[dropcap]T[/dropcap]his year marks a decade since CARIFORUM joined with the European Union to sign the Economic Partnership Agreement (EPA), a landmark piece of legislation that ushered in a new era of trade relations. The overarching goal of the EPA was to create a partnership that would not only improve market access, but also encourage sustainable development and promote greater regional and international integration. It was an important step into the world economy for CARIFORUM States, but many feel that businesses are still not fully exploiting the legislation and missing out on all the European market has to offer.
CHANGING THE TRADE DYNAMIC
When the EPA came into force in 2008, the global marketplace was a very different environment. Trade relations between the Caribbean and Europe were governed by the Cotonou Agreement which granted duty-free, non-reciprocal preferential access to the European market. This drew the ire of the World Trade Organisation (WTO), however, which voiced opposition to this kind of discriminatory trading. If certain Caribbean nations were given favourable terms to trade with Europe then all members should receive those same allowances, according to the WTO.
It was obvious that a new trade dynamic was needed so discussions began to decide on a way forward that would satisfy all economic and political interests. Negotiations concluded in December 2017, and the WTO-compatible EPA was officially signed into law the following year. More liberal than the trade provisions of Cotonou Agreement, the EPA is a reciprocal agreement that keeps the level of discrimination at a minimum to satisfy WTO requirements. It also has a broad remit – although its core is trade in goods, the EPA also covers services, investment, trade-related issues and development.
MARKET RESEARCH
By widening the scope of the EPA, law-makers aimed to help the participating Caribbean nations diversify their economies and pursue sustainable growth but, a decade later, many are questioning whether it has had the desired effect.
“The main aim of the EPA was to secure preferential market access treatment for products and services from CARIFORUM states. It has not generally achieved its objective due to the limited production capacity of the Caribbean countries who signed the agreement and the global financial and economic crisis that followed its signature,” says Virginia Paul, Head of the Organisation of Eastern Caribbean States (OECS)’s Trade Policy Unit.
While global instability and political change is unavoidable, building capacity in the region is achievable – and must be a top priority if Caribbean businesses want to expand and grow. Uptake of EPA opportunities among smaller businesses however is not where it should be, according to economists from both Caribbean Export and the OECS (both of which regularly host workshops to raise awareness of how firms can use the EPA). SMEs are often dissuaded by the thought of shipping products to a far-flung continent which encompasses around 28 countries, each with their own language, culture and regulations.
“It is not as intimidating as you think,” Caribbean Export consultant Dr Noel Watson told participants at a workshop held last year in Trinidad and Tobago. “You just need to have the proper guidance.”
Market research is key, according to Dr. Watson who advises companies to spend time finding buyers, making strategic alliances with regional partners and getting to know the country they’re targeting – what are its transportation routes like? Is there a representative on the ground to advise on customs duties and other regulations? Do products meet European standards?
Paul highlights the importance of marketing and wants to see businesses invest in getting the word out about their products. She says: “Caribbean SMEs can turn market access into market presence by undertaking promotional activities and meeting the required standards, registrations, and other regulations. This usually requires an investment of time and money.”
Considering the consumers is also crucial. Buyers in Europe are not necessarily looking for a bargain but prioritise quality over price, says Dr. Watson. Demand for natural, handmade and environmentally-friendly products is growing – giving the Caribbean a prime opportunity in terms of agricultural goods and crafts. “They want flavours and ingredients that we have in our cuisine,” says Dr. Watson. “The Caribbean is exotic.”
GETTING READY TO COMPETE
The Caribbean may be a disparate group of nations, but there’s strength in numbers. Dr. Watson urges firms to come together to target Europe effectively, saying: “One of our problems in this region is that we’re small, but if small businesses got together they would be able to do a lot more.”
Companies can reduce costs by sharing packing centres and containers. They can also pool together to get discounts and deals. These economies of scale and scope can give smaller firms the help they need to compete.
Businesses can also take advantage of support from regional organisations. Both the OECS and Caribbean Export regularly host workshops, presentations and roundtable meetings on the EPA and how it can be applied. Paul says there is always more to be done and wants to see increased activity at the domestic level. “The support required to exploit the EPA is typically technical in order to understand and meet the regulatory requirements,” she says. “There is still need for awareness building on the EPA, particularly by national governments. Regional agencies cannot do it all.”
As the EPA looks ahead to another decade, there is a lot of uncertainty on the horizon. The EU is set to lose a major trading partner soon as the UK moves ahead with BREXIT – a shift that will undoubtedly have far-reaching implications for the entire trading bloc. In the meantime, firms are advised to make full use of the tools available to them. These include the EU’s free online export helpdesk which gives information on EU import requirements, tariffs and trade preferential agreements.
The OECS continues to spread the word, through activities undertaken by its Competitive Business Unit, and looks forward to greater participation by all stakeholders in the future. “The next ten years will be a time for a review of the impact and value of the EPA,” says Paul. “Efforts will continue to penetrate the European market.”
