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RNM UPDATE 0501

January 19, 2005

Prepared by the Communications Division of the Caribbean Regional Negotiating Machinery (CRNM), this
electronic newsletter focuses on the RNM, trade negotiation issues within its mandate and related activities.

- US APPEALS WTO GAMBLING DECISION, ANTIGUA EXPRESSES DISAPPOINTMENT

- SIDS SUMMIT PRESSES FOR INCLUSIVENESS IN WTO DECISIONMAKING AND PREFERENTIAL


TRADE RULES

- CARIBBEAN VIEWS WTO INSTITUTIONAL REFORM AS VITAL

- CARICOM PERSPECTIVE OUTLINED AT ISLAND NATION MEET

- ESSENTIAL FOR CARIBBEAN THAT WTO STRIKE BALANCE ON DEVELOPMENT AGENDA

- OUTLOOK FOR FTAA REMAINS UNCERTAIN, STRATEGIC TRADE OPTIONS UNDER REVIEW

- COMMODITIES TOP AGENDA OF CARIBBEAN MEETING WITH EU TRADE CHIEF

- SERVICES IN FOCUS AT REGIONAL TRADE MEET

- FIRST MARKET ACCESS DELIBERATIONS ADVANCE CARIFORUM-EU EPA NEGOTIATIONS

- NEWS BRIEFS

- UPCOMING EVENTS

This is the first issue of RNM UPDATE for 2005, best wishes for the New Year. As 2005 gets
underway, there is lingering uncertainty about the outlook for Americas-wide trade talks, prompting
a rethinking of strategic trade options in the hemisphere. Notwithstanding, negotiations for a
Caribbean trade deal with Europe are progressing well. On the multilateral front, the process is
moving forward at a time when the race to appoint a successor to the current World Trade
Organization (WTO) Director General is now in full swing. Notably, at the outset of the year, there
is added pressure for the WTO negotiating agenda to be more cognizant and supportive of the
‘special case’ of small island nations, these countries having presented their case to the global
community at a key small islands summit in Mauritius, held earlier this month. In recognition of the
difficulties of such countries integrating into the global economy, there were calls for an
intensification of efforts to facilitate their full and effective participation in the deliberations and
decision-making processes of the WTO; as well as calls for steps to address the issue of

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preference erosion. All these developments and more are examined in this issue of RNM
UPDATE.

US APPEALS WTO GAMBLING DECISION, ANTIGUA EXPRESSES DISAPPOINTMENT

“The Government of Antigua & Barbuda is deeply disappointed at the United States Government’s
decision to challenge the WTO ruling on Internet gaming in Antigua & Barbuda’s favour.” This was
the view of the Prime Minister of Antigua & Barbuda, Hon. Baldwin Spencer, in an address to a bi-
partisan Congressional team from the United States, led by Congressman Pete Sessions (R-TX)
and Congressman Donald Payne (D-NJ), and business leaders, January 15. Organized by the
Washington, DC-based Inter-American Economic Council, the visit of US lawmakers to the island-
nation this past weekend involved a delegation of over two-dozen members of the US
Congressional Caribbean Caucus, holding a series of meetings with the Antiguan Prime Minister
and members of his Cabinet, government officials and members of the business community on a
range of issues, including: the deepening of bilateral relations, the US Patriot Act, offshore financial
services and the WTO Internet gaming dispute between Antigua & Barbuda and the United States.

Earlier this month, the United States formally notified WTO members of its intention to appeal the
WTO panel decision issued in November last year, concerning the dispute between Antigua &
Barbuda and the US on Internet gaming (for details see RNM UPDATE 0418, November 16, 2004
ANTIGUA WELCOMES RELEASE OF WTO REPORT ON INTERNET GAMBLING DISPUTE
WITH THE US).

According to Permanent Secretary in the Antiguan Ministry of Foreign Affairs Ambassador Colin
Murdoch, the Government of Antigua & Barbuda viewed the encounter with the US Congressional
delegation as a critically important opportunity to appeal for the intervention of the US lawmakers
on the Internet gaming dispute. In his address to the US Congressional group, the Antiguan Prime
Minister said he looked forward to intervention on the part of the US lawmakers for the withdrawal
of the United States challenge to the WTO ruling. According to a diplomatic source, “there was a
willingness on the part of the US lawmakers to talk with the Antiguan side on the matter.”

Citing the US Administration’s push for an appeal, the Antiguan Prime Minister lamented that “we
would have hoped for, if not expected, a more conciliatory US approach in the Internet gaming
dispute.” An Antiguan government source told RNM UPDATE that the US had “lost any shred of
moral high-ground that it may have had left, when it indicated it was going to appeal the ruling.”
On the grounds that Antigua & Barbuda is a “friend of the US” and that as a small nation had
strengthened mechanisms for regulating the international financial services sector, having also
bolstered money laundering laws, and that despite limited financial resources had met the deadline
for international port security systems mandated by the US Patriot Act, the source said the
Antiguan public was “at a loss as to why the US was taking such a course of action that could have
cross-cutting deleterious effects not just on the industry, but the wider economy.”

According to a senior Antiguan government official, the timeline for the dispute since the start of the
year is as follows: submission of a brief by the US on January 14, further to its January 7

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notification of its intent to appeal; January 19 - submission by Antigua & Barbuda of notice, in
response to the US appeal (which an informed source has indicated has been honoured); January
24 - submission of brief as ‘other appellant’, due from Antigua & Barbuda. An informed
source revealed to RNM UPDATE that either during the second or third week of February, both
sides in the dispute will take part in oral hearings before the Panel overseeing the dispute.
According to the source, the earliest date by which the appellate report would be forthcoming
would be March 8, however, the source said that in all likelihood the report would not be available
at that time.

SIDS SUMMIT PRESSES FOR INCLUSIVENESS IN WTO DECISIONMAKING AND


PREFERENTIAL TRADE RULES

An International Meeting on Small Island Developing States (SIDS) took place in Port Luis,
Mauritius, January 10 to 14. Touted as a pro-active strategy to further implement the Barbados
Programme of Action (BPoA), the Mauritius Strategy
(http://www.un.org/smallislands2005/pdf/sids_strategy.pdf) was adopted January 14, along with a
companion political declaration - the Mauritius Declaration
(http://www.un.org/smallislands2005/pdf/mauritiusdeclaration.pdf

The Mauritius Strategy identifies actions under twenty broad headings, including globalization and
trade liberalization. On trade issues, the Strategy recognizes that “most small island developing
states, as a result of their smallness, persistent structural disadvantages and vulnerabilities, face
specific difficulties in integrating into the global economy.” The document also recognizes “the
importance of intensifying efforts to facilitate the full and effective participation” by SIDS “in the
deliberations and decision-making process of the World Trade Organization.” There was
consensus on the need to ensure that in the WTO Work Programme on Small Economies, due
account is taken of SIDS.

Trade and financial liberalization constitute important sources of vulnerability for small states. Yet,
there is an absence of coherent policymaking at the global level for these states. The role of the
WTO in trade adjustment assistance is expected to become critical in the years ahead. Ultimately,
the Caribbean would wish to see an integrated policy framework of external assistance for the
integration of small states into the multilateral trading system in which there is a greater role for the
WTO in trade adjustment without the existing conditionalities, as well as in establishing the
linkages between trade and non-trade objectives, and taking account of the poverty impacts of
trade. This is in conformity with the Marrakesh Declaration on the Contribution of the WTO to
Achieving Greater Coherence in Global Economic Policymaking, requiring more effective
coordination between the WTO and other international institutions.

Interestingly, one of three panel discussions at the SIDS Conference January 11, which addressed
the growing risk island nations faced of being marginalized in the global economy, deliberated on
whether SIDS should be treated as a separate group in the WTO. That panel discussion, entitled
“The Special Challenges of SIDS in Trade and Development”, was co-chaired by Jayakrishna
Cuttaree, Mauritius’ Minister of Foreign Affairs and International Trade and Regional Cooperation.
Ambassador Anthony Severin, one of the St. Lucian delegates, participated in that panel,

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presenting an extensive review of the characteristics of ‘small size’. Among his recommendations
was the maintenance of preferential access for SIDS, and the allowance of realistic adjustment
periods when preferences were to be phased out (a summary of Ambassador Severin’s
intervention is available on www.crnm.org).

Preferences

The Caribbean has a strong interest in preferences. Amongst the issues the Conference noted as
high priority was a recognition of the importance of long-standing preferences, and of the need for
steps to address the issue of preference erosion. The Strategy document framed the challenges
brought on by trade liberalization and globalization in regards to trade preferences, and in terms of
their erosion. Delegations at the meeting called for the return of preferential trade rules, according
to Washington Trade Daily (January 12 edition). The publication reported SIDS delegates
impressed on developed countries that their relatively undiversified economies were under
pressure due to the erosion of existing trade preferences. While hesitant to make commitments as
regards preserving preferences, that same report noted developed countries expressed a
willingness to help SIDS diversify their industries. The Conference did not discount trade
liberalization, acknowledging a rules-based, non-discriminatory and equitable multilateral trading
system holds the potential to significantly catalyze development, a position reaffirmed by the
Mauritius Declaration. The Mauritius Declaration recognizes that international trade is “important
for building resilience and the sustainable development” of SIDS, and calls upon international
institutions, including financial institutions, to “pay appropriate attention to [..their..] structural
disadvantages.”

The purpose of the United Nation’s conference was to review implementation of the BPoA for the
Sustainable Development of SIDS. The BPoA was adopted in 1994, and sets forth specific actions
and measures at the national, regional, and international levels in support of the sustainable
development of SIDS. The Mauritius Strategy reaffirms that the BPoA remains the “blueprint” for
the sustainable development of SIDS. At the closing ceremony, January 14, Secretary-General of
the International Meeting Mr. Anwarul K. Chowdhury emphasized “the process of implementation
should begin with the drawing up of a Roadmap for the implementation of the Mauritius Strategy.
Such a Roadmap would serve as an overarching guideline. It would help in the coordination of the
activities of different stakeholders. It would give us a basis for monitoring and review. It would help
in indicating the progress achieved or the lack of progress.”

CARIBBEAN VIEWS WTO INSTITUTIONAL REFORM AS VITAL

The Caribbean views institutional reform in the WTO over the next ten years as a vital confidence-
building measure, especially for small developing countries. Institutional reform should take
account of both administrative issues and the decision-making process.

The WTO Doha Declaration underscores the importance of ensuring internal transparency and
effective participation of all Members, as a result of the challenges posed by an expanding
membership. The WTO, especially since its Third Ministerial Conference, held in Seattle in 1999,
has been concerned with the following aspects of WTO reform: internal transparency; external
transparency; efficient functioning; more effective participation of members; reform of decision-

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making in the WTO. The Seattle Ministerial succeeded in bringing the issue of transparency to the
forefront of WTO concerns. Since the Conference, changes have been made to improve both
external transparency and internal transparency. But, the task ahead in the short to medium-term
is how to make both the preparation and conduct of trade negotiations more transparent, inclusive
and predictable; and the focus has to be on what is practically achievable in a reasonable
timeframe, RNM UPDATE was told.

Staffing of the WTO Secretariat also remains a concern. Developing countries have identified as
needing priority attention and solution the representative nature of the WTO Secretariat and the
senior management structure, its independence and role in negotiations.

CARICOM PERSPECTIVE OUTLINED AT ISLAND NATION MEET

CARICOM issued a call for greater economic and political support to help small countries build
their capacity to overcome the economic, social and environmental threats faced because of their
size, location and external conditions, at a small island’s summit earlier this month. In his address
to the meeting (available on the RNM website), H.E. Mr. Edwin Carrington, Secretary-General of
the Caribbean Community, proposed recommendations to serve as outcomes for the meeting that
included: a commitment by the international community to confront the underlying causes of
climate change and sea-level rise; policy and operational changes to ensure that multilateral trade
policy enable strong growth in SIDS; and the provision of the resources needed to implement the
agreed development measures. He made a call at the High Level Segment of the Meeting, on
January 14, for exemptions for small countries from the onerous obligations of some international
agreements or, alternatively, for the provision of resources to facilitate the meeting of those
obligations with development aid focusing on youth and women, as part of a broader human
resource development strategy.

The Conference’s major outcomes document for further implementation of the BPoA, the Mauritius
Strategy, highlights that SIDS “are located among the most vulnerable regions in the world in
relation to the intensity and frequency of natural and environmental disasters and their increasing
impact, and face disproportionately high economic, social and environmental consequence.” The
December 26 Indian Ocean tsunami is cited as an example of this, as were the recent
hurricane/cyclone/typhoon season in the Caribbean and Pacific. The United Nations Secretary-
General, Kofi Annan, also addressed the high-level segment of the small islands conference,
focusing on the recent South Asian tsunami, touting the need for prevention and early warning.
The Mauritius Strategy proposes to use the opportunity of a Conference on Disaster Reduction in
Kobe, Japan to consider the specific concerns of SIDS, including in the areas of insurance and
reinsurance arrangements.

For summaries of Caribbean country statements as well as full length presentations delivered at
the SIDS Summit, please see www.crnm.org

The International Meeting was attended by 18 Presidents, Vice-Presidents and Prime Ministers, some 60
ministers and nearly 2000 delegates, civil society representatives and journalists from 114 countries, and by
15 UN or multilateral agencies. For further information on the Conference, please see:
http://www.un.org/smallislands2005/, http://www.sidsmauritius2005.mu/, http://www.sidsnet.org/index.html

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and http://www.un.org/special-rep/ohrlls/ohrlls/default.htm . Side events included the Fifth Summit of the
Alliance of Small Island States (AOSIS), convened January 12.

ESSENTIAL FOR CARIBBEAN THAT WTO STRIKE BALANCE ON DEVELOPMENT AGENDA

In the wake of the collapse of the Fifth WTO Ministerial Conference in 2003, Ministers agreed to
move towards a successful and timely conclusion of the current round of multilateral trade
negotiations. Coming out of the WTO General Council held from July 28 to July 31, 2004 a
framework consensus was reached in the General Council Decision of August 1, 2004.

Covering a limited core agenda of outstanding issues, the July Framework package establishing
modalities represents a step forward in building a framework consensus. The framework is more
credible, especially in agriculture. This has been achieved by the introduction of an end date as
regards export subsidies, tighter disciplines on domestic support and all forms of export
subsidization, and an approach to market access that provides a fair degree of flexibility, for both
developed and developing countries, in the form of a deeper recognition of the need to protect
sensitive and special products.

The fact remains, the July Framework did not delve into some important areas for developing
countries, such as implementation issues, preferences, special and differential treatment, and the
small economies work programme. Success in the future will depend on striking an overall balance
on this wider agenda of development issues. Notably, the vulnerability of small states as an
additional factor has yet to be taken on board by the WTO. Many small, weak and vulnerable
countries have two adjustments to make instead of the one for the average WTO member at the
end of this round. They are being asked to adjust to sizeable cuts in industrial and agricultural
tariffs and at the same time to adjust to the loss of their preferences, especially the long-standing
ones.

As small economies highly exposed to the risks of international trade, extremely vulnerable to trade
and environmental shocks and heavily dependent on trade preferences, the Caribbean considers
that its integration into the world economy requires the WTO to become a development partner
supportive of its transformation needs rather than an institution merely creating a level playing field
for competitive trading.

On the larger front, the Caribbean views the WTO as being in search of the right mix between
providing a multilateral framework of rules for freer trade and assisting countries to develop trade
by tackling problems of competitiveness and supply constraints. Reforming the WTO mandate to
make explicit that trade is not an end in itself therefore must remain an ongoing task.

OUTLOOK FOR FTAA REMAINS UNCERTAIN, STRATEGIC TRADE OPTIONS UNDER


REVIEW

Priorities in trade policy changed markedly in the Americas in 2004, primarily because of the re-
evaluation of strategic options by various countries as regards utilizing the Free Trade Area of the
Americas (FTAA) - negotiations for which have been languishing - as a springboard for securing
access to the US market. The victim in all this is the Americas-wide trade pact, whose January

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deadline will meet with the same fate of an important end-date concerning market access last year,
which expired with no conclusion to those talks.

Sub-regional integration initiatives appear to have been consolidated, and efforts at securing
bilateral trade deals involving the United States intensified. Regarding the former, the emergence
of the South American Community of Nations showcased this development in a big way (for details
see RNM UPDATE 0420, December 14, 2004). As for the latter, this is underscored by the US
placing priority on the successful passage of the Central America Free Trade Agreement (CAFTA)
through Congress in the first quarter of 2005, and members of the Andean Community and
Panama having elected to pursue bilateral negotiations with the United States. The trend of
bilateral trade deals has received impetus for a number of reasons, not least because of the
outcome of a Ministerial meeting for the hemisphere-wide trade pact in November 2003, that
engineered a compromise for the adoption of a scaled back vision to reconcile deep differences
over the terms of the trade pact.

Bilateral trade deals with the United States are being aggressively sought after and negotiated as
they are viewed as the preferred approach for engaging the US market. This does not bode well
for the prospects of FTAA talks, whose level of ‘ambition’ has been rolled back. The fact remains,
if reached, the final FTAA Agreement will likely differ substantially from the pact that was originally
envisioned a decade ago, primarily because of the two-tier structure introduced at the Miami
Ministerial. Conceivably, that structure could affect market access benefits, concessions and the
scope of liberalization across the tiers.

In a recent interview with DOW JONES NEWSWIRES, the Director-General of the Caribbean
Regional Negotiating Machinery (RNM), Ambassador Dr. Richard Bernal, underscored that
CARICOM still views the FTAA as “a very worthwhile and important endeavor”, but that the 14-
country bloc, whose main trade partner is the US will approach Washington about a separate trade
deal if the Americas-wide impasse continues for much longer. The top CARICOM trade official
was quoted as saying, “it is something we are thinking about.”

At this juncture, the outlook for the FTAA remains uncertain. Certainly, the United States has
publicly expressed its commitment to the goal of a hemisphere-wide trade deal, most recently in
remarks made regarding US diplomacy, trade liberalization and the US’ free trade agenda by the
nominee for Secretary of State, Condoleezza Rice, at a January 18 confirmation hearing of the
Senate Foreign Relations Committee. In contrast, Brazil’s signals have been circumspect.
However the question remains, to what extent are the two Co-Chair countries, Brazil and the
United States, placing ‘priority’ or ‘urgency’ on re-engagement as regards negotiations, talks for
which have floundered for more than one year? Trade Negotiations Committee (TNC) Co-Chairs
are slated to resume informal consultations later this month in a bid to break the impasse over the
scope of the negotiations and eventual agreement, but whether this encounter will necessarily
translate into the early resumption of negotiations is uncertain. The prevailing negotiating
environment and external circumstances are less than propitious for an early re-start of
negotiations. The fact is, the ‘pragmatic re-dimensioning’ reached for the FTAA in November 2003
was not well received by all, and certainly its operationalization remains difficult. Exogenous
factors too, like the recently announced imminent departure of United States Trade Representative
(USTR) Robert Zoellick to America’s State Department, where he has been tapped to serve as

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Condoleezza Rice’s deputy, could play on the trajectory and smooth re-engagement of troubled
hemispheric trade talks.

The priorities of Brazil and the United States appear not to centre only on the consolidation of sub-
regional integration and bilateral trade deals, respectively. Very much in their scopes is advancing
negotiations at the multilateral level, and especially for Brazil advancing a free trade deal with the
European Union (EU) also remains of primary importance. Recent policy pronouncements reveal
as much, as regards their priority setting. Doha Round talks, that are taking place under the
auspices of the WTO, are poised in their post-July modalities phase to advance the multilateral
process, that has had its own difficulties moving forward following from the breakdown at the Fifth
WTO Ministerial, in Cancun. Also receiving close attention at this time is the appointment of a
successor to the current WTO Director General, Dr. Supachai Panitchpakdi, whose term comes to
an end August 31. The race that has now ensued in this regard involves four candidates who are
vying for the coveted post, one of which is the African, Caribbean and Pacific (ACP) Group
favoured Jayakrishna Cuttaree, Mauritius’ Minister of Foreign Affairs and International Trade and
Regional Cooperation.

CARICOM is in the process of charting a course with the aim of improving current levels of market
access for its goods and services, stimulating investment flows and contributing to the
development of sustainable trade relations in the hemisphere. The grouping is taking stock of its
trade relations in the hemisphere, closely examining its strategic trade options. In terms of
sequencing of priorities, a possible FTA with Canada is considered of great importance.
CARICOM countries are important trade and investment partners for Canada, and vice versa. In
2002, CARICOM’s two-way merchandise trade with Canada totalled CDN$1.2 billion, of which
there was a positive balance in CARICOM’s favour of CDN$335 million. In 2000, bilateral services
trade amounted to CDN$2.28 billion, with a CARICOM surplus of CDN$703 million. Trade and
economic cooperation relations between CARICOM countries and Canada are currently covered
under a number of instruments, namely: CARIBCAN; the 1979 CARICOM-Canada Trade and
Economic Co-operation Agreement and its Protocols, including the 1998 Protocol on Rum, which
are implemented through the Joint Trade and Economic Committee (JTEC); and a number of
bilateral Investment Treaties with individual Member States, namely Barbados and Trinidad and
Tobago. These ties extend beyond trade alone; there is a long cultural history as well. A survey in
2001 revealed that there were more than 530,000 people of Caribbean origin living in Canada.

During the Sixth Canada-CARICOM Summit in January 2001, CARICOM and Canadian Heads of
Government agreed to undertake exploratory work on a FTA. In keeping with this mandate,
negotiations for a possible free trade deal between the region and Canada have been advanced,
seeking to identify the scope and nature of the possible trade pact. Canada recently conducted a
review of its bilateral trade initiatives, and reaffirmed to CARICOM its interest in pursuing a FTA.
The possible FTA would provide a framework for cementing the relationship between CARICOM
and Canada, and promoting trade and investment. It is anticipated that the next meeting between
the two sides, to be hosted by the RNM, will take place next month to discuss modalities for the
talks, negotiations for which are expected to be launched during the second quarter of 2005.

CARICOM and Mercosur are also exploring the possibility of a FTA. Following a meeting between
the Lead CARICOM Minister with responsibility for bilateral negotiations, Hon. Kenneth Valley and

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Brazilian Foreign Minister, Celso Amorim, in Port-of-Spain, January 13, it has been proposed that
the first CARICOM-Mercosur technical session be held in Port-of-Spain in late February. The
intention would be to advance economic and commercial relations, as such the February interface
would serve as an initial meeting for an exchange of trade information. The ministerial interchange
this month comes in the wake of the attendance by Minister Valley of the XXVII Ordinary Summit of
the Mercosur Council held in Belo Horizonte, Brazil, December 16, 2004. A Joint CARICOM-
Mercosur Statement issued on December 16 revealed that an exploratory mission by Mercosur
representatives to Port-of-Spain took place in November 2004, at which time the establishment of a
working group between the two blocs was discussed.

COMMODITIES TOP AGENDA OF CARIBBEAN MEETING WITH EU TRADE CHIEF

Trade Ministers of CARICOM Members States, Cuba and the Dominican Republic met with the
new EU Commissioner for Trade, Peter Mandelson, in Georgetown, Guyana, January 6. Taking
place on the occasion of the Eighteenth Meeting of the Council for Trade and Economic
Development (COTED) and Fifth Special Meeting of the same body, several regional organizations
including the RNM and commodity/industry groups were present at the encounter. The visit was
the Commissioner’s first to the region since his assumption of office, as well as his first meeting
with a group of ACP ministers outside of Europe.

EPA Interchange

Regional Trade Ministers and Commissioner Mandelson had a very constructive exchange of
views on a range of issues of mutual interest, including CARIFORUM-EU negotiations for an
Economic Partnership Agreement (EPA). The EU Trade Commissioner put forward a proposal to
ensure that development comes first within these agreements with the ACP, saying “I have
announced my decision to put the EPA process under continuing review so as to make sure that
the process really does put development first. To do this, I have decided to establish a mechanism
to monitor the roll out of our development and trade related assistance, to check continuously
whether or not it is delivering the right results to build up local economic capacity, and that the
process really does constitute the true economic partnership I insist on for these agreements”. In a
statement issued on January 6, Commissioner Mandelson said “the end goal is an end to
vulnerability and dependency for Caribbean economies. The goal is a region that competes on its
merits in the global trading system. The artificial insulation of this region from the realities of global
trade is a barrier to long-term prosperity, and that insulation must be slowly and carefully
dismantled and something more sustainable put in its place.” He added, “that is why the European
Union is negotiating a new Economic Partnership Agreement with the Caribbean region. The EPA
is a trade toolbox. It will set the new terms of trade between this region and the EU when the
Cotonou waiver expires in 2007.”

WTO Talks, Commodity Issues

WTO Doha Round negotiations and the future of commodities, namely bananas, sugar, rice and
rum, were also discussed by the two sides.

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Concerning the region’s participation in Doha Round talks, Peter Mandelson noted the specific
needs of smaller and more vulnerable WTO members, emphasizing his commitment to coalition
building with the ACP Group on the development components of these talks: “we must craft, in the
DDA, a global strategy for the smaller and more vulnerable WTO members, but their interest will be
better served by embracing the Round rather then seeking to slow it down and remaining over
dependent on preferences.”

Commissioner Mandelson expressed strong support for the Caribbean’s concerns surrounding the
erosion of trade preference for sugar, but he urged the Region to forge ahead with a concrete plan
of action to sustain its vital agriculture sector. In this regard, Mandelson noted, “the EPA will set
the rules for trade between our regions, but it will also entrench the principles of flexibility and
asymmetry that will allow those rules to be adapted at times to reflect regional circumstances here
in the Caribbean. Yes, the EPA will force us to face up to the difficult commodity issues such as the
new terms of trade for sugar, rice and bananas; but it will also contain the measures that will help
these sectors adjust to change and achieve a more competitive future.” As regards sugar, the EU
trade chief pledged his support for an action plan from the EU that would favour ACP sugar
producers affected by the future reform of the EU’s sugar regime, stating “development assistance
measures will be advanced to increase the competitiveness of the industry in sugar producing
countries or to support its diversification. An urgent dialogue is needed with the ACP to define
these measures. There can be no delay. I want the fullest possible understanding and agreed
measures in place in 2005, prior to the Hong Kong ministerial meeting in December.”

CARICOM Ministers were of the view that the Caribbean recognized that change is inevitable,
emphasizing the region is in the process of responding to the possible negative impact of such
changes. However, they stressed that due recognition must be given to the inherent constraints
that confront the region and the vulnerabilities associated with the regions characteristics. They
further emphasized that the proposed reform to the EU sugar regime and the change from a quota
system to a tariff-only regime for bananas would have devastating effects on Caribbean
economies, if implemented in there present form.

Regarding rice: trade reform being negotiated with the EU’s ACP partners for commodities such as
rice are closely linked to EU agricultural reform, and as such - as reported in the Press -
Commissioner Mandelson was quoted as saying that “through the European Development Fund,
the EU is taking practical steps to help Caribbean producers develop, compete and prosper in a
changing market”. In a separate meeting, representatives of the Caribbean Rice Association
(CRA) and Commissioner Mandelson discussed the preferential regime for rice imported into the
EU and the start up and implementation phases of the EURO24 million EU support programme to
the rice industry in the Caribbean.

CARICOM Heads of Government plan to follow up on the issues arising from Caribbean Trade
Ministers’ interchange with Commissioner Mandelson, when they meet with the EU Commissioner
for Development on the occasion of their Inter-sessional summit in Suriname, slated for February
16 to 17.

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SERVICES IN FOCUS AT REGIONAL TRADE MEET

At a high-level regional trade meeting earlier this month, the RNM presented a preliminary analysis
of the findings of its research on CARICOM trade in services. The research noted services are a
very large part of the economies of Member States and of the exports of several countries,
suggesting the need for a more offensive approach for external services negotiations.

Regional services export data suggest room for improvement in overall services export
performance, as well as scope to promote the development of new service industries. Balance of
payments data for the period 1997-2002 illustrated consistently large surpluses only in select
services sectors. Jamaica is the largest services exporter and importer in CARICOM. This is
reflective of the fact that Jamaica has put some emphasis on promoting service industries through
various incentives and also has the most commitments in services, relative to other CARICOM
countries, under the General Agreement on Trade in Services (GATS).

The RNM was of the view that the Region needs to re-focus on services as a new area for
development and export thrust and needs to consider the linkages between services and
manufacturing. In light of this, the RNM prevailed upon the meeting that there was an urgent need
to take stock of national regulatory structures that constrain the services sector, including new
investment in that sector.

Recommendations were also discussed on selected sub-sectors, including tourism services,


creative industries and tertiary education.

FIRST MARKET ACCESS DELIBERATIONS ADVANCE CARIFORUM-EU EPA NEGOTIATIONS

Since the launch of CARIFORUM-EU negotiations in Kingston, Jamaica in April 2004, both sides
have met twice at the level of Principal Negotiators (on July 15 in Brussels in the context of Phase I
and on November 12 in Barbados during Phase II). In the latter Phase, which is related to the
regional integration dimension of EPA negotiations, the two sides also met once in Kingston
December 17 to 18, 2004 at the technical level on Regional Market Access Issues. In keeping with
the Joint Plan and Schedule three more technical sessions will be held in Phase II wherein two
main objectives are being pursued, namely, (a) defining the nature of the CARIFORUM economic
space that will assume commitments under an EPA, and (b) identifying the priorities of
CARIFORUM regional integration to be supported by an EPA. This Phase will conclude in
September 2005.

The technical level meeting on Regional Market Access Issues addressed market access issues
emerging from both the CSME and CARICOM-Dominican Republic FTA. The meeting took stock
of the nature of the regional economic space, current and future, with which the EU will forge a
partnership, and reviewed the series of market access measures encompassed in both the CSME
and CARICOM-Dominican Republic FTA. CARIFORUM also used the opportunity to signal areas
where implementation of the regional integration exercise could be accelerated through tangible
EU support.

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Background

At the first meeting of Principal Negotiators, both sides tabled their respective visions of an EPA in
mapping the priorities and scope of the negotiations. Although not meant to be either exhaustive or
conclusive, the discussion simultaneously exposed shared concerns and variance in emphasis and
approach, objectives and principles for the EPA negotiations. At the second meeting of Principal
Negotiators, discussions focussed primarily on identifying priorities of Caribbean regional
integration and the requisite support measures that can be secured within the context of an EPA.
other issues addressed at the second meeting of Principal Negotiators included the adoption of the
modalities and work programme of the Regional Preparatory Task Force (RPTF), refining the
indicative schedule of negotiations and addressing topical Caribbean–EU trade issues such as the
pending reforms of the EU sugar and bananas regimes. Both Principal Negotiators endorsed the
initial RPTF work programme that emerged from that body’s first full meeting. The RPTF would
seek to complete the following two tasks before the next meeting of Principal Negotiators, viz.: (a)
an inventory of technical studies and policy documents on Caribbean regional integration
processes, and (b) an inventory of trade- and integration-related assistance programmes in
operation within the Caribbean. As envisaged in the Joint CARIFORUM-EC Plan and Schedule,
the Caribbean Non-State Actor (NSA) Network on the EPA was launched on November 13, 2004.
This will be a policy forum for the Region’s non-state actors to feed their positions into the EPA
negotiations.

In its efforts to sensitise stakeholders to the challenges posed by EPA negotiations and to the
importance of putting in place mechanisms to process views on a regular basis, the RNM has
begun to activate and participate in one-day national consultations on EPA negotiations in Member
States, targeting initially St. Vincent and the Grenadines (October 15, 2004) and Dominica
(December 13, 2004). The RNM intends to continue such activities in 2005.

NEWS BRIEFS

RNM Vacancies

The following posts have been advertised: Director-Administration and Operations; Finance
and Administration Officer; Communications Officer. Details are available on the RNM
website.

Jamaica Trade Policy Review

Jamaica has made significant efforts to liberalize its trade and investment regime since its first
review in 1998, reflecting the importance of trade to its economy – this according to a WTO
release. The statement also cited the adoption of legislative and institutional improvements that
facilitate trade and enhance transparency. Market-opening initiatives were also listed as having
been undertaken across various key service activities. Details on the report on the trade practices
and policies of Jamaica have been published by the WTO Secretariat, which along with a policy
statement by the Jamaican Government are available on:
http://www.wto.org/english/tratop_e/tpr_e/tp241_e.htm

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Controversial DR Tax Repealed

In a move that was welcomed by US lawmakers and the US Administration, reportedly the
President of the Dominican Republic, Leonel Fernandez, signed into law legislation repealing that
countries’ controversial high fructose corn syrup tax in early January (for details see RNM UPDATE
0419, December 10, 2004 CONTROVERSIAL HFCS TAX TO BE RESCINDED BY DOMINICAN
REPUBLIC).

Differing views Persist Regarding Level of Ambition for Doha Round

In terms of the process, perspectives differ as regards the date for finalizing Doha Round talks.
Some delegations believe that negotiations could be finalized in six to eight months after the Sixth
WTO Ministerial Conference set for Hong Kong, slated to take place December 13 to 18, 2005.
They believe that members should achieve modalities by that ministerial. On the other hand, some
countries are of the view that detailed plans for the Sixth Ministerial cannot yet be made and that
one should await the outcome of this phase in the Spring to determine what is possible. No
specific goals have therefore been set for the ministerial meeting.

Observers expect that several “mini-ministerials” will be held in the coming months to take stock of
the current negotiations and advance concrete proposals regarding elements for a “roadmap” in
advance of the end-of-year Hong Kong WTO ministerial. One such mini-ministerial meeting, the
first for 2005, is set for Davos, Switzerland later this month.

Report on future of the WTO Released

On January 17, WTO chief Supachai Panitchpakdi received the report of his Consultative Board -
‘The Future of the WTO-Addressing Institutional Challenges in the New Millennium.’ Chaired by
Peter Sutherland, the former director-general, the eight-member independent panel was tasked
with examining the state of the WTO as an institution, to study and clarify the institutional
challenges that the system faced and to consider how the WTO could be reinforced and equipped
to meet them. As the WTO marks its tenth anniversary, Dr. Supachai said “there is undoubtedly a
need for serious reflection on how to improve our functioning while safeguarding the strengths of
this institution”. The document is available at:
http://www.wto.org/english/thewto_e/10anniv_e/future_wto_e.pdf

Trade Measures for Tsunami-hit countries pressed by UNCTAD

The United Nations Conference on Trade and Development (UNCTAD) has called for immediate
trade measures aimed at assisting nations affected by the December 2004 tsunami, making the
case that the international trading system must complement international efforts to re-build these
countries. The UNCTAD secretariat also considers that medium- and longer-term trade measures
in favor of the affected and other vulnerable developing countries should be effectively addressed
in the context of ongoing multilateral trade negotiations under the Doha Work Programme. The
UNCTAD Secretariat’s preliminary assessment indicates that immediate trade measures by the
international community could include:

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- A temporary provision of duty-free treatment to imports from the affected countries, in line with
WTO rules and disciplines;

- An immediate suspension and/or termination of all special trade-restraining measures, such as


anti-dumping actions, against products originating in the affected countries, such as seafood and
processed agricultural products;

- Immediate measures to strengthen the capacities of the affected developing countries and their
businesses to restore the infrastructure needed to conform with sanitary and phytosanitary
standards for their exports;

- Relaxation of market access for services providers of the affected countries, so as to help
generate additional foreign exchange;

- Special measures to revive the tourism industry and infrastructure, including a more supportive
approach to travel advisories and improved access to information and distribution channels; and
Actions to support the rebuilding of trade logistics and other related services infrastructure.

UPCOMING EVENTS

January 26: WTO General Council, Geneva

January 26 to 28: WTO/OAS Workshop on Trade and Development for Caribbean Countries, Barbados

January 31 to February 4: Commonwealth Secretariat, Small Economies Trade Experts’ Meeting, London

For More Information Contact:

Nand C. Bardouille
Caribbean Regional Negotiating Machinery
3rd Floor, The Mutual Building, Hastings Main Road, Hastings, Christ Church, Barbados
Tel: (246) 430-1678
FAX: (246) 228-9528

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