Economic Partnership Agreement (EPA) is a free trade agreement between the Caribbean Forum (CARIFORUM – CARICOM member states and the Dominican Republic) and the European Union (EU). It replaces the trade agreement between the EU and African Caribbean Pacific (ACP) countries called Cotonou Partnership Agreement which expire the end of 2007.
Members (27) of the EU include Austria, Belgium , Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latavia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and United Kingdom.
CARIFORUM members (15) that are a part of the EPA include Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, the Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Lucia, Saint Vincent and the Grenadines, Saint Kitts and Nevis, Suriname, and Trinidad and Tobago. Haiti signed the agreement in December 2009, but is not yet applying it pending ratification.
Trading between the EU and the Caribbean started many years ago. Over the years the Caribbean countries have enjoyed preferential treatments given the historical and cultural links between themselves and the EU. Main exports from the Caribbean to EU include fertilisers, banana, sugar, rum, fuel and mining products and minerals. While the imports into the Caribbean from EU include milk and cream, phone equipment, construction vehicles and engine parts, boats and ships. Over the years EU imports have decreased and CARIFORUM members have not seen the needed boost in economy and stimulated growth as was expected from the preferential access that existed in the past.
The EPA is similar to previous agreements between Caribbean and EU countries but has included other areas. The EPA covers trade in goods and services, investment, trade related issues like innovation and intellectual property as well as links to development cooperation. The EPA aims to promote sustainable development and poverty reduction by helping to integrate the developing countries. The EPA makes it possible for CARIFORUM companies to set up a commercial presence in the EU. The agreement also comes with substantial aid from the EU for CARIFORUM countries.
Advantages of EPA for CARIFORUM members (list is not exhaustive)
- 100% duty and quota free access to the EU market for CARIFORUM goods and services
- Increased job creation (local and abroad)
- Diversification of exports and increased value added
- Increased opportunities for joint ventures and co-production with EU firms
- Increased foreign direct investment and associated technology transfers
- Technical expertise to support greater integration within the region
- Enhanced competitiveness with the adoption of higher standards
- Access to cheaper, better quality or more innovative inputs to enhance movement along the value chain
- Integration of the region into the global trading system
Disadvantages of EPA for CARIFORUM members
- Removal of preferential treatments.
- EU goods and services may be of higher quality and lesser price and pose greater competition for CARIFORUM goods and services.
- Potential displacing of local businesses by EU firms.
Protection for CARIFORUM Markets
With the EPA both markets are expected to open up to allow free trading. Prior to EPA, the EU markets have always been fully accessible by CARIFORUM members. However, with EPA CARIFORUM member markets are being opened up gradually to the EU. They are given 15 to 25 years to open up to EU imports while providing protection for sensitive imports. The timeline is expected to give CARIFORUM members enough time to develop and become competitive in sensitive sectors. However, goods that are already zero-rated or attract low tariffs are immediately being traded freely. With the EPA, CARIFORUM members have the right to take measures to safeguard their national industries against dumping and subsidies.
What is expected of CARIFORUM members in order to reap benefits of EPA?
- Developing of service industry and less reliance on export of traditional products
- Competitiveness in the diversification of their products
- Creation of more higher skilled jobs
- Adopting best practices
- Moving up the value chain
- Financial Assistance from EU
As part of the EPA, the EU has pledged its support to enabling the CARIFORUM members to be better positioned to reap the benefits of the EPA. Financial assistance includes:
- Budgetary support under the European Development Fund (EDF)
- A Regional Development Fund via the Caribbean Export Development Agency
- The EU’s Aid for Trade Strategy (an annual amount of one billion Euro in trade-related assistance)
With the EPA, the EU welcomes increased exports and commercial presence from the CARIFORUM members. The necessary teams are in place to support the mission of the EPA such as Caribbean Export Development Agency, Caribbean Development Bank, Inter-American Institute of Co-operation on Agriculture, Centre for the Development of Enterprise and the EU Export Helpdesk. As such, it is in the best interest of CARIFORUM members to ensure that they capitalize on the many
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