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  • As small, vulnerable economies, Caribbean countries have been severely impacted by the crisisShort-term impacts compound the impact of longer-term trends associated with globalisation and climate changeThe situation of Caribbean economies probably has much in common with that of Small Island Developing States and Small Vulnerable Economies and as a whole
  • ECF Extended Credit FacilitySBA Stand-By Arrangement; RCF Rapid Credit FacilitySource: author, based on IMF Press Releases
  • CARICOM Regional Trade Information System TradSys Online captured 23/01/13

Girvan south centre presentation 1 feb2013 Girvan south centre presentation 1 feb2013 Presentation Transcript

  • THE CARIBBEAN, THE CRISIS AND THE ECONOMIC ‘PARTNERSHIP’ AGREEMENT Norman Girvan Presentation at South Centre Seminar January 31-February 1 2013
  • Impact of the global crisis• As small, vulnerable economies, Caribbean countries have been more severely impacted by the crisis than developing countries as a whole and LAC as a whole• The short-term impacts of the crisis come on top of the impact of negative long-term trends resulting from globalisation (preference erosion) and climate change (floods, hurricanes, and coastal degradation)• The situation of Caribbean economies probably has much in common with the group of Small Island Developing States and Small Vulnerable Economies in other regions
  • 10 IMPACT OF THE CRISIS 8 Annual variation in GDP Developing economies 6 4 2 Latin America & Caribbean 0 Caribbean 2008 2009 2010 2011 2012 2013-2-4-6
  • DEBT % GDP 90 80 Caribbean Latin America 70 60 50 40 30 20 10 0 2009 2010 2011 4.5 DEFICIT % GDP – OVERALL & PRIMARY 4 2012 3.5 3 Caribbean Latin America 2.5 2 1.5 1 0.5 0Based on data in ECLAC PreliminaryOverallof the Economies of Latin America and the Caribbean, 2012 Overview Primary
  • Transmission mechanismsTourismRemittancesExport receiptsImport prices—food commoditiesFiscal revenuesFinancial meltdowns
  • Tourist Arrivals 5400Thousands 5300 5200 5100 5000 4900 4800 11 Caribbean Countries 2006 2007 2008 2009 2010 2011 4500 Remittances 4000 3500 3000 2009 2011 2500 2005 US$m 2000 1500 1000 500 0 14 Caribbean (Caricom) countries 2005 2006 2007 2008 Years 2009 2010 2011
  • Selected IMF Caribbean Programmes 2010-2012Country Type Date Term US$Antigua & Barbuda SBA 2010 36/mo. 128 M.Dominica RCG 2012 Imed. 3MDominican Rep. SBA 2009 27/mo 1.74 BGrenada ECF 2010 36/mo 13.7 MHaiti ECF 2010 278 MJamaica SBA 2010 27/mo 1.27 BSt Kitts & Nevis SBA 2011 36/mo 79 MSt Lucia RCF 2011 Immed 8.2 MSt Vincent & Grenadines RCF 2011 Immed 2 M
  • The Caribbean EPA• In October 2008 the CARIFORUM Group, consisting of 15 Caribbean countries, signed a “Full” EPA with the EU covering goods, services, investment, innovation and intellectual property, public procurement, competition policy and other trade-related subjects• The Caribbean is so far the only ACP group to sign on to a “Full” EPA• Notably, the CF EPA contains an MFN clause obliging CF to offer to the EU any more favourable treatment it accords in goods, services and investment to emerging economies of the Global South
  • Why a ‘Full’ EPA?• 14/15 CF countries are non-LDCs & the EU threatened to impose tariffs on their exports if negotiations were not completed by the deadline• Many CF countries are services exporters & they believed they would benefit from the opening of EU services markets• CF feared losing market share to Central and South American countries with which the EU was negotiating FTAs• CF was promised additional assistance under Aid For Trade—”first-in-the-line” advantages
  • EPA Implementation ProblemsThe ‘Full’ EPA has imposed onerous legal, regulatory and administrative obligations on the small, resource- constrained CF statesBy mid-2011, 5/15 CF countries had set up EPA Implementation Units; & these were small & under- resourcedThe EPA was ‘provisionally applied’ on December 29 2008; but it has not legally entered into force as only 5/15 CF states and 10/25 EU states have completed their EPA ratification procedures (October 2012)The legality of its ‘Provisional Application’ has been questioned (Naar 2012)
  • Due to acute fiscalconstraints, including those resultingfrom the impact of the global crisisand debt burden, 7 Cariforum statesfailed to meet their commitmentsto implement the first round oftariff cuts on EU imports scheduledfor January 2011
  • Since Provisional Application of the EPA, Caricom’s trade balance with the EU has worsened4000 CARICOM-EU trade pre/post EPA3500 US$MN30002500 IMPORTS FROM EU200015001000 EXPORTS TO EU500 0-500 2007 2008 2009 Axis Title 2010BALANCE 2011
  • Other reported problems Caribbean small exporters have reported substantial non-tariff barriers in accessing the EU market including SPS, TBT and ROI Traditional exporters have lost ground from EU banana agreement and FTAs concluded with Latin American & Asian countries Mutual Recognition Agreements necessary to access the EU’s services markets are not yet in place The promised Aid for Trade has not materialised The EU’s proposed Differentiation policy will mean a substantial diminution of aid flows to the Caribbean Major disagreements between CF and the EU have emerged over the interpretation/wording of certain clauses of the EPA The EPA has in effect side-lined the CARICOM integration scheme - - Caricom Single Market and Economy (CSME)
  • EPA access to EU services marketsThe EPA proritises the services professions of accounting, architecture, engineering and tourism for exports to the EU marketIn these and other “liberalised” sectors, access is qualified by several eligibility requirementsA key requirement is the establishment of agreements for the mutual recognition of professional qualifications between CF and EU countries
  • Steps to MRAs Relevant professional bodies are to be encouraged to start negotiations within three years after the coming into force of the Agreement Once agreement is reached, recommendations are to be submitted to the EPA Joint Committee on Trade and Development CTD reviews to determine consistency with EPA. If CTD approves, Parties negotiate and MRA through their competent authorities covering requirements, qualifications, licenses and other regulations”; Subject to relevant GATS Article VII provisions-- “other WTO Members should be notified with sufficient possibility for others interested to join.” Update: after over four years, technical work is proceeding on engineering. No profession has reached an advanced stage of negotiations on an MRA
  • Disagreements CARIFORUM is of the view that there are errors in the schedule of CARIFORUM States tariff reductions with respect to motor vehicles and parts imported from the EU, because the schedule does not reflect the "moratorium" which both regions had agreed would apply to cuts in the rates for these products. The EU’s response is that if CARIFORUM States wished to amend their schedule, this will require a wholly different and much lengthier procedure than that which applied for the treatment of errors. This issue failed to be resolved at meetings of EPA Trade and Development Committee (TDC) and Joint Council (JC) C in 2012
  • DisagreementsCARIFORUM has objected to the application of the octroi de mer by the French Caribbean Overseas Regions (FCORs) of Guadeloupe, Martinique and French Guyana.The EU’s response, following the French authorities, is that the octroi de mer is specific to the FCORs; not a customs duty; does not discriminate against CARIFORUM States; and that it had its legal basis in the EUs Lisbon Treaty and had been grandfathered in the EPA, under Article 239(4);CARIFORUM has reasserted that the octroi de mer is an internal tax, and that it is being administered in a discriminatory manner.The Joint Council meeting of October 2012 failed to reach agreement on the issue.
  • EPA Five-Year Review A Joint Declaration adopted at the time of signing the EPA mandated a ‘comprehensive review’ of the Agreement to be undertaken within 5 years at subsequent five-yearly intervals in order to determine its impact, including the costs and consequences of Implementation and an undertake to amend its provisions and adjust their application as necessary.” What this means will be/is the subject of interpretation & negotiation Monitoring set up by CF so far focuses on implementation of EPA obligations The EPA needs to be monitored as an instrument of sustainable development that brings benefits to all socio- economic groups including “men, women, young people and children”. (Article 5).
  • Thank You!