FOR IMMEDIATE RELEASE
The Caribbean Association of Industry and Commerce makes a call for tougher bargaining by CARICOM on the CARICOM-Canada Free Trade Agreement.
With the possible concluding rounds taking place in Barbados this week, the Caribbean Association of Industry and Commerce (CAIC) calls on the College of Negotiators to stand firm and leverage the good relationship Canada has had with the Caribbean to secure a fairer free trade agreement. The CAIC is cautioning against accepting a “watered down agreement” which would not be beneficial to either party and worse yet the Caribbean private sector.
Based on consultation with its Caribbean Private Sector stakeholders, CAIC identified six areas of concern with the ongoing negotiations.
- The impact that the status of these negotiations would have on the CARICOM private sector in the event that the trend of these negotiations continue.
- The impending withdrawal of the CARIBCAN without the enactment of the CARICOM-Canada FTA; and the severe impact on Caribbean export items such as rum, tapia, ground provisions, fruits, vegetables and other food products.
- Areas that Canada are interested in receiving greater market access to based on its demonstrable export capacity such as, dairy industry, poultry, non-alcoholic beverages, sausages and apparel.
- The removal of sensitive items of interest to Canada on the basis of reciprocation.
- Insufficient and therefore ineffective mechanisms to facilitate CARICOM suppliers of Trade in Services.
- A desire to reengage the Canadian Private Sector that allows integration at the provincial level.
In January 2001 discussions towards the negotiation of a possible CARICOM-Canada Trade Agreement was announced. Since then, negotiations began in November 2009 and are due to be concluded in June 2014.
The Trade Agreement would replace the current non-reciprocal CARIBCAN, the WTO waiver which allows Canada to grant non-reciprocal preferences due to expire on December 31, 2014 and the 1998 CARICOM-Canada Protocol on Rum.
The Trade Agreement includes market access for goods, cross border trade in services, investment, temporary entry, labour, rules of origin, information and communications technologies, customs procedures, competition, monopolies and state enterprises.
CARICOM - Canada relationship
CARICOM's export of goods to Canada, whilst small, it is the third largest market of export goods for the region in which CARICOM enjoys a trade surplus (based on the preferential arrangement).
Canadians account for a major percentage of tourists to the region, and Canada is also home to a significant number of CARICOM's diaspora. While contributing significantly in aid to CARICOM countries, Canada also invests heavily in a variety of industries including banking, tourism and mining. In CARICOM, direct investments account for in excess of US$75 billion and trade in services approximately US$3 billion.
Given the current level of trade between Canada and CARICOM, any movement backwards, such as the reinstatement of tariffs and other non-tariff barriers for CARICOM goods and services would have disastrous effect on those companies that have invested in and trade with Canada.
While economists try to reassure that the Canadian economy is fine, beneath the surface it may be crumbling. Canada's economy is two-speed (energy and manufacturing) with high energy prices and oil sand investments in Western Canada resulting in a strong economy and improvement in government finances.
Since the recession Canada's export trade has collapsed with its largest provinces of Ontario and Quebec suffering the brunt as non-energy exports and the decline in the Canadian dollar slows their economic recovery and ability to eliminate their deficits.
Canada offerings vs CARICOM offerings
Taking these into consideration the ongoing negotiations between CARICOM and Canada are heavily vested on Canada's side with increasing their non-energy exports to the Caribbean in particular meat, fish, vegetables and processed foods. These goods while increasing the variety available to the region and the competitiveness, it can have devastating effects for the territories whose livelihood will be affected by the import of these goods from Canada.
For example, the Caribbean may soon see the importation of canned saltfish to replace the “buljol” prepared locally. The success of sardines from the Canadian market is only too well known. Co-opetition between the two sides could seek to create opportunities for Caribbean firms to establish a presence in Canada to produce and export the saltfish / buljol to the world.
As identified by CAIC, the trade in services discussion has been insufficient to allow for meaningful mechanisms to be put in place. Traditionally the Caribbean region has been portrayed to be market leaders in sun, sand and sea and despite the historical offering of agricultural products, the Caribbean Community is rich in human resources and professional services. The EPA has set a standard for services agreements for CARICOM but we note that several of the elements which were to be of benefit in services trade have not materialized, so anything worse than that would be of little relevance.
The effect of Canada’s approach to immigration and labour migration is well known to those who do business with Canada. There is still no provision made for CARICOM entrepreneurs seeking to enter the market and ply their “trade in service” under “Modes 3 and 4” as opposed to seeking employment.
During the negotiations, Canada has indicated its disappointment with CARICOM's proposals to liberalise given that negotiations with the European Union resulted in 90% liberalisation. Canada seeks to obtain additional preferences from CARICOM for its non-export goods, which are in competition with goods produced and sold locally.
Technical Co-operation for Trade and Capacity Development
It is clear that Canada is the stronger partner in these negotiations and therefore it is not unrealistic to expect or need to have them play a more direct and secure role in trade related technical cooperation. The reluctance on the part of the Canadians is demonstrated not only by the tone of the negotiations but there are articles which go against the legally binding nature of the initial mandate of this agreement. CARICOM is being asked to compete with more competitive Canadian goods, paying triple their electricity costs, with a poor business environment, and no assured assistance to improve matchmaking, and financing trade. Furthermore distinctions that are made about MSMEs without acceptable definition should be withdrawn since MSMEs set in the CARICOM context would be different for Canada because of the business environment within which each sits.
The trade agreement to be established between CARICOM and Canada exists at a national level and does not take into consideration the legislation and policy of the provinces. The EPA between the EU and then CARIFORUM is made between the EU and individual countries for effectiveness as policies vary between the Caribbean territories.
Given the provincial legislation and policies and the varying policies of the islands it negates the success rate of the trade agreement since CARICOM attempted to establish a Single Market and Economy which has largely failed and resulted in disputes between territories over trade, accessibility and tariffs.
It is on these grounds that CAIC calls for extending the negotiations beyond June 30th 2014, without the attendant repercussions of reverting to uncompetitive rules and appeals for a reengagement with the Canadian Private Sector to allow for a smooth and successful implementation of the proposed CARICOM/Canada Trade Agreement.