1. The CARIFORUM-EC EPA and the Services Sector By Carlos L.A. Wharton Senior Trade Policy Advisor Management Consulting Business Symposium 2 St. Kitts & Nevis HEAD OFFICE: Hastings Main Road, Christ Church, BB15154, Barbados. Tel: +1 246-436-0578 Fax: +1 246-436-9999 Email: info@carib-export.cominfo@carib-export.com SUB-REGIONAL OFFICE: C/ Carlos Lora #9, Ensanche Los Retauradores, Santo Domingo. Dominican Republic Tel:+1-809-531-2411 Fax: +1-809-473-7532 Website: www.carib-export.com

2. Contents Concepts EPA Implementation – Trade in Goods – Trade in Services – Regional Integration – Implications of trade agreements on Industrial and Investment policies – Development cooperation Private Sector Constraints The Way Forward

3. CONCEPTS - EPA IMPLEMENTATION What is EPA Implementation? – Treaty Implementation – Ensuring that firms and individuals take advantage of the new trade regime offered under the EPA (and by extension all other bilateral and multilateral trade agreements) – Government agencies must ensure that they are equipped with tools and human resources to monitor, regulate (inclusive of enforcement) and evaluate trade flows and patterns – Ensuring that the necessary regulatory framework accommodate new commitments taken with the various trade instruments

4. CONTEXT Context – Erosion of preferential treatment – Reciprocity – (preference creation) – Asymmetry – New Disciplines – Services and Investment as well as Intellectual Property, Innovation, transparency in government procurement – Regional Integration – Development Cooperation

5. Key Trade Agreements/Arrangements – CARICOM Single Market and Economy – CARICOM-Dominican Republic – CARIFORUM-EC EPA – CARICOM-Colombia – CARICOM-Costa Rica – CARICOM-Cuba – CARICOM-Venezuela – CARIBCAN – CBI/CBPTA

6. TRADE IN GOODS Trade in Goods – Phased reduction of Customs Duties/ODCs (Art. 16) – National Treatment (Art. 27) – Rules of Origin – (Protocol I) – Administrative Cooperation (Art. 20) – Safeguards (Art25 (6)(b) (Only with respect to the FCOR)

7. Adjustment Challenges Phased Reduction of Customs Duties etc. – Fiscal reform to replace and create revenue – Private sector competitiveness (Like or substitute products originating from the EC) – Exclusion list provides limited breathing room for producers and government – TBT/SPS measures have limited the exports of agro- processed goods in the past. Establishing appropriate regulatory, institutional and monitoring mechanisms is required to enable these firms to export to EU Market.

8. ADJUSTMENT CHALLENGES Rules of Origin – Reciprocal nature of the Agreement requires CARIFORUM Governments to enforce the rules and therefore training of officials and the private sector will be important – Firms must alter production methods and input markets in order to qualify for preference or be competitive – Industrial and investment policies must be reviewed and revamped

9. Trade in Services and Investment – Commitments in all modes of supply taken by the Parties – asymmetrically in favour of CARIFORUM – Investment (commercial presence) CARIFORUM has taken broader commitments than the EC for non-services investment – Visas and work permits not covered by the Agreement – Moratoria exists for some countries in some sectors

10. ADJUSTMENT CHALLENGES – Development of domestic regulations – Establishment of and compliance to standards – Development of Mutual Recognition Agreements (More so for Architects and engineers, Accountants) & Management Consultants? – Establishment of Co-production Agreements

11. REGIONAL INTEGRATION Pace and content of integration is a matter to be determine exclusively by CARIFORUM Member States (Art 4) In the area of services – the progressive removal of remaining barriers and the provision of appropriate regulatory framework among CARIFORUM States (Art. 64) Regional Preference – (Art. 238) Cooperation with FCORs – (Art 239)

12. Regional Preference This principle has implications for: – the trade relationship between CARICOM and the Dominican Republic in particular the Strengthening of the Agreement Establishing a Free Trade Area between CARICOM and the Dominican Republic (elimination of customs duties, rules of origin, trade in services and investment and so on) – Bahamas and CARICOM – Bahamas and the Dominican Republic – Haiti and the Dominican Republic

13. ADJUSTMENT CHALLENGES – CARICOM-Dominican Republic as well as CARICOM-The Bahamas trade relations set to deepen. Provides an opportunity for the Parties to develop a mutually beneficial arrangement that is consistent with Art. 238 – Fast tracking the CSME –to provide the development space required for CARICOM SMEs – Deepening relations with the Bahamas will require political commitment and human resources

14. Impact of Trade Policy on Industrial Policy – These Agreements will have implications on the types of assistance that can be offered to firms in the future. Member States should re-examine their industrial policy in lights of the evolving framework. – Safeguard Article on Infant Industries prohibits the use of tariffs as a safeguard measure to protect infant industries 10 years after entry into force the Agreement – Liberalisation of Services also require States to revisit industrial and incentive regime to promote trade with Europe – WTO SCM Agreement prohibits the use of important Export Subsidies by 2015

15. Private Sector Constraints: Role for Management Consultants Few firms are exporting and the range of products exported are limited – The use of limited and outdated technology in production – Limited supply capacity and value chain management – Limited or no use of research & development and innovation – High production costs – Limited skills sets – Limited access to affordable financing – A business environment that is often characterised as bureaucratic and slow to facilitate business transactions – Limited foreign direct investment as well as local and regional Investment flows – The lack of modern management and business processes that promote efficiency, product quality and cost competitiveness. – limited exposure to standards, market requirements and best practices in their fields.

16. Development Cooperation Priorities – Building human, legal and institutional capacity – Promotion of private sector enterprise development – Diversification of exports – Enhancing technological and research capabilities – Development of Innovation systems – Development and use of IP

17. Development Priorities Services – Improving Access to Market Intelligence – Improving the export capacity of service suppliers – Promoting Investment and Joint ventures between service suppliers – Facilitating dialogue between CARIFORUM and EC Service Suppliers

18. EPA IMPLEMENTATION – Focus on building human and technical capacity – Enhancing training and education – Deepening trade relations with the FCORs and OCTs – Ensuring that there is sufficient direct assistance to encourage firms to meet the necessary standards and requirements in export markets – Working with professional associations to ensure that qualifications are recognised

19. EPA IMPLEMENTATION – Strengthen Business Support Organisations to ensure that firms are equipped with the necessary intelligence to penetrate markets – Identify possibilities for joint ventures and strategic alliances between regions – Working with Management Consultants to assist firms in mitigating the challenges associated with trade liberalisation.

20. WHO SHOULD BE INVOLVED? Regional – CARIFORUM Coordinator – CARIFORUM DIrectorate – CARICOM SEC/CARICOM Implementation Unit – OECS Secretariat – CROSQ, CAFHSA, CCC, – Caribbean Export National – Implementation Unit – Customs – Ministries of Finance, Foreign Trade, Industry and commerce, Labour, Education – BSOs, Universities, NGOs – FIRMS

21. Contact Details Carlos Wharton Senior Trade Policy Advisor Email: cwharton@carib-export.comcwharton@carib-export.com Head Office Mutual Building Hastings Main Road Christ Church, BB15154 P.O. Box 34B Brittons Hill Post Office St. Michael, BB14000 BARBADOS Tel: +1(246) 436-0578 Fax: +1(246) 436-9999 E-mail: info@carib-export.cominfo@carib-export.com Sub Regional Office Calle Carlos Lora No. 9 Ensanche Los Restauradores Santo Domingo DOMINICAN REPUBLIC Tel: +1 (809) 531-2411 Fax: +1 (809) 473-7532 E-mail: c.export@codetel.net.doc.export@codetel.net.do