1. Presented by: Aaron Parke LLB; LEC; MSc. and Govind Seepersad PhD. 2012

2. Structure of the Presentation 1. Learning objectives 2. Background 3. What is the EPA agreement 4. EPA negotiations 5. Legal basis 6. Principles and objectives 7. What is in the EPA???????? 8. Details of the provisions 9. Opportunities 10. Implementing the EPA –development dimensions 11. Other issues of relevance

3. LEARNING OBJECTIVES At the end of the session you should: Know the main tenets of the EPA Have a better appreciation of the opportunities available to CARIFORUM in the EU Discuss the major challenges faced by Cariforum Have a better understanding of the issues related to implementation of the EPA agreement.

4. Part 1

5. BACKGROUND In 1975 the European Community and the African Caribbean and Pacific (ACP) group signed an Aid and Trade pact known as Lome I. Four (4) such conventions have been signed to date, the last being the Cotonou Agreement of 2002. A central tenet of these conventions was preferential access to European markets for goods exported from ACP countries ACP group comprises some 79 countries (Cuba did not sign the agreement) 40 of which are classified as LDC’s Trade between the EU and the LDC’s is governed by the provisions of the “Everything But Arms” Initiative (EBA)

6. BACKGROUND (cont’d) The previous EU / ACP Agreement did not fulfil the requirement for a free trade agreement under Article XXIV of the General Agreement on Tariffs and Trade (GATT), Article XXI requires that in free trade areas (FTAs) and cus­toms unions, trade preferences are permitted only when duties and other restrictive regulations are eliminated on “substantially all the trade” between the constituent territories. However the arrangement continued under a waiver of Article xxiv of the GATT.

7. BACKGROUND (cont’d) The GATT was replaced by the WTO in 1995 Various challenges mounted in the WTO led a WTO panel to determine that the arrangement as incompatible with WTO rules because they violated the fundamental principles of non-discrimination and reciprocity.

8. BACKGROUND (cont’d) The COTONOU Agreement was signed in Benin in 2000 It addresses these concerns (non- discrimination and reciprocity) by ◦ requesting that the parties conclude WTO- compatible trading agreements, involving the progressive removal of barriers to trade between them and ◦ enhancing cooperation in all areas relevant to trade

9. BACKGROUND (cont’d) The new EPAs were to come into effect when the WTO legal waiver previously extended to cover the trade arrangements between the ACP and the EU expired on January 1,2008.

10. BACKGROUND (cont’d) The new EU-ACP EPAs were negotiated with the aim of allowing European countries some access (reciprocity) to ACP markets, and to expand trading privileges to more developing nations

12. The EU’s Economic Partnership Agreement is the agreement that the EU negotiated with the African Caribbean and Pacific (ACP) regions that replaced the trade chapters of the Cotonou Agreement when the trade preferences of this agreement expired in 2008

14. Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, the Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Lucia, Saint Vincent and the Grenadines, Saint Christopher and Nevis, Surinam, and Trinidad and Tobago On December 16,2007, the European Commission initialed the Economic Partnership Agreement with

15. CARIFORUM STATES: CARICOM and the Dominican Republic,

16. CARIFORUM Note: Bahamas, Barbados, Belize, Guyana, Haiti, Jamaica, Trinidad & Tobago, Suriname, and OECS members: Antigua & Barbuda, Dominica, Grenada, Montserrat, Saint Kitts & Nevis, Saint Lucia and Saint Vincent & the Grenadines. Dominican Republic The British Virgin Islands and the Turks and Caicos became associated members of CARICOM in 1991. Twelve other states from Latin America and the Caribbean have an Observer Status in various Community institutions.

17. EUROPEAN COMMUNITY THE KINGDOM OF BELGIUM, THE REPUBLIC OF BULGARIA, THE CZECH REPUBLIC, THE KINGDOM OF DENMARK, THE FEDERAL REPUBLIC OF GERMANY, THE REPUBLIC OF ESTONIA, IRELAND, THE HELLENIC REPUBLIC, THE KINGDOM OF SPAIN, THE FRENCH REPUBLIC,

18. EUROPEAN COMMUNITY THE ITALIAN REPUBLIC, THE REPUBLIC OF CYPRUS, THE REPUBLIC OF LATVIA, THE REPUBLIC OF LITHUANIA, THE GRAND DUCHY OF LUXEMBURG, THE REPUBLIC OF HUNGARY, THE REPUBLIC OF MALTA, THE KINGDOM OF THE NETHERLANDS, THE REPUBLIC OF AUSTRIA,

19. EUROPEAN COMMUNITY THE REPUBLIC OF POLAND, THE PORTUGUESE REPUBLIC, ROMANIA, THE REPUBLIC OF SLOVENIA, THE SLOVAK REPUBLIC, THE REPUBLIC OF FINLAND, THE KINGDOM OF SWEDEN, THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND,

20.  The negotiations leading to the Economic Partnership Agreements (EPA) were launched in Brussels on 27 September 2002 and conducted in two phases:  The first phase was conducted at "All-ACP"-EU level and took on board cross-cutting themes of interest to all parties concerned, mainly:  legal matters,  the development "dimension" of the EPAs,  Agriculture and Fisheries agreements,  services,  market access and  trade-related matters.

21.  The negotiations leading to the Economic Partnership Agreements (EPA) were launched in Brussels on 27 September 2002 and conducted in two phases:  The Second phase was conducted at ACP national and regional level with spotlight on specific commitments.

22. LEGAL BASIS

23. On October 15, 2008 the EU and CARIFORUM concluded the EPA. The EPA is a legal document as well as a developmental mechanism geared at assisting CARIFORUM’s emersion into the world economy

24. LEGAL BASIS Contd. The EPA between the EU and CARIFORUM is intended to introduce reciprocal trade arrangements between the parties that are compatible with WTO guidelines

25. LEGAL BASIS Contd. The EPA seeks to uphold the principles and objectives of:  The EU TREATY  The CARICOM TREATY  WTO AGREEMENTS Uphold other international conventions to which the parties are signatories.

26. LEGAL BASIS Contd. As a successor Agreement to the COTONOU Agreement the EPA also includes a developmental component in addition to the treatment of trade in goods, services and trade related issues It proposes an asymmetrical liberalization of trade between the parties and reinforce, broaden and deepen cooperation in all areas relevant to trade and investment.

27. Part 2

28. OBJECTIVES of the EU – CARIFORUM EPA

29. OBJECTIVES General objectives of EPAs: ◦ sustainable development of the ACP States, ◦ smooth and gradual integration in the world market, ◦ and eradication of poverty.

30. OBJECTIVES Specific objectives: enhancing sustainable growth, increasing production and supply capacities of the ACP countries, promoting structural processing and economic diversification of the ACP states while supporting regional integration

31. OBJECTIVES will be achieved through: Integration of ACPs into world economy Diversify ACP economies Boost competitiveness of local businesses More, better and cheaper goods and services for ACP consumers Reform: improve economic attractiveness (investment, public procurement, customs) Regional integration

32. OBJECTIVES CONTD. Specific to the CARIFORUM/EU EPA the objectives are: 1. Contributing to the reduction and eventual eradication of poverty 2. Promoting regional integration, economic cooperation and good governance 3. Promoting the gradual integration of the CARIFORUM States into the world economy

33. OBJECTIVES Contd. Specific to the CARIFORUM/EU EPA the objectives are: 4 Improving the CARIFORUM States' capacity in trade policy and trade related issues; 5.Supporting the conditions for increasing investment and private sector initiative and enhancing supply capacity, competitiveness and economic growth in the CARIFORUM 6. Strengthening the existing relations between the Parties on the basis of solidarity and mutual interest.

34. KEY PRINCIPLES The fundamental principles and objectives of the EPAs are defined by the COTONOU Agreement:  Equality of partners and ownership of development strategies  Participation  Dialogue and mutual obligations  Differentiation and regionalization

35. KEY PRINCIPLES Additionally the EPA is intended to;  be an instrument of development  support regional integration:  enhance gains made under COTONOU  Increase Compatibility with WTO rules  Enshrine the principle of Special and differential treatment

36. Architecture of the EPA

37. The CARIFORUM-EU EPA is a comprehensive Agreement by virtue of the myriad of issue areas that it covers. These include: * Development Cooperation, * Market Access (Customs Duties), * Trade Defense Instruments, * Trade Facilitation, * Agriculture and Fisheries, * Investment, * Trade in Services and E-commerce, * Current Payments * Capital Movement and * Dispute Avoidance.

38. The EPA also provides rules, measures and provisions in Trade Related Issues such as 1. Competition,

39. The EPA also provides rules, measures and provisions in Trade Related Issues such as 2. Innovation and Intellectual Property,

40. The EPA also provides rules, measures and provisions in Trade Related Issues such as 3. Government Procurement,

41. The EPA also provides rules, measures and provisions in Trade Related Issues such as 4. Environment,

42. The EPA also provides rules, measures and provisions in Trade Related Issues such as 5. Social Aspects

43. The EPA also provides rules, measures and provisions in Trade Related Issues such as 6. Protection of Personal Data.

44. WHAT IS IN THE EPA?

45. WHAT IS IN THE EPA Trade in goods:  Duty free / Quota free access to EU Market from day one  CARIFORUM level of liberalisation: approx.90 % in value over 25 years  Full liberalization will not be realized until 2033 at which time there would be 89.9% liberalization of EU imports

46. WHAT IS IN THE EPA Contd.  On the other hand the EU has proposed that customs duties in the EU shall be entirely eliminated on all products of Chapter 1-97 of the HS System except those in Chapter 93 ( arms and ammunitions) thereof originating in a CARIFORUM state on the entry into force of the agreement

47. WHAT IS IN THE EPA Contd. The liberalization is to include all goods that are not covered by the exclusion list, which comprise mainly:  agricultural & processed agricultural goods including meats and fish,  beverages & tobacco,  some chemicals,  paints,  soaps,  apparel,  iron and steel products,  furniture,  mattresses and  other industrial products

48. WHAT IS IN THE EPA Contd. Rules of origin:  Based on Cotonou Agreement  Improvement on specific areas: textiles and clothing, agriculture, fisheries

49. WHAT IS IN THE EPA Contd. Safeguards:  Exception from WTO multilateral safeguard measures  Asymmetry, infant industries clause

50. WHAT IS IN THE EPA Contd. Customs and trade facilitation:  Simplification and modernization of customs procedures  Aid for trade

51. WHAT IS IN THE EPA Contd. Technical barriers to trade (TBT):  Improving capacity to eliminate unnecessary obstacles to trade

52. WHAT IS IN THE EPA Contd. Sanitary and phytosanitary measures (SPS):  Cooperation to enhance relevant information exchange

53. WHAT IS IN THE EPA Contd. Sanitary and phytosanitary measures (SPS):  Implementation of SPS measures

54. WHATS IN THE EPA Contd. Development aspects run through all provisions of the agreement, for example:  Sustainable development and the environment  Asymmetrical / progressive obligations  Transition periods  Improved Rules of Origin  Safeguard clauses

55. Part 3

56. SOME MORE DETAILS

57. MARKET ACCESS The application and scope of the EPA are more comprehensive than those of previous agreements. It expands the former commitments on market access from trade in goods to a range of additional subject areas such as (i) government procurement, (ii) investment, (iv) trade facilitation, (v) competition policy and (vi) intellectual property rights.

58. MARKET ACCESS Importantly, the agreement also includes a services agreement that is compatible with the General Agreement on Trade in Services (GATS) Article V. Now, except for rice, sugar and bananas, as of January 1, 2008, all products from CARIFORUM states have enjoyed duty-free, quota-free access to the EU market.

59. Market access Contd. The market access offered under the EPA removes quota and tariff limitations on 98 percent of all goods from CARIFORUM countries into the EU

60. Market access Contd. This provides duty-free, quota-free access for agricultural products such as beef, dairy, cereals, fruits and vegetables that previously incurred tariffs.

61. Market access cont’d. Custom duties have been removed from sugar and rice, while the quota aspect for sugar has been removed since October 2009 and sugar will be eliminated on a phased basis, ending in 2010.

62. Market access cont’d. Bananas will also enjoy immediate duty-free, quota-free access to the EU market

63. MARKET ACCESS- COMMODITIES Reciprocal grant of preferences by the EC and CARIFORUM Sugar: Sugar Protocol to end by 30 September 2009; For the marketing period 2008-2009 CARIFORUM States signatory to the Protocol to share 60,000 tonnes quota increase

64. MARKET ACCESS- COMMODITIES Reciprocal grant of preferences by the EC and CARIFORUM Rice: duty-free and quota-free access into to the EC market to apply from January 1, 2010; Tariff rate quota in place in 2009, with zero rate of duty and quota of 250,000 tonnes.

65. MARKET ACCESS- COMMODITIES Reciprocal grant of preferences by the EC and CARIFORUM Bananas: duty-free and quota-free access into EU market from date of application of the Agreement (i.e. 29 December 2008)

66. MARKET ACCESS- COMMODITIES cont’d. For CARIFORUM, a number of items (representing 13.1% of CARIFORUM imports from the EU) have been excluded from tariff liberalization altogether CARIFORUM enjoyed a three (3) year moratorium across the board

67. MARKET ACCESS- COMMODITIES cont’d. Reduction of Tariffs on motor vehicles subject to a ten (10) year moratorium Haiti to enjoy a ten (10) year moratorium on certain petroleum products (of tariff heading 2710.11)

68. MARKET ACCESS –Tariff Liberalization

69. CARIFORUM to apply zero rates of duty on a number of items (which represent 52.8% of CARIFORUM imports from the EU) from 1 January 2009) CARIFORUM to liberalize remaining tariffs over prescribed periods (i.e. phased reductions over 5,10,15,20 and 25 years) By the end of fifteen years, CARIFORUM will have liberalized 82.7% of imports from the EC and by twenty- five years, 86.9%

70. Market Access –Tariff Liberalization Contd. Other Duties and Charges’ applied at the border by CARIFORUM States to be maintained for seven years from the date of application of the Agreement and phased out in the succeeding three years (i.e. by 29 December 2018)

71. Market Access –Tariff Liberalization …..like treatment… Region Preference – CARIFORUM States will confer upon each other concessions granted to the EU.

72. Market Access –Tariff Liberalization Contd MFN Clause – The EU will grant to CARIFORUM anymore favourable treatment arriving from subsequent agreements the EU concludes with any third party

73. Market Access –Tariff Liberalization Contd CARIFORUM will only have to grant to the EU any more favourable treatment to a major trading country with whom they conclude FTA after signature of the EPA

74. Discussion Point/Group Exercise EXCLUSION LIST AGREED BY THE PRINCIPAL NEGOTIATORS. GUIDE TO INTERPRETING THE SCHEDULE OF TARIFF LIBERALIZATION

75. Rules of origin

76. Rules of origin specify the criteria for a product to be considered as locally produced and to thereby qualify for preferential treatment.

77. Rules of origin The EPA’s guidelines on rules of origin create new opportunities for CARIFORUM countries to “extract” more value added through further processing within the region before the final product is exported to the EU

78. Rules of origin The changes in the EPA’s guidelines on rules of origin affect (i)value-added conditions, (ii) the discontinuance of the certification of origin and (iii) verification procedures.

79. Rules of Origin Contd. The changes also allow for some “permanent derogation” from the primary rules through an exception called “cumulation,” which allows for the broadening of the concept of the originating status of materials and sufficient working or processing.

80. “cumulation,”

81. Rules of Origin Contd. Under the EPA, materials originating in some of CARIFORUM’s neighbouring developing countries will be considered as originating in a CARIFORUM state.

82. Rules of Origin Contd. The concept of “wholly owned” has been broadened beyond products extracted or grown locally to include sea fishing or other products taken from the sea by local vessels and local fishermen

83. Rules of Origin Contd. A main drawback however relates to the “non-cumulation” of a list of sugar based products and for rice up to 2015.

84. How is Rules of Origin Calculated?  Value added (VA) criteria  Change in Tariff Heading (CHF) criteria

85. Discussion Point/Group Exercise DETAILED EXAMINATION OF PROTOCOL 1 OF THE AGREEMENT - Definition of the concept of wholly owned products -“Cumulation” -Sufficiently worked or processed products -Territorial reguirements -Proof of origin

86. Part 4

87. Investment, Trade in Services and E-Commerce The Agreement includes a Title on Services, Investment and E-commerce and the related schedules of commitments, which give rise to an agreement compatible with GATS Article V. The sectoral coverage provides for more than 80 percent for Dominican Republic, and between 50 to 62 percent of services sectors for all others except Haiti and Bahamas who had proposed to join the services and investment part of the agreement within 6 months

88. Investment, Trade in Services and E-Commerce On the EC side, there are commitments in the areas of movement of service providers (sellers of goods, investors, short term business visitors, graduate trainees), as well as for entertainers, artists, chefs de cuisine and fashion models. The Agreement contains regulatory principles in a number of sectors, including tourism to enable CARIFORUM to them develop competitive services sectors and ensure benefits for the region.

89. Investment, Trade in Services and E-Commerce Differential market liberalization by the CARICOM MDCs and the LDCs The EU has liberalized 94% of the sectors listed under the GATS The Region has managed to elicit notable gains in the areas of Mode 4 (temporary movement of natural persons) and Cultural Industries. The Parties recognize that e-commerce increases trade opportunities in many sectors and have committed to the maintenance of dialogue on regulatory issues relating to ecommerce

90. Investment, Trade in Services and E-Commerce The EPA also sets out: principles for the new regulatory framework for all courier services that are to be liberalized the regulatory principles for telecommunication services other than broadcasting which are to be liberalized principles of the regulatory framework for financial Services to be liberalized principles regarding the liberalization of international maritime transport service

91. Financial Services, Current Payments and Capital Movements The Articles (103-108 and 122-124) on Financial Services, Current Payments and Capital Movements provide for effective market access to, and facilitation for suppliers of financial services of the Parties

92. BRIEF EXAMINATION OF ANNEX IV of the Agreement

93. PART 5

94. Customs and Trade Facilitation The provisions of this Chapter:  aim to enhance the existing customs and trade facilitation procedures in CARIFORUM States, while at the same time maintaining effective control  provides for harmonized legislation, practice and procedures across CARIFORUM

95. Technical Barriers to Trade and SPS Measures TBT This Chapter:  emphasizes enhanced communication and exchange of information on technical regulations, standards, conformity assessment and on products affected by TBTs SPS This Chapter:  Includes provisions dealing with increased capacity of CARIFORUM countries to protect plant, animal and public health, while facilitating trade among countries

96. Agriculture and Fisheries  There is a commitment to development cooperation in areas such as market development, promotion of investment, downstream processing, development experiences, policy and institutional changes, rural development, new technologies and issues relating to quality  The EC has also committed to providing development support, including in the following areas:  improving competitiveness of both traditional and nontraditional export sectors;

97. Agriculture and Fisheries Contd.  development of export marketing capabilities;  compliance with, and adoption of, quality standards;  promotion of private investment and public- private  partnerships;  improvement in the ability of CARIFORUM operators to comply with national, regional and international technical, health and quality standards; and  building or strengthening scientific, technical, human and institutional

98. TRADE DEFENCE MECHANISMS A bilateral safeguard mechanism, which allows CARIFORUM States to apply safeguards at a threshold less onerous than that applicable to multilateral For a period of ten years from the date of entry into force of the EPA, a Signatory CARIFORUM State may take safeguard measures where imports of an EC product cause or threaten to cause disturbances to an infant industry producing like or directly competitive products

99. TRADE DEFENCE MECHANISMS Contd. While Safeguard provisions may be applied by a CARIFORUM State for a period not exceeding four (4) years, such measures may be extended for a further period not exceeding four (4) years, where circumstances warranting imposition of safeguard measures persist. Safeguard provisions may be applied by the EC for a period not exceeding two years; extension for a period of two years where circumstances warrant is available.

100. Trade Related Issues Competition (Articles 125-130)  commitment to free and undistorted competition  support to be provided to CARIFORUM in the establishment, strengthening and facilitation of the efficient functioning of Competition Authorities at the national and regional levels  the Parties have committed to cooperate in addressing anti-competitive business practices.

101. TRADE RELATED ISSUES Contd. Government Procurement  CARIFORUM States are required to ensure transparency in the conduct of procurement activities and nondiscriminatory treatment of eligible suppliers  CARIFORUM is required to comply with rules of transparency.

102. COMPETITION The competition law chapter of the Agreement identifies the types of anticompetitive conduct that are prohibited as they affect trade between the Parties These only cover restrictive agreements and abuse of a dominant position Mergers are not addressed since most of the CARIFORUM countries do not have merger control rules

103. COMPETITION Contd.  The agreement also treats with enforcement; public enterprise and enterprises with special rights and cooperation between the parties  Re-Copyright, right holders from both sides are adequately remunerated for the use of their music or other artistic works in the territory of the other party.  CARIFORUM States have committed to adhere to the Patent Cooperation Treaty (PCT), which allows the filing of a single international patent application in several countries, CARIFORUM States will establish a system of protection of GIs by 2014.

104. PUBLIC PROCUREMENT The government procurement chapter of the Agreement seeks to support a more efficient use of public budgets when authorities want to buy products on the market. The procurement chapter sets out some basic principles and minimum transparency rules that procuring entities should respect when tendering. These however only apply to the relatively few large contracts (those in excess of US$ 200,000) tendered by central authorities. It remains for the Parties to decide which suppliers are eligible to tender.

105. INNOVATION AND INTELLECTUAL PROPERTY Innovation: The main objective of integrating Intellectual Property Rights (IPR) in the agreement is to promote innovation and creativity in the Caribbean. Fields specified are science and technology, information society, information and communication technologies; eco-innovation and renewable energy. science and technology, information society, information and communication technologies; eco- innovation and renewable energy.

106. INNOVATION AND INTELLECTUAL PROPERTY Contd.  Long implementation periods (2014) and provisions in "best endeavour" terms that allow CARIFORUM states to implement them only if and when they are ready; and  The Least-Developed Country member of CARIFORUM (i.e. Haiti) will not have to implement the IPR chapter until 2021 at the earliest.

107. INNOVATION AND INTELLECTUAL PROPERTY Contd. Intellectual Property Rights: Provisions covering Intellectual Property Rights include:  The capacity of the parties to promote access to medicines should not be impaired;  Specific provisions related to development- related issues such as traditional knowledge, biodiversity or transfer of technology;  A provision that allows farmers to save, use and exchange farm-saved seed or propagating material rather than buying new seed each year

108. Group Discussion on IP issues Group Discussion on IP issues CASE STUDY ON DEVELOPING GEOGRAPHIC INDICATORS

109. PROTECTION OF PERSONAL DATA The EU will assist the CARIFORUM to establish a comprehensive data protection system, which is a key condition for success in e-commerce, better business and administrative cooperation, as well as good governance. The parties are obliged to establish legal regimes and administrative capacity to ensure the implementation of the most important set of data protection principles and enforcement mechanisms, as contained in international instruments in this field.

110. Part 6

111. Institutional Provisions (Articles 227-232) The following institutions will be established under the Agreement:  A Joint CARIFORUM-EC Council  CARIFORUM-EC Trade and Development Committee  Special Committee on Customs Cooperation and  Trade Facilitation  CARIFORUM-EC Parliamentary Committee  CARIFORUM-EC Consultative Committee

112. IMPLEMENTING THE EPA- DEVELOPMENT COOPERATION EPA Financing  Guaranteed and programmable sources for financing EPA implementation and accompanying measures: ◦ the National Indicative Programme (NIP) of CARIFORUM Member States; and ◦ Under the 10th EDF Regional Indicative Programme (RIP) €165 million allocated for the Caribbean ◦ Aid for Trade resources to be negotiated and mobilized

113. IMPLEMENTING THE EPA Contd. UK Aid for Trade commitments to the CARIFORUM Region and the establishment of a Trust fund of the CDB Review  Comprehensive review of the EPA, no later than Five (5) years after date of signature, and at subsequent five (5) yearly interval

114. OPPORTUNITIES FOR THE PRIVATE SECTOR Increased foreign direct investment and associated technology transfers Increased opportunities for joint ventures and co- production with EU firms Expanded market access in the EU for CARIFORUM goods and services Diversification of exports and increased value added Capacity building initiatives and development support Enhanced competitiveness with the adoption of higher standards Economic growth Throughout the CARIFORUM region

115. THE EU OUTERMOST REGIONS As part of the EU and its customs territory, the outermost regions are fully covered by the commitments taken by and towards the EC Party. The Overseas Countries and Territories associated with the EU are not parties to the EPA. However The Parties may also consider revising this Agreement to bring Overseas countries and Territories associated with the European Community within the scope of this Agreement.