Trade Notes

Four years ago, the European Union launched trade talks with six regions in the world. So far, only the Caribbean countries – 13 of them – have signed an Economic Partnership Agreement with Europe. Countries in the region signed the pact last October, although the Bahamas and Haiti have been given extra time for their services sector.

One of the twists to the Economic Partnership Agreement was that it included the Dominican Republic, along with the mostly English-speaking nations.

“We are an integration movement,” said Richard L. Bernal, a Jamaican diplomat who was the chief negotiator for the Caribbean. “It means getting the Dominican Republic to work with our group.”

Under the agreement, the European Union gave the 13 countries duty-free and quota-free access for their exports. While European members of the group liberalized 90 percent of its service sector for the Caribbean nations; they, in turn, open up half of their services to their European partners. The agreement also includes an investment chapter.

Not everyone was enthusiastic about the economic partnership. The London-headquartered Christian Aid, an international development charity, concluded in a report that under the agreement “poor countries will simply get poorer.”

But for Bernal, currently the alternative executive director of the Inter-American Development Bank, the agreement was a “superb” one for the Caribbean nations. One of the biggest benefits to the region, he added, is that the treaty is accompanied by European development funds – “which is unusual.”

Such funds could become crucial to a region dependent on highly volatile sectors, such as tourism and sugar production, which are being battered by the global economic crisis.

“The Caribbean is getting hit harder than any place in Latin America,” said Richard Francis, a credit analyst at Standard & Poor’s who covers the region. “These countries depend on the United States and Europe for tourism.”

The White House and Capitol Hill have taken the first steps in what promises to be a bruising battle over passage of trade and investment agreements signed by former President George W. Bush and still unapproved. During the campaign, President Barack Obama said Washington needed to renegotiate the North American Free Trade Agreement and opposed both the Panama and Colombia trade deals. But Obama officials have recently expressed interest in the “appropriate timing” for bringing those agreements before Congress for approval.

In remarks delivered April 23 at the Georgetown University Law Center, U.S. Trade Representative Ron Kirk signaled the administration’s intentions.

“We believe there is strong bipartisan support for the pending free trade agreement with Panama, and I’m working to resolve some labor and other issues before we ask Congress to consider it,” Kirk said, adding: “At the Summit of the Americas, President Obama instructed me to lead a review of the Colombia agreement to deal with outstanding issues there.”

Although Kirk voiced his support for free trade, the recent summit was the first hemispheric meeting where a regional trade agreement, the Free Trade Area of the Americas, was totally off the table. If the April meeting in Port of Spain, Trinidad & Tobago stopped short of launching a new model for hemispheric integration, it was clear neither Washington nor the other 33 countries had the stomach for new pan-regional trade initiatives.

On the eve of the summit – hailed as a new beginning for relations with the United States – the Washington group, Global Trade Watch, hosted a discussion of research outlining the benefits and drawbacks of 15 years of NAFTA, the first trade agreement to be put into place between the United States and a developing country.

“Mexico got exactly what it wanted from NAFTA: trade and investment,” said Timothy A. Wise, who did the research along with Kevin Gallagher, both of the Tufts University Global Development and Environment Institute.

“It didn’t get the broad-based economic development that was assumed would come from NAFTA,” Wise said.

The report underscored that Mexico signed the agreement in the best of times – before other regional trade and investment agreements leveled the playing field. “In 1994, preferential access was a very meaningful thing. If Mexico couldn’t get strong economic development out of a trade agreement like NAFTA under such favorable circumstances, what could any other country expect to get?”

On the bright side, the World Bank, which predicts that world trade will fall by around 6 percent this year (less than the World Trade Organization forecast of 9 percent) issued a report last month saying it believed the drop is bottoming out. 

Photo: US President Barack Obama (C) poses with Panama’s Minister of Tourism, salsa icon Ruben Blades (L), as the president of El Salvador, Antonio Saca, looks on, during the V Summit of the Americas, held in Port of Spain, Trinidad & Tobago on April 18.