The EPA has more advantages than disadvantages for the region
Former Caribbean diplomat Sir Ronald Sanders is one of the most ardent and vociferous critics of the CARIFORUM-EU Economic Partnership Agreement (EPA). In his Sunday column in the Kaieteur News titled, “EPA for whose benefit?”
Mr. Saunders starts out by warning readers that if the EPA is to be signed in its present form, Cariforum states run the risk of becoming “plantations economies” with large foreign owned and managed EU companies ruling the day and Caribbean people being reduced to lowly workers.
Somewhat surprisingly, Mr. Saunders then went on to contradict himself at the end of his column by stating: “The EPA will bring no new investment to the Caribbean.
Caribbean incentives to foreign direct investment (FDI) are already overly generous; European firms do not need an EPA to invest in the region.”
If the EPA will not result in new FDI, then how exactly is the plantation economy scenario supposed to play out?
Mr. Saunders ambivalence aside, since when is FDI in the region a bad idea? Taking an example from our local circumstances, could you imagine what our telecommunication sector would have looked like if it weren’t for GT&T and Digicel?
Could you even fathom where Guyana would be today if we had waited for a local company to emerge and provide the services of those two foreign owned companies?
There are many other examples where FDI has produced dramatic results in a particular sector(s) throughout the Caribbean.
Mr. Saunders highlighted the unequal strength of the EU as compared to that of individual Cariforum countries.
He mentioned the EU being a $12 trillion economy with about 350 million people and a size that is 88 times larger that all Cariforum states put together.
For him, that mathematics added up to total disaster for individual Caribbean states because of the vast asymmetry.
For me, I see this as presenting an enormous advantage for Cariforum states; Cariforum companies and service suppliers will have duty free quota free access to such a vast market, whereas, the EU will have to be contented with our small combined population and economies(and even smaller when taken individually).
Furthermore, the fact that most Caribbean territories are involved in the trade of services rather than that of goods, I find it difficult to envision a scenario where upon signing of the EPA, EU firms and professionals would want to flock the service sector in the region and have to compete with already established firms (many of which are foreign owned) for the small available market share.
Nonetheless, even if we were to see an influx of EU firms and professionals, it means that Cariforum consumers (visitors and locals) will have more available choices, better service and cheaper prices because of this new highly competitive landscape; for the tourism sector this will be a fortunate development.
Additionally, Mr. Saunders mentioned a point made by Professor Norman Girvan that if the EU is given duty free access to Cariforum, then other developed countries and Cariforum trading partners will want to have the same duty free access.
I want to remind Mr. Saunders that all Cariforum countries are members of the World Trade Organisation and agreed to trade liberalization as per the WTO’s mandate. Is this a surprising development?
In closing, I would posit to say that the EPA is not a perfect (made impossible by so many competing interests) arrangement, but has more advantages than disadvantages to the region based on observation.
However, I might change my view if official statistical data is made available showing the impact expected from the signing of the EPA.