How to cite this journal: Author, Date of the post, WMO Conflict Insight, Title of the post, ISSN: 2628 6998, https://worldmediation.org/journal/
ABSTRACT *
This article traces the trade relationship between the European Union and the African, Caribbean and Pacific States, with particular attention to the Economic Partnership Agreement concluded with CARIFORUM. Situating the arrangement within the wider context of globalisation and liberalised trade, the author follows the sequence from the Lomé Convention of 1975 and the establishment of the Caribbean Community through the Treaty of Chaguaramas, to the end of non reciprocal preferences under the Cotonou Agreement and the signature of the Economic Partnership Agreement in 2008. The structure and objectives of that agreement are set out, together with its institutional machinery. The author then identifies the difficulties of implementation, including revenue loss from tariff reductions, competition from European exports, adjustment costs, and the absence of a unitary legal order on the Caribbean side comparable to that of the European Union. The conclusion is that the parties negotiate from positions of markedly unequal capacity and that no adequate process for resolving disputes has been established.
KEYWORDS *
CARIFORUM, Economic Partnership Agreement, European Union, Lomé Convention, Cotonou Agreement, Treaty of Chaguaramas, CARICOM, asymmetric negotiation, liberalisation, regional integration, dispute settlement, small states
INTRODUCTION
The impact of globalization and trade brought with it the neoliberal-laissez-faire dialogue and the pursuit of profit. The ACP, EPA, and European Union trade agreements may be described as fitting this description. They make up some of the countries that have entered into international agreements for national interests. These multilateral trade agreements are aligned with open markets, limited subsidies, and foreign direct investment. These factors should be appreciated when examining the African, Caribbean, and Pacific States (ACP) countries, trade agreements with the European Union. The ACP countries have a long history with the European Community. The purpose of the ACP is to foster collaboration and cooperation with these communities. The basic aim was to facilitate sustainable development and eradicate poverty in the countries (Nyomakwa-Obimpeh, 2017).
MAIN CORPUS
Negotiations
The negotiations for the Economic Partnership Agreement (EPA) between the ACP were based on the Cotonou Agreement and were conducted in two phases beginning with: (1) The ACP-EC phase; and (2) the EC Commissioners for Trade and Development and Humanitarian Aid. The CARIFORUM negotiating mandate went through a series of regional specifics at local and then international levels. In June 2002, the General Affairs and External Relations of the EU gave the mandate to negotiate an EPA.
The trade agreement and the implications of the EPA between CARIFORUM and the European Union are put in perspective of the LOME Agreement established between 1973-1975. The Lomé Convention is a comprehensive trade and aid agreement with developing countries in Africa, the Caribbean, and the Pacific (Gibb, 2000). The Caribbean Community and Common Market (CARICOM) was established in 1973, and it included most of the major Commonwealth Caribbean territories, such as Trinidad, Barbados, The Bahamas, Guyana, and Dominica (Payne, 1985).
The establishment of the CARIFORUM-EU trade agreement was brought about by a sequence of events that followed convoluted and almost impassable arrangements with the Caribbean and African states. They wanted to secure viability for the sugar and banana industries with Britain and France, who viewed the African nations as full of substantive resources. The Commonwealth Caribbean states signed the Treaty of Chaguaramas, establishing the Caribbean Community and Common Market. The Treaty of Chaguaramas came into effect on August 1, 1973, comprised of Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Belize, Grenada, Guyana, Haiti, Jamaica, Montserrat, and Trinidad and Tobago, amongst others.
The Caribbean States began negotiation with the African and Pacific States with a mutual understanding to build international relations. The signing of the Lomé Convention Agreement on February 28, 1975, brought multifaceted changes to ‘Less Developed’ countries and negotiations with the Common Market, the African, Caribbean and, and the Pacific States (Gruhn, 1976).
Negotiating the Cariforum-EC-EPA
The Lomé Convention was a functional tool in international trade relations and allowed less powerful states to present a fortitude of convictions and purpose to the European Community. This saw changes due to globalization and the expansion of the European State. In 2000, the Cotonou Agreement came to an end, and with it, the end of the non-reciprocal trade policy that was made under the Lomé Convention (Hurt, 2003). This was beneficial because multilateral negotiations promote trade and economic growth. The CARIFORUM countries are relatively small and dependent on foreign trade, and the Caribbean has fewer goods to export than the larger European market. It has been observed that, now that the Caribbean economies have been integrated into international trade, it has brought high trade to GDP ratios and dependency on imported goods (Brusse and Simon, 2007).
Structure and Provisions
The CARIFORUM-EU Free Trade Agreement between the EU and its former colonies provides a comprehensive and multifaceted international trade agreement. The agreement has four parts, inclusive of protocols and declarations. It provides a comprehensive list of the objectives, which include: (a) ‘Contributing to the reduction and eradication of poverty; (b) regional integration, (c) economic cooperation; (d) promoting the integration of CARIFORUM States; and (e) improving CARIFORUM States capacity in trade policy.’ The structure of the agreement and the provisions provided in this development area promotes cooperation in the ideals of partnership such as rules, procedure, and sources of funding standards.
It should be noted that the CARIFORUM-EU is an international agreement that provides the Europeans with the ability to display international diplomacy. However, it noted that “The European Commission was keen to use the EPA negotiations as an opportunity to lay down a marker in the context of international disputes, (Ben Garner, 2017). In terms of institutional provisions, the joint CARIFORUM-EC Council is the primary institution with the CARICOM-EC Trade and Development Committee and is the second-highest institution. It aims to demonstrate a mutuality of interests of the parties in bilateral, multilateral, or international matters.
This is done through the CARIFORUM-EU Agreement and liberalization policy, which was used to promote development through the EPA. Liberalization is the removal of trade barriers between the EU and EPA while enhancing cooperation in trade. CARIFORUM states have benefitted from the liberalization commitment via the Dominican Republic by satisfying the compatibility for trade. The challenge, however, is that the agreement attempts to balance agricultural products with WTO strict limits on agricultural tariffs and subsidies (Heron, 2011).
Challenges of Implementing the CARIFORUM-EC EPA
Implementing the CARIFORUM-EC Economic Partnership Agreement involved a series of processes that involved legal, procedural, and administrative mechanisms of the CARIFORUM States. The EPA’s schedule was an integral part of the Caribbean Single Market Economy (CSME). The plan to establish the CSME was part of a global integration framework to provide a framework for a Revised Treaty of Chaguaramas. The signing of the CARIFORUM EPA in 2008 was intended to gain access to the European market and developing trade capacity. However, there remain several challenges with the EPA. These include revenue loss from tariff cuts, competition from EU exports, adjustment, and implementation costs (Montoute, 2015). It is noted that Europe is a unitary system, and issues of the law are considered by the European Court of Justice (ECJ), a single body. On the other hand, the CARIFORUM States do not have a unitary system, and law issues may be adjudicated by a regional court. This is challenging because each country has laws that are consistent with national interests.
SUMMARY *
The article traces a single trajectory across five decades: from preferential access granted without reciprocity under Lomé, through the incompatibility of those preferences with World Trade Organization rules, to a reciprocal agreement in which small economies undertake obligations comparable in kind, though not in scale, to those of the largest trading bloc in the world. The difficulties the author identifies at the implementation stage, lost customs revenue, exposure to European competition, and administrative capacity, follow from that shift rather than from any defect in the drafting.
CONCLUSION
The examination of ACP, EPA, and EU trade agreements provides a historical look at the ACP and its interaction with Europe. The challenge is that these countries do not have the industrialized capacity to compete on a total mutuality of interest basis. This is the reality of the primary export of the sugar and bananas industries. Less developed countries are unable to compete with the refined products of Europe and lack adequate financial resources. Also, there is not a well-defined process of negotiation of conflict resolution. It is hoped that as these multilateral agreements expand with the less developed countries like the ACP, those negotiations are promoted based on mutuality of interests.
POTENTIAL SOLUTION *
The article’s closing observation, that no well defined process exists for resolving disputes and conducting negotiations, identifies the point at which this material becomes relevant to mediation practice, and it is worth developing.
Asymmetry of the kind described here is a familiar problem for anyone who works with parties of unequal weight, and negotiation research offers a specific diagnosis. What determines an outcome is not the size of the parties but the quality of their alternatives, and the article’s own reference to the BATNA literature points there. The Caribbean states negotiated under a deadline created by the expiry of a waiver, facing the loss of existing preferences if no agreement was concluded, while their counterpart faced no comparable consequence. Under those conditions the weaker party is not negotiating but choosing between an offer and a cliff. Anything that improves the alternative therefore improves the outcome more than any amount of skill at the table: alternative markets developed in advance, coalition with other regions facing the same negotiation, and above all the removal of artificial deadlines that press on one side only.
Capacity is the second lever, and it is the one most readily addressed. A negotiation in which one delegation is supported by hundreds of specialists and the other by a handful of officials covering several files each is unequal before anyone speaks. Independent technical assistance, funded by neither party, and joint regional negotiating machinery with permanent staff rather than seconded ministries, are the standard remedies and they work. This is also where sequencing matters: agreements negotiated faster than the weaker party can analyse them produce commitments whose implications emerge only years later, which is precisely what the implementation difficulties described here reflect.
On dispute settlement, the asymmetry the author notes has a practical consequence beyond the institutional one. Formal arbitration is available under such agreements, but using it requires legal resources that the smaller party frequently lacks, with the result that the mechanism exists and is not used. Standing consultative machinery with mediation as its first stage, low cost, non adversarial and available before a matter hardens into a legal dispute, is more useful to a small state than any tribunal. Where formal proceedings are unavoidable, a shared legal facility serving the region collectively would make the rights on paper into rights in practice.
Finally, a broader observation. Trade agreements are ordinarily treated as economic instruments and analysed by economists, but they are negotiated outcomes, and everything the mediation field knows about power imbalance, deadline pressure, information asymmetry and the durability of agreements applies to them directly. An agreement whose weaker party experiences it as imposed will be implemented reluctantly, renegotiated at the first opportunity and blamed for whatever follows. That is not an argument against liberalised trade; it is an argument for negotiating it in a way that both sides can defend at home, which is the same argument this journal makes about every other kind of settlement.
* Added by the WMO Editorial Team
REFERENCES
References
Busse Matthias and Lueje Simon. “Should the Caribbean an Economic Partnership Agreement with the EU? Challenges and Strategic Options.” Center for Economic Integration, Sejong University 22, no. 3 (September 2007): 598–618.
Gibb Richard. “Post-Lome: The European Union and the South.” Third World Quarterly 21, no. 3 (June 2000): 457–81.
Gruhn Isebill. “The Lome Convention: Inching Towards Interdependence.” University of Wisconsin Press, The Lome Convention, 30, no. 2 (Spring 1976): 241–62.
Heron Tony. “Asymmetric Bargaining and Development Trade-Offs in the CARIFORUM-European Union Economic Partnership Agreement.” Taylor & Francis Ltd 18, no. 3 (August 2011): 328–57.
Hurt Stephen R. “Cooperation and Coercion? The Cotonou Agreement between the European and the ACP States and the End of the Lome Convention.” Taylor & Francis Ltd, Third World Quarterly, 24, no. 1 (February 2003): 161–76.
Montoute Anita. “CARICOM’s External Engagements: Prospects and Challenges for Caribbean Regional Integration and Development.” The German Marshall Fund of the United States, May 2015. https://www-jstor-org.cob.idm.oclc.org/stable/pdf/resrep18854.
Nyomakwa-Obimpeh James. “Examining the Role of BATNA in Explaining EPA Negotiation Outcomes.” Center for Economic Integration, Sejong University 32, no. 2 (June 2017): 488–530.
Supplementary references added by the WMO Editorial Team
Economic Partnership Agreement between the CARIFORUM States and the European Community and its Member States, signed at Bridgetown, 15 October 2008.
Partnership Agreement between the members of the African, Caribbean and Pacific Group of States and the European Community (Cotonou Agreement), 23 June 2000, as revised.
Fourth ACP EEC Convention (Lomé IV), 1989, and the earlier Lomé Conventions of 1975, 1979 and 1984.
Revised Treaty of Chaguaramas Establishing the Caribbean Community including the CARICOM Single Market and Economy, 2001.
World Trade Organization, General Agreement on Tariffs and Trade, Article XXIV, and the Doha waiver for ACP preferences, 2001.
Fisher, R., Ury, W., & Patton, B. (2011). Getting to Yes: Negotiating Agreement Without Giving In (3rd edition). Penguin Books, New York (on the best alternative to a negotiated agreement).
Odell, J. S. (Ed.) (2006). Negotiating Trade: Developing Countries in the WTO and NAFTA. Cambridge University Press, Cambridge.
Zartman, I. W., & Rubin, J. Z. (Eds.) (2000). Power and Negotiation. University of Michigan Press, Ann Arbor.