Guyana and the wider world

I have already pointed out that the text of the Cariforum-EC; Partnership Agree-ment (EPA) is very long. The main text, which has to be read in conjunction with several annexes, protocols, schedules and other listings in order to be understood is about 150 pages. The accompanying material, however, takes up at least 850 pages. This makes for an overall length of more than 1000 pages.

In addition to its length the overall text is highly technical, embracing as it does complex legal, economic and trade terminology. These two characteristics of technicality and complexity work against efforts to make the EPA the subject of intelligent democratic public dialogue and discourse.

The sobering truth is that most lay persons would find it exceedingly difficult, if not impossible, to follow and understand the EPA in a meaningful way so as to assess its implications. Part of my effort, in these columns must therefore be aimed simply at trying to inform and educate the public about the content of the agreement while simultaneously exposing its deficiencies in light of what transpired at the Guyana consultation and its aftermath.

A case in point is the several readers who have asked me if the agreement goes into effect immediately on signing by the parties to the agreement. And, if this is so why do we keep referring to the liberalization of trade in goods and services as something yet to come after the signature.

Liberalization schedule: trade in goods
The lowering of tariffs and trade barriers on the imports of European Union goods and services into the region takes about 25 years to fully accomplish after signature by the parties to the EPA. In the agreement this is scheduled over 5 year intervals as follows.

First, there is an overall moratorium of three years before Cariforum countries are required to take any action on the removal of trade barriers on European Union imports.
Second, five years after coming into force the region must remove tariff barriers on 51 per cent of goods imported from the European Union.
Third, within ten (10) years tariff barriers on the import of goods must be reduced by 61.0%.

Fourth, within fifteen (15) years these tariff barriers on goods imported from the European Union must be reduced by 82.7%.
Fifth, within twenty (20) years tariff barriers on imports from the European Union must be reduced by 84.6%.

Finally, over twenty-five (25) years full tariff liberalization is obtained as 86.7% of tariff barriers to imports from the European Union must be removed. There are two points to note with this schedule. One is that most of the liberalization of trade in goods occurs within ten (10) to fifteen (15) years. The other is that at full liberalization in 25 years when 86.7% of trade in goods is liberalized we are expected to meet the WTO legal requirement for regional trade agreement between developed and developing economies. That requirement is that “substantially all trade” between the two parties is covered.

The remaining items not covered by this liberalization schedule (about 13 % of the region’s imports of goods from the European Union) are mainly sensitive products for which the region is not prepared to give up its tariffs.

In addition to the above all export duties are to be removed from products exported to the European Union within three (3) years. Duties and other charges also levied on exports to the European Union are all to be removed in ten (10) years.

On the part of the European Union its goods markets are immediately opened to the region’s exports on a tariff free/quota free basis. This situation, however, substantially existed under the Cotonou Agreement, which the EPA replaces in the area of trade arrangement.
In addition to all the above, readers sh-ould note that specific transitional arrangements are included for three agricultural products, namely, bananas, rice and sugar. These do not immediately get duty-free quotas free access to the European Union’s markets.

Trade in services
The European Union states that it will immediately free 94 % of its services sectors to Cariforum exports based on the W120 list of services sectors, enshrined in the General Agreement on Trade in Services (GATS). There are, however, several qualifications and restrictions which accompany this offer. In return and based on the same W120 list the region has agreed to liberalize 75% of its services sectors for the more developed countries (MDCs) and 65% for the lesser developed countries (LDCs) of Caricom.

Guyana’s liberalization schedule: trade in goods
Each country in Caricom has agreed to an individual tariff liberalization schedule with the European Union.
The schedule cited above is the average for all Caricom. In the case of Guyana the agreement is to liberalize 53% of European Union’s goods imports immediately, an additional one (1%) in five years, then a further seven (7%) within ten years. The bulk of the liberalization takes place between ten (10) and fifteen (15) years, as the removal of tariffs in that period jumps to 18 per cent making for an overall liberalization of seventy-nine (79) per cent in fifteen (15) years. In the next two stages 20 and 25 years this increases to eighty one (81) and eighty two (82) per cent respectively. This means that eighteen (18) per cent of imports of European Union goods are not slated for liberalization in Guyana.
Next week I will continue the discussion on the Guyana consultation and its aftermath from this point.