RNM UPDATE 0716

December 19, 2007

Prepared by the Information Unit of the Caribbean Regional Negotiating Machinery (CRNM), this electronic
newsletter focuses on the RNM, trade negotiation issues within its mandate and related activities.

• THE EPA NEGOTIATIONS COMPLETED

• WTO UPDATE
• NEWS BRIEF
• UPCOMING EVENTS

THE EPA NEGOTIATIONS COMPLETED

The CARIFORUM EPA Negotiations have been completed. The text was initialed in the wee
morning hours on December 16, 2007. While the culmination of this negotiation process has come
later than previously scheduled, CARIFORUM countries, by completing the EPA before the end of
the year, have ensured that their product exports to the EU will not have to face GSP treatment or
face MFN duties in 2008. Effective January 1, 2008, with a temporary exception for rice and sugar,
all CARIFORUM goods will be entitled to duty-free and quota-free access to the European Union.
Importantly, CARIFORUM is the first group within the ACP to secure a comprehensive Agreement
that covers not just goods but services, investment, and trade related issues such as innovation
and intellectual property.

Principal Negotiator, CRNM’s Director General Ambassador Dr. Richard Bernal, after completing
the negotiations said,

“This is a momentous and proud achievement for the Region. Our success in completing this
agreement, though hard won, has secured opportunity for trade expansion, economic development
and the improvement of the welfare of the CARIFORUM people. What we have attained within this
agreement is unprecedented within the Region. Certainly, the CARIFORUM region is the only of
the six negotiating ACP groups to successfully complete a comprehensive EPA with Europe. The
stewardship of the Heads and the active, robust participation of our Region’s stakeholders,
including the technicians, the private sector, the officials and civil society have made this possible.”

In the recent past, it was uncertain whether CARFORUM–EU negotiations would have resulted in
the requisite compromise to seal an Agreement in time. The priority of CARIFORUM countries has
always been to ensure that the details of the Agreement met core standards to make it ‘a good
deal’. As the Principal Negotiator continued to explain “This is a sound agreement and strong on
the key areas necessary to cultivate development within the Region.”

He highlighted, with respect to market access in goods, that “It is a commonly accepted
interpretation of international rules that in Regional Free Trade Agreements like the EPAs, the

1
requirement to liberalize ‘substantially all trade’ suggests liberalization at a level of 90% within 10
years. The CARIFORUM EU EPA has transcended that understanding. Instead, given our
development peculiarities, we have reached an agreement which has reduced the burden of
liberalization for CARIFORUM but in a manner that would still allow us to meet WTO requirements.
Furthermore, we have secured flexibilities that in some cases provide an unprecedented grace
period of 25 years before liberalization may be fully implemented, which will give CARIFORUM
countries the time to adjust to the brunt of liberalization.”

“In services we placed emphasis on the inclusion of market access, and financial as well as non-
financial development assistance for the subsectors of tourism and entertainment in particular. This
we insisted was important to bring almost immediate dividends to a number of CARIFORUM
people. In this regard, CARIFORUM was triumphant in securing the commitment of the European
Commission. The EC should also find satisfaction in this triumph as Europe, despite its own
domestic reservations and sensitivities was able to give meaningful concessions in such areas so
critical and vital to our Region’s development.”

“We were also able to protect the interests of our vulnerable small and medium enterprises in a
manner that is consistent with their development needs. This was evident for example in our
negotiations in transparency in government procurement. By not negotiating market access
commitments, small and medium enterprises will not be in danger of being pushed out of the
market for government contracts by European firms. Member States determined that this was not
to our detriment but on the contrary, was very much to our benefit. Securing transparency for
government contracts helps reduce the likelihood of corruption. Additionally, it signals to investors
and the rest of the business world that this Region is open to business and follows international
best practice. Furthermore, transparency in the process of government procurement provides
opportunities for regional firms to aspire to the standards necessary to attain large government
contracts. These examples are but a few. This agreement has been well crafted and I am
confident that it is indicative of the best possible deal.”

The DG was also clear to conclude that notwithstanding the strength of the Agreement it was
necessary that the EPA is used appropriately as a tool for development. He said,

“While the Region’s stakeholders have worked earnestly to complete this Agreement appropriately,
the Region has only just begun to embark on the task at hand. The focus in the New Year for all
stakeholders must shift to the implementation of the Agreement to help chart the repositioning of
our Region’s economies.”

WTO UPDATE

The Chairs of Agriculture and NAMA were scheduled to deliver their new draft texts by mid
November but reports from Geneva have suggested that this is no longer possible. WTO Director-
General Pascal Lamy has indicated that a breakthrough in the Round was not going to be possible
this year. However, he has expressed optimism that a deal could be reached in 2008. It should be

2
recalled that earlier this year, the Director General was seemed also optimistic that the elusive deal
could be attained by the end of December 2007.

It is clear that the goal posts seem to be shifting constantly in this negotiating forum, pushing the
target for the conclusion of the Round further and further, seemingly just beyond reach.

In order for a deal to be reached, the Round must sincerely capture the development interests of
developing countries across all the pillars of the negotiations, not just NAMA and Agriculture. In
addition, it is unlikely that the Round could be negotiated without the effective and focused
participation of the United States of America. Not only will 2008 find that nation deeply entrenched
in throes of domestic elections, but the Bush Administration on the eve of their superannuation, no
longer have the Trade Promotion Authority (TPA) to help advance a deal in the WTO negotiations.
While US Trade Representative Susan Schwab has indicated that a deal could still be reached
without the TPA, the possibility of Congress approving a Doha deal exits but the probability is low.

The prolonging of this negotiations process increasingly undermines credibility of and the public
support for multilateralism. Director- General Lamy recently tried to rally civil society to help
consolidate support and consensus within their respective countries in order to advance the
completion of the Doha Round. The war on terror, the slowing of the growth of the global economy
and the burden of other global challenges could fatigue support for multilateralism in some circles.

However, the reform of the multilateral trade system must remain a priority. For the least developed
countries, other trade and economic tools such as preferential arrangements, like Everything but
Arms (EBA), are facilitating access to some important developed country markets in the absence of
a reformed multilateral trading system.

In contrast, for the small island developing countries of the Caribbean, reform of global trading
system is essential. Regional trade arrangements between developed and developing countries
could be helpful to a degree. However, the increased use of these arrangements by other
developing countries with the same developed country partners will eventually lead to preference
erosion, the effects of which would be more profound for smaller more vulnerable developing
economies.

The Doha Round must successfully reform the multilateral system to better accommodate the
development needs and considerations of small vulnerable economies, so that the gradual erosion
of preferences caused by the proliferation of FTAs would not undermine the future development of
the Caribbean.

3
NEWS BRIEFS

International News

US and EU Make a Deal Over Online Gambling

The United States will provide the European Union with new trade concessions in mail services
and warehousing as part of a compensation deal over Washington's refusal to lift restrictions on
Internet gambling, the EU said Monday. The agreement also includes new U.S. market
opportunities for European companies offering testing and analysis services as well as in research
and development.

UPCOMING EVENTS

December 2007/January 2008

19-20 WTO GENERAL COUNCIL, Geneva

January 2008

17-18 Meeting of OECS Authority, Dominica

21-25 25th Meeting of COTED, Georgetown

Reflection Group on Lessons from EPA Negotiations (np)

30-01 WTO/IDB-INTAL/CRNM Training Programme for Trade Negotiators,

“Advanced Regional Workshop on Domestic Services Regulation and
Scheduling Issues for Caribbean Countries ”, Barbados

Recipients of RNM UPDATE are authorised to forward this newsletter to other addresses. We
welcome suggestions for additions to our mailing list. If, on the other hand, you wish to be removed
from the list, kindly inform us.

For More Information Contact:

Marsha Drakes
Programme Officer-Trade Information
Caribbean Regional Negotiating Machinery (RNM)
3rd Floor The Mutual Building
Hastings Main Road
Hastings, Christ Church, Barbados
Tel: (246) 430-1678
Fax: (246) 228-9528
marsha.drakes@crnm.org