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Friday 15 December 2017
News

Economic advisor warns against exaggerating effects of Brexit

Inder Ruprah, Regional Economic Advisor for the Caribbean at the Inter-American Development Bank (IDB) has cautioned the region against exaggerating the effects of the (Brexit) vote by the citizens of the United Kingdom (UK) to withdraw from the European Union.

Speaking during a recent “webinar” on the subject “Caricom, The Caribbean and Europe: Rethinking Trade, Assistance and Integration Post the Brexit Referendum,” Ruprah said, “the master agreement with the EU will remain in place, including with the UK, until the divorce terms have been settled and, who knows, they may fall in love again.” He said Brexit has a negative impact, “uncertainty always has a negative impact on economic growth and economics in general but we are talking about two years, three years, four years before any kind of negotiation could go ahead.” He added that the new Prime Minister of the UK, Theresa May has said that she is going to inform the European Council of Brexit early next year, “so we know that a formal notice of exit will be given to the European Council next year,” but apart from that, he said, “the only thing we are certain about is that we are uncertain.” Also speaking on the panel was Richard Bernal, Pro Vice Chancellor Global Affairs at the University of the West Indies. He lamented that the Caribbean hasn’t made full use of the Economic Partnership Agreement (EPA) negotiated between the EU and CARIFORUM (the 15 CARICOM states and the Dominican Republic) in 2008. The aim of the EPA, which included substantial EU aid for trade, was to help Caribbean countries expand their economies and make it easier for people and businesses from the region and the EU to invest in trade with each other and create jobs.

Bernal said the EU is not the region’s major trading partner, although the UK market within the EPA remains important. According to Bernal, “The negotiations for the exit are likely to take several years which means the EPA remains in place. Built into that agreement are various institutional arrangements to review and recalibrate the agreement. When the UK does in fact leave that agreement, I see no reason why the agreement has to be renegotiated, Britain has dropped out and will not be applying it. What has to be renegotiated is the UK’s relationship with CARIFORUM, but the agreement doesn’t have to be renegotiated.” David Jessop, a consultant with the Caribbean Council, noted that after the signing of the EU CARIFORUM EPA the EU negotiated and signed trade agreements with many other partners so that the world today is replete with agreements covering various disciplines and areas.

He added, “so in a way the EPA itself is no longer a best practice in terms of that trade and investment relationship and that’s going to be a big issue as we go forward not only with the UK but also with the European Union. Not to mention the fact that the EPA is not fully implemented in all of the CARIFORUM partners yet so there is already a deficiency on the CARIFORUM side.

He added that “Within the CARIFORUM, what we’ve seen over the years is that the non- CARICOM partners of the Dominican Republic and Haiti, although it’s a full member of CARICOM now, have really outperformed the CARICOM members in terms of trade, investment flows and also even development assistance and it also shows the fact that in that period both the UK and the broader EU have had a greater amount of interest with the rest of the region than just with CARICOM. So the real question is how can the region compete faced with all these new actors coming in? Another panellist said the region needs to prepare people to assess, review and project what it is going to do “because the changes are already happening. The Brexit is just the cherry on the pie of something that has been happening for ten years, which is very bad performance in the relationship with the EU.”

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