By Kurt Reynolds

On January 1st the Economic Partnership Agreement (EPA) between the European Union and CARIFORUM will take effect. Negotiations between the two parties concluded in Barbados last Sunday with Caribbean nations signing on the dotted line.

The EPA will allow Caribbean goods to enter the European Union duty free and quota free while there is a phased period between three to 25 years for European goods to enter CARIFORUM markets duty free as well as an important number of exclusions for sensitive products. Initialing on behalf of the two sides were Karl Falkenberg, the European Commission’s Deputy Director General for Trade and Ambassador Richard Bernal, Director General of the Caribbean Regional Negotiating Machinery.  A ministerial signature of the EPA is foreseen no later than April 2008 possibly in Barbados.

At a press conference yesterday, Senator Guy Mayers, minister for trade, industry, and commerce and consumer affairs said he considered the agreement an attempt to “create opportunities for investment and production.” He made note of the developmental aspects of the new agreement that will allow for technical support in tourism and the agricultural industries.

 “The agreement is the successor to the provisions under the Contonou agreement which granted preferential market access to the European Union for goods from Caribbean countries that were former colonies of European countries,” began Mayers. “By signing the EPA on schedule St Lucia has avoided its exports into the EU having to face import duties that would have applied under the Generalized System of Preferences. With the EPA in place all exports from CARIFORUM into the EU will enjoy duty free status.

In return, CARIFORUM countries have agreed to liberalize market access for some of the EU’s exports to the region. “CARIFORUM has agreed to a list of products that will be allowed duty free access into CARIFORUM markets over a period of 15 years, another group that will enter duty free after a longer period of 20 to 25 years and a third group for which there will be no duty free access,” said Mayers.

The senator explained that items under Article 164 (pasta, soft drinks, and etcetera) would not be allowed into the CARIFORUM markets from the EU. He said that there was much to gain from the agreement, considering “the duty free and quota free special protocol on bananas.” According to Mayers, the ten-year period in which CARIFORUM countries must amend other duties and charges to make them WTO compliant and the assistance with tax reform one of the major benefits of the agreement.

 “Consumption tax is not considered a border tax,” explained Mayers. “For instance, where you pay an import duty, environmental levy and an excise tax on a motor vehicle, we are in the process of reviewing our tax structures. So instead of an import duty on a vehicle, we will shift it to an excise tax or some other form of tax to make it WTO compliant. So it is not that we have to do it right now, we have ten years to adjust and then start the implementation. “The EU also agreed to contractual service suppliers . . . that is to allow the temporary entry of natural persons into the EU to provide services.”

Mayers admitted that with the benefits came certain things that CARIFORUM countries had to “give up.”  The Tariff Liberalization, being one of them, opens the markets to the EU over a 25-year period, and will see a huge loss of revenue. St Lucia is being called upon to make a number of adjustments to our revenue collection systems to allow us to continue to access the European market.

Minus the “special protocol on bananas” and the access to EU markets by entertainers, St Lucia will receive no preferential treatment and still face the same competition from the Latin American countries, which produce goods at a cheaper cost. According to Mayers, there will be European goods on island but that doesn’t mean that there would be only one option for buyers.

“The goods from the EU are not necessarily going to be more affordable. If someone can source an item at a lesser cost from the American market then they can get the item from there,” he said. In an earlier STAR interview prime minister Stephenson King had shown concern over the “substantial amount of revenue that farmers will lose” and said he wanted “compensation” for the lost revenue. However, according to Mayers, there will be no compensation but provisions are made to assist farmers in other “technical” areas.

With the advent of the signing of the agreement, WIBDECO and WINFA are meeting today (Tuesday) to discuss their way forward. In the final evaluation, St Lucia will be called upon to forgo quite a bit of revenue on import duty items and re-exportation of items to other countries.