By Mr. Karl Falkenberg, EU Principal Negotiator of the CARIFORUM-EC EPA and Deputy Director-General for Trade, European Commission
The EPA is a far-reaching agreement which builds on extensive consultation and study carried out over four years of negotiations. As it is a broad agreement, this article looks at some of the questions and concerns raised over the EPA in more detail and sets out the potential benefits for Guyana from this agreement.
Has the market access for goods to the EU been improved?
Yes. Under the previous trade regime of the Cotonou Agreement there were a range of tariffs applicable on Guyanese agricultural exports and quotas limiting duty free rice and sugar exports. This trade regime expired on 31st December 2007, together with a waiver from WTO rules which safeguarded it from legal challenge. The EPA improves the situation by phasing out the quotas on rice and sugar and giving Guyana duty and quota free access for all its exports. The EPA also fully complies with WTO rules thus putting an end to years of legal challenges and uncertainty for traders and investors. Under the alternative market access arrangement – the EU’s “Generalised System of Preferences” – Guyanese exporters would pay higher tariffs than under the expired Cotonou regime and lose the preferences on rice, rum and sugar exports.
Do EU exports compete with Guyanese production?
No. In 2006, the EU represented 29% of Guyana‘s total exports but only 13% of its imports, behind Trinidad and the USA. The products that went to the EU are mainly sugar and rice but also rum, precious stones and wood products. On the contrary the products imported from the EU are mainly industrial products like construction machinery and goods vehicles that do not compete with local production.
Are there measures to protect local markets?
Yes. The EPA excludes many agricultural products from liberalisation (including sugar, rice, rum and beers, fresh vegetables and fruits, non alcoholic beverages and other products) and spreads liberalisation for other products over the next 25 years to give industry and the economy time to adapt. Recognising the special situation of a developing country like Guyana, the EPA provides flexibility to modify custom duties in the event of unforeseen impacts and clear safeguard provisions in case of sudden import surges.
Will Guyanese exports be blocked by technical or TBT” requirements?
No. On the contrary one of the objectives of the EPA is to help exporters meet European technical standards and understand Technical Barriers to Trade (TBT). These technical regulations and standards (which set out the characteristics of a product like size, safety or labelling requirements) are there to meet the demands of European consumers. They apply to all products in the EU whether imported or manufactured locally and so do not discriminate against imports – they are simply part of the market in Europe. The EPA enhances cooperation to share information and ensures rapid consultation to deal with any problems that arise.
This includes contact points for private companies, provision to share expertise as well as training and capacity development to meet EU regulatory and market requirements.
Can Guyanese exporters meet EU health or “SPS” standards?
Yes. Guyanese firms already export successfully and meet all these requirements for products like shrimps and wood so they know and meet the requirements. The main objective of these health requirements, called Sanitary and Phyto-Sanitary standards or “SPS“ measures, is consumer safety and stopping the spread of pests or diseases among animals and plants. Again, like “TBT” standards, they come from consumer pressure and apply equally to imports and local production in the EU and do not discriminate against imports. They cover issues like inspection of products, specific treatment requirements or maximum levels of pesticide residues. The EPA will help more Guyanese exporters meet these standards by provisions to share expertise, training and information for regulatory personnel and capacity development for the private sector.
Will the EPA help Guyanese companies find out about EU import requirements?
Yes. The EPA will build on current general provisions for developing countries with CARIFORUM specific dialogue and cooperation. Until then, an EU Export Helpdesk (http://exporthelp.europa.eu) provides basic information for all developing countries covering information like import requirements and taxes, custom duties, custom documents. It also has links to Trade and other Professional Associations in the EU and a “Market Place“ for exporters to establish contact with EU importers.
Are there new opportunities created by the EPA for Guyanese service sector?
Yes. The EU has made unprecedented concessions in the service sector. EU services commitments open the EU market to service suppliers and investors to supply cross-border services like international phone calls, banking or architectural services. They also allow the commercial presence of Guyanese firms in Europe, including commitments for people to travel temporarily for business purposes across most sectors, including short term business visits, salespeople, investors, and graduate trainees. The EU has made commitments for contractual service suppliers and some independent professionals to work in the EU in a large number of sectors, including tourist guides, entertainers, artists and chefs de cuisine. Guyana’s services companies will be able to transfer management trainees to their affiliated companies in the EU for up to one year of work experience.
Guyanese companies with a contract to provide services in 29 sectors like nursing, computer services and engineering will be able to send some employees to the EU to provide these services for up to six months at a time. Similar provisions apply to skilled self-employed service suppliers in 11 sectors like legal advisory services, computer services and management consulting who will also be able to enter the EU for up to six months at a time. According to a 2007 USAID report prepared for the Ministry of Foreign Trade, “at nearly 50% of GDP and half of all new jobs created, the importance of services trade to the Guyanese economy as an engine of economic growth has enormous potential”. The report notes that Guyana is already actively engaged in international services trade, in the areas like transport, communications, construction, higher education and nursing. Guyana is actively promoting expansion in other areas, such as Business Services and Information Communications Technology. It is therefore clear that new business opportunities in Europe will be of interest to Guyana. In addition it is important to stress that there is nothing in the Agreement that will lead Guyana to privatise or deregulate services or that will affect the provision of public services.
Will families and households benefit?
Yes. The EPA should translate to real benefits such as wider choice at better value in the shops, cheaper business services and more competitive industries, thanks to the reduced costs of importing and exporting. These advantages are important in small economies like Guyana where many of the goods consumed in the economy are traded.
Does the EPA govern the Regional Integration agenda of the Region?
No. The EPA text make absolutely clear that the “pace and the content of regional integration is a matter to be determined exclusively by the CARIFORUM States in the exercise of their sovereignty and given their current and future political ambition”. In all areas, the EPA builds on the CARICOM Single Market and Economy (CSME) agenda and does not go further than what the region had planned or is planning for itself. Examples include competition policy where a CARIFORUM recent study concludes that countries participating in the CSME will meet their obligations under the EPA anyway by complying with their obligations under the Revised Treaty. Neither is the EPA imposing additional burdens or commitments than those the Region has set for itself under its regional integration process. For example, in terms of government procurement, commitments are limited to transparency and there is no commitment for governments to open their market to EU firms.
Is the EPA a tool for Development?
Yes. The basic objective of the agreement is sustainable development. The EPA is a comprehensive and regional trade agreement that covers a wide range of trade related issues to help CARIFORUM regional integration and create strong regional markets, ensure CARIFORUM countries fully benefit from EU market access and to enable their economies to become competitive and integrated in to the world trading economy. In contrast, the previous 30 years of trade regimes were effectively limited to setting tariff rates for goods trade and never managed to promote the economic growth and diversification needed to fuel development. In addition, the EPA has extensive development cooperation provisions linked to each area covered by the Agreement such as trade in services, e-commerce, competitiveness and innovation, cultural industries, information and communication technologies. The EU is already mobilising financial support for this cooperation which will be a main focus of the €165 million European Development Fund regional programme for the Caribbean. However, the EPA cannot guarantee sustainable development of the CARIFORUM region, but certainly offers important opportunities for new business ventures, employment creation and economic growth.
Will the EU support the private sector in increasing its competitiveness?
Yes. There is already a wide range of private sector and trade related assistance programmes funded by the EU and others will follow linked to the EPA. Examples include:
– A €70 million programme to assist the Caribbean Rum industry with developing branded products and marketing campaigns until 2010;
– €13 million for the Guyanese Rice Industry to increase productivity and EU exports;
– Following the EC sugar reform, a US$140 million (€91 million) sugar support programme for Guyana was approved for 2006-2010. From this, US$ 28 Mio (€19 million) has been disbursed so far.
– The Linden Economic Advancement Programme (LEAP), which started in 2001 and has a budget of €12.5 million. LEAP is currently supporting a demonstration farm to promote good agricultural practices in Region 10 to help farmers build up the experience locally in order to sell overseas;
– The Centre for Development of Enterprises which has already supported Guyanese industry, in the wood sector in particular;
– The ProInvest project which among other activities, helps organisations like Investment Promotion Agencies and Chambers of Commerce to develop or extend their range of business development services;
– A €6.8 million grant to the Caribbean Export Development Agency based in Barbados to increase the international competitiveness of the private sector in CARIFORUM including direct assistance to companies to develop new products or carve out a niche in regional and international markets;
– The “Trade.com“ Programme, which should fund a national campaign on the EPA run by the Ministry of Foreign Trade as well as a project to identify products within Guyana’s non-traditional agricultural sector with export potential and specific “sector action programmes” that will help niche product development.
A comprehensive Economic Partnership Agreement with the EU has much to offer to the Guyanese citizens and the Guyanese private sector, while providing all necessary safeguards and flexibility. It is my hope that this article will help clarify some of the questions and remove some of the misunderstandings that have characterised debate on the EPA so far.
