The importance of Trinidad and Tobago’s trade agreement with the European Union

Trinidad and Tobago signed the Lom? Agreement, along with the group of countries that comprise the African Caribbean and Pacific (ACP) Grouping, with the European Union (EU) in 1975. Three successor agreements were entered into by the parties.  The latest agreement is known as the Cotonou Agreement, signed in 2000, in Benin, is expected to be the last of its kind. This agreement provides Caribbean countries with the opportunity for non-reciprocal duty free access to the EU market for a significant number of products. It is to be noted that preferential access under various commodity protocols such as sugar, rum, rice and bananas provide preferential access in terms of quota and higher than world market prices. In view of the new trading arrangements that emerged at the end of the Uruguay Round, a new framework for trade between the ACP and the EU became necessary as the continuation of special non-reciprocal trade preferences for a select group of developing countries became less acceptable.

From Lom? to EPA

With the exception of more stringent rules of origin, Cotonou retains most of the old features of the Lom? arrangements.  What is new, however, in the agreement is the map that it outlines for the signing of what the EU calls a Regional Economic Partnership Agreement (REPA), after September 2000 to enter into force on January 1, 2008.  Cotonou is to be seen as a transitional agreement, which will hopefully lead to a number of regional free trade agreements between ACP regions (sub-Sahara Africa, Caribbean, Asia and the Pacific) and the EU. 
 
The REPAs will have
certain key features:

* The substantial liberalisation of trade between the EU and the ACP in conformity with the WTO, which must be compliant with Article XXIV of GATT. In other words, most trade between the EU and ACP countries must be duty-free;
* The EU will set up the European Development Fund (EDF) to provide subsidies for development support and to promote the development of the private sector;
* Any new agreement will enter into force on January 1, 2008;
* From January 1, 2008 there will be a 12 year transitional period.  Article XXIV of GATT, the article that governs the formation of FTAs, permits a transitional period over ten years only in exceptional circumstances.

The Cotonou Agreement will provide this country with continued and greater access to EU markets for its exports. Trinidad and Tobago therefore needs to participate in the EPA negotiations in order to maintain and expand its access to EU if it hopes to successfully capitalise on future niche markets for its exports. Unlike the rest of CARICOM whose exports to the EU went from US$725.2 million in 1988 to US$695.56 million in 1999, a decrease of  4.1 percent. For Trinidad and Tobago, during the period 1997 to 2001, exports have increased from US$223.59 million to US$389 million in 2000.

The Agreement is therefore expected to boost the local export drive by:

a) Providing technical assistance for the establishment of insurance, and credit institutions in connection with trade development
b) Assisting in efforts to improve product quality, adapt them to international markets and diversify their outlet
c) Providing training for personnel engaged in trade services
d) Supporting efforts to improve its services infrastructure, including transport and storage facilities
e) Assisting in the strengthening of the Export Development Corporation and related organisations to develop trade and services
f) Providing foreign contacts and information to promote trade, including participation in fairs and exhibitions.  In addition, as an island country, Trinidad and Tobago could enjoy special provisions such as payment of travel expenses of personnel and of costs of transporting articles and goods that are to be exhibited.

CARIFORUM’s strategy

Trinidad and Tobago negotiates as part of the CARICOM bloc, which also includes Cuba and the Dominican Republic. This grouping proposes to launch the commencement of negotiations with the European Union early in 2004. It is expected that Trinidad and Tobago will make every effort to maintain the preferential arrangements (duty-free entry of its goods and development assistance) with the EU, but more importantly it will seek to promote the simplification of the rules of origin and standard requirements governing the trading arrangements.  It is to be noted that the expansion of sustainable market access by the ACP into the EU hinges heavily on the negotiation of simplified measures through revisions to the rules of origin and standard requirements of the Agreement.  From the CARICOM perspective, the new partnership with the EU is crucial in order to ensure that developments which may arise from globalisation neither aggravate nor worsen existing inequalities in societies and between regions.

This article is a part of the public education by the Ministry of Trade and Industry. For further information please contact Dionne Ligoure, Communications Specialist at Dligoure@tradeind.gov.tt or 623.2931-4 ext 2028