David Jessop, THIS WEEK IN EUROPE'Small nations, big ambition'. These are the words used by the chairman of a major European company to describe the recently initialled economic partnership agreement (EPA) with Europe.
While being warm towards the region, he was openly sceptical about whether more than three Caribbean nations would recognise or take advantage in time of the opportunity now presented. He sought to find out which body or bodies existed in the region that were able to rapidly implement so complex an agreement.
In some quarters, there is a view that the eleventh-hour initialling of the EPA just before Christmas was in some way a great escape. That is to say, by avoiding the imposition of European tariffs where none existed before, the region had averted a political and economic crisis and was home and dry.
Nothing could be further from the truth. Any reading of the EPA makes clear that every government and regional institution has little option other than to determine within the three-year preparatory period how they are to foster globally competitive economies and industries.
imports
Attached to the EPA are hundreds of pages of tariff-reduction schedules that make clear on a country-by-country basis that most imports from Europe will gradually cease to be subject to tariffs over the next 15 years, and that Caribbean manufacturers and importers will either have to become competitive or suffer the consequences of external competition.
Much the same applies in respect of services where EU firms will increasingly be able to compete directly with a wide range of Caribbean companies providing everything from financial services to ground transport.
Last November, Professor Bish-nodat Persaud, one of the region's internationally respected economists, delivered an address in Mauritius. He spoke in part about trade and competitiveness. He expressed confidence in the future of small island states.
He noted that it had become fashionable to argue that small states are vulnerable and faced considerable disadvantages. While this might have validity in certain respects it was not the whole story.
"If a small state provides a space in which competitive returns to capital can be obtained and that small state does its investment promotion, is expeditious in dealing with foreign investors, has a good legal framework, and can be a little ingenious with tax competition, then capital with come," he observed.
natural resources
In his remarks, Professor Per-saud argued that capital will come to tap natural resources.
Small islands by definition almost always had these in the form of beaches, their environment, fisheries and exclusive economic zones that enabled, for instance, the sympathetic exploitation of undersea resources.
In addition, good human resources, a low crime rate, a functioning democracy, credible law and order, and reasonable social stability enabled small states to succeed. Singapore, Iceland, Ireland, Barbados, Malta, Cyprus and Mauritius were good examples of nations that were flourishing without a major resource endowment.
On preferences, Professor Per-saud observed that while it was understandable that small states would wish to retain them for as long as possible, a sense of proportion was required in dealing with this issue. Preferences, he said, were being eroded, but were not yet at an end. Arguing that they inhibit movement to higher-risk, higher-retur industries, Professor Persaud suggested that "they deter more competitive and efficient enterprises from emerging".
What is needed, he argued, was the evolution of an internationally competitive industrial structure comprising new and transformed traditional industries. This involved repositioning.
This is, of course, precisely what the EPA is about.
Despite this, little has so far been said in the region about which entities define, articulate and deliver on time such a challenging process of regional economic change.
burdensome structure
For its part, the EPA text points prosaically to a rather burdensome joint EU/Cariforum structure involving a joint ministerial committee, a joint committee of senior officials, a joint parliamentary committee, and an advisory committee for civil society that would seem to consign to the sidelines, the private sector, the one group that has to make the EPA work.
But more realistically, it would appear that it will largely be up to CARICOM in the guise of Cariforum, plus new institutions, such as the proposed Regional Development Fund and relevant groups in individual nations.
Working together, they will have to create and deliver the institutional mechanisms and then in less than three years time, the funding, technical assistance and ongoing support that will enable the repositioning of the Caribbean economy.
This is a tall order for Cariforum, a body with a limited capacity and an organisational structure not designed for delivering a time-constrained and legally binding trade agreement that will set the parameters for others yet to be negotiated.
Already, two Cariforum Governments, aware of the short time scales, have met at Cabinet
level to discuss what is needed to become competitive and how the EPA might drive institutional change in a manner that also facilitates the completion of the Caribbean Single Market and Economy.
Oddly as all this is happening and a further trade negotiation with Canada is in the offing, questions are being raised about the Caribbean Regional Negotiating Machinery, its remit and the structure of future institutional arrangements for trade negotiations.
Sometimes it would seem as if the region has a death wish. Success and petty nationalism seems to breed jealousies that drag down those most able to deliver. While elder statesmen such as Sir Shridath Ramphal will no doubt reflect on this in their memoirs, some aspects of Caribbean history seem to have a nasty habit of trying to repeat itself.
This is not to suggest that any arrangement is forever. Rather it is to recognise, as one European Minister observed in the last week, that few nations in the world have a ministerial and technically led trade negotiating structure of the kind that exists in the Caribbean; one, he observed that had proved itself able to resist the political bullying and the intellectual muscle that Europe is able to deploy to achieve the trade arrangements it wants.
In the months ahead we will all discover whether regional institutions and governments make progress towards EPA implementation and by extension see whether and underlying philosophy of change and competitiveness outlined in Mauritius by Professor Persaud will prevail.
David Jessop is director of the Caribbean Council. Email: david.jessop@caribbean-coun cil.org.
