The first research published on the Economic Partnership Agreement (EPA) that comprises an objective empirical analysis of the controversial trade agreement that was signed in 2008 has recently been released. The paper, by The Caribbean Policy Research Institute (CaPRI) together with the Centre for International Governance Innovation (CIGI) is entitled, “The Economic Partnership Agreement (EPA): Towards a New Era for Caribbean Trade.”
The EPA paper, authored by UWI Mona lecturer Diana Thorburn, CaPRI Founder and President John Rapley, Head of the UWI Mona Department of Economics and CaPRI Senior Research Fellow Damien King and CaPRI Research Officer Collette Campbell, sought to determine the impact that the EPA would have on signatory CARIFORUM (CARICOM plus the Dominican Republic) countries, with specific regard to the effect on production patterns and trade balances with Europe, and the fiscal effects that the agreement would have considering that a key part of the agreement is the lowering of taxes and duties on European imports. The paper also explored the political economy dimensions of the virulent debate that surrounded the signing of the agreement in the latter half of 2008.
The signing of the EPA signalled a new era of trade relations between the European Union (EU) and the Caribbean, after decades of agreements guaranteeing markets and preferential prices for Caribbean exports. The new agreement is reciprocal, meaning that Caribbean countries must also now open their markets to EU exports, and is compliant with the rules and precepts of the World Trade Organization (WTO), the governing body of international trade. After years of negotiations, however, just as the agreement was about to be signed, a current of criticism emanating from some of the Caribbean region’s most esteemed economists and public policy makers arose and quickly gathered strength as church leaders, UWI academics, and some civil society non-governmental organizations joined the chorus for the Caribbean to not sign.
This paper found that, contrary to the vociferous dissent that argued that the agreement would prove disastrous for Caribbean economies, the economic effects on the four countries studied—Jamaica, Guyana, Trinidad and Tobago and St. Lucia—would likely be minimal. Jamaica, for instance, stands to improve its trade balance with Europe, but only marginally. Customs revenues will decline as a result of the lowering of import taxes on European goods, but again only marginally.
The political economy dimensions of the agreement, however, and especially the debate over the agreement, are more profound. The paper suggests that the agreement, which was entered into by every CARIFORUM member state, despite the debate and despite the open criticism even by some CARIFORUM heads of state, signals the end not only of a trading era, but of a school of thought that undergirded decades of Caribbean public policy making.
CaPRI, a highly regarded independent, regional think tank, has partnered with CIGI on several research projects, including CaPRI’s Beyond Tourism and Social Partnership papers. CIGI strives to identify and generate ideas for global change by studying, advising and networking with scholars, practitioners and governments and aims to raise capacity to effect change in public policy in Canada, where CIGI is based, and around the world. The document will form a part of CIGI’s Caribbean Economic Governance Project.