Caricom must ‘stand firm’ in negotiations with Canada

– regional private sector

The Caribbean Association of Industry and Commerce (CAIC) says Caribbean Community trade negotiators must “stand firm and leverage the good relationship that Canada has had with the Caribbean to secure a fairer free trade agreement.”

In a press statement, the CAIC said with the possible concluding rounds for a Canada-Caribbean trade agreement taking place in Barbados this week, it was cautioning against accepting a “watered down agreement” which would not be beneficial to either party and worse yet, the Caribbean private sector.

Based on consultation with its Caribbean Private Sector stakeholders, CAIC identified six areas of concern with the ongoing negotiations including the impact that the status of these negotiations would have on the Caricom private sector in the event that the trend of these negotiations continue and the impending withdrawal of the CARIBCAN without the enactment of the Caricom-Canada FTA; and the severe impact on Caribbean export items such as rum, tapia, ground provisions, fruits, vegetables and other food products.

It is also concerned about areas that Canada is interested in receiving greater market access to based on its demonstrable export capacity such as, dairy industry, poultry, non-alcoholic beverages, sausages and apparel; the removal of sensitive items of interest to Canada on the basis of reciprocation; insufficient and therefore ineffective mechanisms to facilitate Caricom suppliers of Trade in Services and a desire to re-engage the Canadian Private Sector that allows integration at the provincial level.

According to the CAIC, in January 2001 discussions towards the negotiation of a possible Caricom-Canada Trade Agreement was announced. Since then, negotiations started in November 2009 and are due to be concluded in June 2014.

The Trade Agreement would replace the current non-reciprocal CARIBCAN, the WTO waiver which allows Canada to grant non-reciprocal preferences due to expire on December 31, 2014 and the 1998 Caricom-Canada Protocol on Rum.

The Trade Agreement includes market access for goods, cross border trade in services, investment, temporary entry, labour, rules of origin, information and communications technologies, customs procedures, competition, monopolies and state enterprises.

 

Caricom-Canada
relationship

 

Caricom’s export of goods to Canada, while small, is the third largest market of export goods for the region in which Caricom enjoys a trade surplus (based on the preferential arrangement), CAIC said. Canadians account for a major percentage of tourists to the region, and Canada is also home to a significant number of Caricom’s diaspora.

 

Canadian economy

 

Canada’s economy is two-speed (energy and manufacturing) with high energy prices and oil and sand investments in Western Canada resulting in a strong economy and improvement in government finances, the CAIC added.

Since the recession, Canada’s export trade has collapsed with its largest provinces of Ontario and Quebec suffering the brunt as non-energy exports and the decline in the Canadian dollar slows their economic recovery and ability to eliminate their deficits.

Canada offerings vs Caricom offerings

Taking these into consideration the ongoing negotiations between Caricom and Canada are heavily vested on Canada’s side with increasing their non-energy exports to the Carib-bean in particular meat, fish, vegetables and processed foods. While increasing the variety available to the region and competitiveness, these goods can have devastating effects for the territories whose livelihood will be affected by importing these commodities, CAIC argued.

For example, the Caribbean may soon see the importation of canned salt fish to replace the “buljol” prepared locally. The success of sardines from the Canadian market is only too well known. Competition between the two sides could seek to create opportunities for Caribbean firms to establish a presence in Canada to produce and export the salt fish/buljol to the world.

As identified by CAIC, the trade in services discussion has been insufficient to allow for meaningful mechanisms to be put in place.

The European Econo-mic Partnership Agree-ment with the region has set a standard for services agreements for Caricom but the CAIC has noted that several of the elements which were to be of benefit in services trade have not materialised, so anything worse than that would be of little relevance.

Further, the effect of Canada’s approach to immigration and labour migration is well known to those who do business with Canada. There is still no provision made for Caricom entrepreneurs seeking to enter the market and play their “trade in service” under “modes 3 and 4” as opposed to seeking employment.

During the negotiations, Canada indicated its disappointment with Caricom’s proposals to liberalise given that negotiations with the European Union resulted in 90% liberalisation.

Canada seeks to obtain additional preferences from Caricom for its non-export goods, which are in competition with goods produced and sold locally.

 

Technical Co-operation for Trade
and Capacity Development

 

CAIC said it is clear that Canada is the stronger partner in these negotiations and therefore it is not unrealistic to expect or need to have them play a more direct and secure role in trade related technical cooperation.

However, they have demonstrated their reluctance not only by the tone of the negotiations but there are articles which go against the legally binding nature of the initial mandate of this agreement.

Caricom is being asked to compete with more competitive Canadian goods, paying triple their electricity costs, with a poor business environment, and no assured assistance to improve matchmaking, and financing trade. Furthermore distinctions that are made about MSMEs without acceptable definition should be withdrawn since MSMEs set in the Caricom context would be different for Canada because of the business environment within which each sits.

It is on these grounds that CAIC is calling for negotiations to be extended beyond the June 30, 2014 deadline without the attendant repercussions of reverting to uncompetitive rules and appeals for a reengagement with the Canadian Private Sector to allow for a smooth and successful implementation of the proposed Caricom-Canada Trade Agreement.

 



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