitute a crucial test of the solidarity of the countries of the Greater Caribbean in the FTAA negotiations.
Professor Norman Girvan is Secretary General of the Association of Caribbean States. The views expressed are not necessarily the official views of the ACS. Feedback can be sent to mail@acs-aec.org.
