The Economic Partnership Agreement (EPA) is a trade and development agreement between the fifteen CARIFORUM States (CARICOM plus the Dominican Republic) and the 27 Member States of the European Community (EC). The EPA was signed in October 2008 and its main objectives are to:
- increase trade between the EC and CARIFORUM by reducing trade barriers
- Contribute to the reduction and eventual eradication of poverty
- Promote regional integration, economic cooperation and good governance
- Improve the CARIFORUM States’ capacity in trade policy and trade-related issues
- Support the conditions for increasing investment and private sector initiative
- Providing development cooperation to enhance supply capacity, competitiveness and economic growth
- Promote the integration of CARIFORUM States into the world economy
There are several reasons why CARIFORUM Member States signed an EPA. First, the preferential trading arrangement which granted duty free and quota free market access to goods imported from African Caribbean and Pacific (ACP) countries could not be maintained by the EC. Incidentally, non-ACP countries challenged the legality of this non reciprocal arrangement on the basis that it was not compatible with World Trade Organization (WTO) rules. One of the founding principles of the WTO (Most Favoured Nation) stipulates trade without discrimination – treating members equally. Therefore the trade arrangement between the ACP and the EU was seen as going against this core principle of the WTO.
Secondly, like most ACP countries, St. Vincent and the Grenadines did not take full advantage of the EC preferential trading arrangement as exports comprised mostly basic agricultural commodities. Besides, the basic commodities obtained lower prices now than they obtained over 20 years ago.
Thirdly, the EPA is referred to as a trade partnership for sustainable development as it is designed to promote trade expansion by the inclusion for the first time, commitments of access for service providers and investors in both goods and services. Businesses are expected to benefit from enhanced market access and new opportunities for investment promotion. For example, a Vincentian firm would be able to trade with a European firm on a more transparent and predictable manner.
The EPA provides for the movement of temporary presence of natural persons for business purposes these include: Contractual Service Providers, Short term Visitors for business purposes, Graduate Trainees, Business Service Suppliers, Key Personnel and Independent Professionals. A significant new area of market access is the Entertainment Services. The Cultural Cooperation Protocol under the agreement provides for greater collaboration between the EC on Cultural services. Hence, Cultural practitioners are allowed to enter the EC market for up to ninety (90) days to collaborate on projects and training. Additionally, co-produced audio-visual products and services can be qualified as European work.
Furthermore, a significant component of the EPA is the Development support. This support can be financial and/or technical assistance and these include: building human and institutional capacity, promoting private sector development, enhancing the technological and research capabilities, infrastructural development and developing the innovation system.
There are however challenges that have to be addressed in order to take advantage of the opportunities under the EPA. Some of the challenges are: the services sector is unorganized and unregulated; standards and the rules of origin criteria to gain market access into the European market are difficult to meet, recognition of professional qualifications and hence there is a need for the parties to negotiate Mutual Recognition Agreements. However, these challenges are not insurmountable and would need greater collaboration between the public and private sector stakeholders to address these challenges.
Failure by the parties to sign an EPA would have resulted in CARIFORUM Countries being subjected to the EC Generalized System of Preference (GSP) which only covered a smaller number of products for preferential treatment.