By: Sabina Zaccaro - IPS

Caribbean countries have said they are committed to finalising Economic Partnership Agreements (EPAs) with the European Union by the year-end, even though a number of hurdles remain. These pertain to the "already severe social, economic and fiscal dislocations to these small and vulnerable economies by the ongoing phasing out of preferences," says Colin Granderson, assistant secretary-general of the Caribbean Community (Caricom).

Caricom, says Granderson, holds the view that "priority will have to be accorded to the development dimension of the EPAs if the sustainable development objective of the agreements is to be obtained."

The Caricom members are Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago.

Discussions were held between trade negotiators from both sides at the Cariforum ministerial meeting in Haiti last week. The Caribbean Forum of African, Caribbean and Pacific States (Cariforum), including all but one Caricom countries (Montserrat), plus Haiti and the Dominican Republic, is a consultation forum for regional cooperation created to monitor European Development Fund (EDF) resources for financing regional projects.

Cariforum is signatory to the ACP-European Union (EU) Cotonou Agreement. This agreement between the 79 African, Caribbean and Pacific (ACP) countries governs trade and aid relations between the two groupings. Cuba, a member of Cariforum, has not subscribed to the agreement, named after Cotonou, capital of the West African country Benin, where it was signed in June 2000.

Starting January 2008, new EPAs are due to replace the non-reciprocal preferential arrangements currently in place, and which the World Trade Organisation (WTO) ruled to be non-compliant with global free trade rules.

Many ACP countries -- particularly West African states -- have repeatedly asked the EU to postpone the end of year deadline for concluding a free trade agreement, and to maintain the current preferences on imports of their goods for a period, the length of which is disputed. They say their industries and farms are unprepared to compete with cheaper goods from Europe.

IPS correspondent Sabina Zaccaro met Granderson in Rome, where he was attending the national conference last week on relations between Europe and the Latin American and Caribbean countries. Some excerpts:

IPS: Why does such little information circulate in Europe about the Caribbean countries' position on EPAs?

CG: First of all the Caribbean is a much smaller group than Africa -- the Caribbean Forum of ACP states includes 14-15 countries with a population of 20 million altogether. Secondly, compared to Africa the countries in the Caribbean have a much higher standard of living. For those reasons -- being small and having a higher standard of living -- perhaps not as much attention is paid to Caricom and the Cariforum.

IPS: What are the main issues related to economic relations with the EU that Caribbean countries are facing?

CG: There are major problems. In Caricom, for example, we had preferential trading arrangements on basic commodities, in particular sugar and bananas. Over the past four years, preferential arrangements on bananas have come to an end, and that has had very serious negative impact, both economic and social.

In some of our smaller countries, like St. Vincent for example, where bananas was basically the major economic activity, once access to the European market was reduced, this had obviously a huge economic and social impact on that country. That has been a major problem.

IPS: Sugar has been targeted by a EU trade measure in recent times...

CG: Very recently the European Union brought to an end what we call "the sugar protocol" (a special export regime for cane sugar in place since the mid-1970s that guaranteed fixed quotas and prices for shipments from ACP countries, that was unilaterally ended by the EU last month). This is going to have further negative impact on our economy. In addition, some of our countries are extremely small; in many of them most of the revenue comes from taxes on imports.

Under the proposed Economic Partnership Agreement, most of these taxes will have to be removed, which therefore means that we have to find other ways of getting revenue. In the (Caribbean) smallest countries personal taxes are very low, and this will mean putting in place value added taxes. As you may well imagine, it is very difficult to tell people in a country where the taxes have been very low, that the taxes are going to be raised 15 or 18 percent.

Politically, it is not going to be very easy for governments to do that, but most probably they will not have any other choice.

IPS: Are these issues finding room in the ongoing negotiations with EU?

CG: We have been telling the EU that it has to take into account disparities in size and resources between countries with a population of a million, some of them 600,000, and the EU. If they say there must be free trade, we say we agree with free trade, but then you have to help us to build the capacity, and help us to be competitive and to retool our industries, so that they become more competitive. These are some of the problems that are being discussed.

IPS: What is Europe's response?

CG: Well, Europe has said free trade is our way to go. We say that one size doesn't fit all, because if you are big, like the U.S., Japan or the European Union, yes you can trade. But when you have a population of 600,000, it is very difficult to be competitive with much larger countries.

There must be special differential treatment for the smaller and less advanced countries in the world. If you want to be equitable, than you have to help those that are weaker. That's our point with the European Union.

IPS: What are the main challenges of the little states in the globalised world?

CG: There are many challenges, but the biggest is trade. With globalisation and market liberalisation we've been told "if you want you can develop your free trade". And our answer is "yes we are willing to trade, but it will take some time before we bring ourselves toward standards". The situation has become much more complex. There are standards that have to be respected, norms that have to be met, and they're very costly. For very small economies it costs a lot to bring themselves up to global standards. That is part of the problem.

IPS: How much time would you need?

CG: It is difficult to say, but during the negotiations we have told Europe that there must be a longer transitional period. That's part of the negotiations: you can't change our economy in four-five years, it takes much longer than that.