By Alison Lowe
Nassau Guardian Business Editor
NASSAU, Bahamas -- It will “take a miracle” for the Caribbean Community (CARICOM) to conclude a trade agreement with Canada by the stipulated deadline next month, leaving open the possibility that Bahamian goods will be subject to severe competitiveness-reducing rates of duty, according to reliable sources.
Sources have described as “worrying” the fact that no meetings have occurred since April between Canada and CARICOM. None are presently scheduled, and there remain outstanding issues in all areas of the agreement – goods access, services and investments – suggesting that this shows a consensus is unlikely within the timeframe sought by Canada.
CARICOM is negotiating a new trade pact on behalf of The Bahamas and other CARICOM countries. The trade talks began in 2007.
The current trajectory of the talks leaves open the distinct possibility that any progress achieved to date on solidifying a new agreement could “die a quiet death” and Bahamian goods going into Canada could be subject to a much higher rate of duty than at present.
It could also be a rate that is well above that which other CARICOM members’ goods would be subject to, given their status as World Trade Organization (WTO) members, unlike The Bahamas at present.
The decision on whether to terminate the current trade arrangement would ultimately be Canada’s to make, should no new trade deal be concluded in the course of the next 30 to 40 days. Canada’s waiver from the WTO for its trade with CARICOM expired in December 2013, leaving the North American country at odds with its obligations under that organization so long as the present arrangement, which allows Caribbean goods duty free access to Canada, continues.
The position Canada will take on the trade talks and the present rules under which Caribbean goods enter the Canadian market, should no agreement be reached by June, is unclear, however Guardian Business understands this is likely to be influenced by the fact that it has a packed negotiating agenda with a number of countries and regions.
“Sometimes things die a death and sometimes they are purposelessly put to death. There might not be an exact decision to end the negotiations as a failure, but the practical effect would be the end of the negotiations and it would be up to Canada what to do. They may not say it’s the end, but they have any number of negotiations going on at the moment,” said a source.
Recently, Canada has knocked CARICOM’s commitment to conclude a new trade deal.
In an emailed statement to the Jamaica Gleaner last week, a spokesperson for the department of Foreign Affairs Trade and Development Canada (DFATD), Canada, Caitlin Workman, said: “Canada has communicated our desire to conclude negotiations in the immediate term, and is urging CARICOM to bring an appropriate level of ambition to the table to do so.”
Locally, Prime Minister Perry Christie has stated that talks “have proven difficult and a settlement has been nettlesome”, while hitting out at what he termed a “fundamental disequilibrium” in the talks; Minister of Financial Services and Trade Ryan Pinder described negotiations as “very tenuous” in early April.
Meanwhile, Canada is said to be unhappy with what is on the table at present.
“There are a number of areas where Canada has specifically requested improvements in the CARICOM offer,” said a source.
As to what specific issues are outstanding, Guardian Business understands that one of the overriding concerns is that Canada is seeking treatment equal to that which CARICOM would have provided in its trade deal with Europe, under the Economic Partnership Agreement (EPA). That deal was finalized with The Bahamas in 2010; it calls for the lowering of tariffs on European goods coming into this country over a period of years along with easing and clarification of rules in the area of services exports and investments, in return for the maintenance of duty free and quota free exports of Caribbean goods into Europe, and reciprocal treatment of services and investments emanating from this region.
“From early on (Canada) said they would not accept an agreement in which they perceived they were being treated in a less favourable manner than Europe and I believe at the moment that could be their perception,” said a source.
Meanwhile, in the area of services and investment, Guardian Business understands that there is contention over the method of liberalization that would be stipulated in the agreement. CARICOM is said to be seeking a “positive list” approach, while Canada would prefer a “negative list” approach.
“In the negative list approach, what’s listed are the areas that will not be liberalized. In the positive list approach, you list the areas that will be liberalized. There is a perception that the Canadian approach will be more liberalizing than the positive list approach. Canada has said you can reach the same result, but it hasn’t yet been agreed by CARICOM,” said a source.
In negotiations over what the Caribbean will offer to Canada by way of liberalization of investment, Guardian Business understands that this area has been further complicated by the fact that a number of CARICOM countries who are part of the negotiations already have bilateral investment treaties with Canada.
The proposal now put forward by CARICOM would fall below that which Canada has in place with countries with which they now have bilateral investment treaties, Guardian Business understands.
Another prickly area for CARICOM is the extent to which its trade deal with Canada will apply to doing business with the provinces of the country.
“There’s a concern that the commitments taken by Canada at the federal level would not include enough of the provinces; they have significant power, they can negotiate international trade agreements, but normally in certain sectors, for example architectural services, there might be different rules in the provinces. CARICOM would like a bit more certainty that the offer, particularly in some areas of interest, would be applicable through most of the provinces - or at least it the provinces you trade with,” said a source.
Duty free status
CARICOM would also like to see duty free status extended to a greater list of its goods going into Canada under a new agreement; CARICOM has also taken issue – as highlighted by Pinder – with Canada’s insistence on the inclusion of an investor-state dispute settlement mechanism. Such a mechanism, which allows companies to directly sue governments over what they may deem as national policies that infringe on their business interests or investment returns, are increasingly being considered as problematic to countries’ ability to legislate in the interests of their citizens, and onerous for developing country governments to administer.
“There are ongoing issues on both sides. The main challenge is getting together a good acceptable market access offer,” said a source.
“It could be viewed now that in all three areas (goods, services, investment) that the offer of CARICOM is not of a level that Canada could accept,” said a source.
Caribbean heads of government have stated an objective of negotiating a “pro-development agreement which takes account of the differences in the levels of development between CARICOM and Canada and which would support sustainable economic and social development of the peoples of the region”.
According to Canadian trade statistics, The Bahamas exported some $146.56 million worth of goods to Canada in 2012.
Republished with permission of the Nassau Guardian