Recent signings by the European Union of trade and economic agreements with countries in the Hemisphere, including the states of Central America in our Caribbean Basin, indicate the EU’s continuing determination to extend their formal frameworks of economic relations beyond the recently independent states of Africa, the Caribbean and the Pacific. And in a sense, this has been a follow-up to two types of situations in the Hemisphere affecting the European Union as it has sought to reorganize its post-colonial, post-WTO Treaty global economic relations. For, first, with the studied determination of the United States, from the mid-1980’s-1990’s, to back South and Central American states’ opposition to preferential trading relations between the EU and the ACP states, particularly in respect of the EU’s preferential banana regime, it became apparent to the EU that that game was up. And secondly, that opinion would have been consolidated by the refusal of the WTO to accept any qualifications to its free trade mandate, as expressed in its response to the various banana cases subsequently brought before the organisation by those same countries.
The second situation was President Bill Clinton’s follow-up to his predecessor’s announcement of an Enterprise of the Americas initiative through his proclamation of the Free Trade Area of the Americas initiative. This indicated the United States’ determination to modernize its economic relations with hemispheric countries, following its inclusion of Mexico in the North America Free Trade Agreement (NAFTA). And since then, with some difficulty the EU has sought to establish free trade agreements in the area, particularly (though still unsuccessfully) with Mexico. The follow-up step for the EU was to accept that in the new globalization era, free trade arrangements would be the order of the day, and the European Commission has doggedly pursued this course.
During these last two months, the EU has signalled that its efforts have been culminating in some success. As suggested, in one area that must be of significance for us, the EU initialled, on the 22nd March, an Association Agreement with the Central American states, our sometime partners in the American-initiated Caribbean Basin Initiative. The agreement was described by Karel De Gucht, the EU Commissioner for Trade, as another in the EU’s “region to region” agreements, and “an ambitious and comprehensive agreement which will boost trade and investment between us…and help Central America progress in its regional integration”. This is, recognizably, a sentiment and description of an intended process not dissimilar to what the EU perceives to be the objectives of the EU-Cariforum Economic Partnership Agreement.
It would appear that the agreement has been arrived at, however, without the degree of acrimony that characterized our own negotiations with the EU. Both sides seem to have been anxious to enter into some form of agreement, the Central Americans, no doubt, wishing to diversify a trade pattern that is really dominated by the United States. Interestingly however, the fact of the matter is that the data shows that the dominant EU imports from Central America are not agricultural (which were 34.8% of the trade last year), but industrial products, led by office and telecommunication equipment which constituted 53.9% of trade. Obviously, the Central Americans’ desire is not simply consolidation of old, but extension of new spheres of trade; and in that respect we ourselves should not forget that the isthmus is also active in the sphere of tourism, which many Caricom states now claim to be a significant economic activity in our relations with the EU. And of course from our perspective also, it is important to note that the Central American governments, along with our Cariforum partner the Dominican Republic, have already signed up to the US-CAFTA-DR Free Trade Agreement not without difficulty, including governments being required to get the specific approval of their electorates. The Central Americans seem to follow the old dictum that “time and tide wait for no man” – the Costa Rica government, in particular, having had to fight a ferocious referendum battle for approval of that agreement.
Last week too, the EU initialled Trade Agreements with both Colombia and Peru just a short time, as we indicated in a previous editorial, after the United States government eventually got the approval of its Congress to sign a Trade Promotion Agreement with Colombia. Commissioner de Gucht described these agreements as “a milestone in our trade relations with the Andean region” that “creates a foothold for European business in the area and an anchor for structural reforms in the countries concerned”. And that emphasis on structural reforms is, as reported in descriptions of the Agreement, also accompanied by an emphasis on observance of labour rights and environmental protection. So these agreements are, as often suggested by critics in our own Region, far reaching; and we might venture to say that they are not only a reflection of post-structural adjustment concerns of the international financial institutions, but are no doubt influenced by the approach to structural reforms being required of states of the former Eastern Europe now members of the EU.
The EU will be well aware, as they have conducted their negotiations, that substantial efforts are underway to consolidate trade agreements in the Latin American arena which are meaningful and not simply formal, as has often been the case there. With the decision, intended to be agreed next month, of a virtual merger of the stock markets of Chile, Colombia and Peru, the not normally naïve British journal, the Economist, has described it as ”the most tangible sign of a growing closeness between three fast-growing, medium-sized South American countries with Pacific coastlines that now aspire to form a common market” .
All these agreements are signs of substantial thinking in the Hemisphere about its future geo-economic pattern; and on the part of the Latin Americans leaderships, thinking about how their section of the Hemisphere will be positioned in that pattern. They imply thinking, as well, about how the continent will be positioned not only in relation to the EU-NAFTA western complex, but about the scale of economic operations that will be required relative to the fast-growing Asia-Pacific complex of countries.
The lesson for us in this period, from all these developments in our hemispheric neighbourhood, is that the various hesitations characterizing our relations with larger entities are unlikely to be accepted as particularly relevant to their various preoccupations. And that particularly in relation to the Hemisphere, where we will be fixed as we slowly pursue our FTA negotiations with both the US and Canada will largely be determined by what has been agreed with the bigger others around us.
