Trade Liberalization / Globalization
Economic Partnership Agreement (EPA)
The Economic Partnership Agreement between the CARIFORUM States and the European Community is scheduled to be signed by The Bahamas in July, 2008.
The CARIFORUM States includes the countries comprising CARICOM, of which The Bahamas is one, plus the Dominican Republic and Cuba. The European Community comprises the countries that are members of the European Union (EU).
Prior to the EPA, trade between the European Community and the African, Caribbean and Pacific Group of States (ACP) was governed by the Cotonou Agreement signed on the 23rd of June, 2000, and prior to that by the four Lomé Conventions, the first of which was signed in 1975. The EU has broken with tradition in that it is dealing separately with each group of the ACP by creating three separate agreements, one with each region; African States, Caribbean States and Pacific States.
The Cotonou Agreement, unlike the Lomé Conventions that dealt strictly with the trade of goods, provides for an enhanced political dimension, increased participation, a more strategic approach to cooperation, new economic and trade partnerships and improved financial cooperation. The Cotonou Agreement provides that a revision must take place every five years and the required revision was made in 2005.
The EPAs will not replace the Cotonou Agreement that will remain in effect until 2020, instead they will replace only those sections of the Cotonou Agreement that deal with trade. The reason that the trade component of the Cotonou Agreement is being replaced is due to the fact that it is not compliant with the World Trade Organization (WTO) rules on non-discrimination. The Lomé Conventions and Cotonou Agreement are non-reciprocal in that ACP countries can export goods to the EU countries on a preferential basis, however the EU countries cannot export goods to the ACP countries on a preferential basis. The acceptance of non-reciprocal trade agreements between the EU and ACP was due to the fact that most of the ACP countries were at one time Colonies or Territories of a European Community nation.
The WTO granted a waiver allowing the trade components of the Cotonou Agreement to remain in place until the 31st of December, 2007. Non-discrimination is a major principle of the WTO and while the EPAs will in practice be discriminatory to non-ACP states, the EPA qualifies as a Regional Free Trade Agreement (RFTA) and is therefore permitted under WTO rules. Although RFTAs must contain areas of reciprocal liberalization in the movement of goods, or goods and services, they do not necessarily need to share the same degree of liberalization commitment.
The Chief Negotiator for the CARIFORUM States in the EPA is the Caribbean Regional Negotiating Machinery (CRNM) that was created by the Caribbean Community (CARICOM).
Caribbean Community and Common Market (CARICOM)
The Treaty of Chaguaramas that established the Caribbean Community and Common Market, later known as CARICOM, was signed on the 4th of July, 1973 in Chaguaramas, Trinidad and Tobago. CARICOM replaced the 1965–1972 Caribbean Free Trade Association (CARIFTA) that had been organized to provide a continued economic linkage between the English-speaking countries of the Caribbean following the dissolution of the West Indies Federation which lasted from the 3rd of January, 1958 to the 31st of May, 1962. A Revised Treaty of Chaguaramas establishing the CARICOM Single Market and Economy (CSME) was signed on the 5th of July, 2001 in Nassau, The Bahamas. CARICOM unofficially became multilingual in practice with the addition of Dutch-speaking Suriname on the 4th of July, 1995 and Haiti, where French and Haitian Creole are spoken, on the 2nd of July, 2002.
From its inception, The Bahamas has been an active member and staunch supporter of the Caribbean Community, however The Bahamas has never been part of the Caribbean Common Market. The Bahamas is not a member State of the CSME established by the Revised Treaty of Chaguaramas for three primary reasons:
While the CSME provides for a Free Trade Area between CARICOM countries where the movement of goods would not attract tariffs (Duties, Stamp Tax, etc.), the Treaty provides for a Common External Tariff, meaning that the rate of tariffs for goods coming from non-CSME countries would be the same in all CSME countries. The Common External Tariffs are at a substantially lower rate than those currently in place in The Bahamas. Since a considerable amount of Government revenue comes from import tariffs The Bahamas cannot agree to the Common External Tariffs without completely revamping its tax structure.
The CSME is not limited to the trade of goods, it extends to the provision of services as well. In order to accommodate the provision of services, the Treaty provides for the free movement of persons. The free movement of labour by removing all obstacles to intra-regional movement of skills, labour and travel is not acceptable to The Bahamas.
The Bahamian dollar is pegged to the U.S. dollar on a one-to-one basis. With the U.S. being our major trading partner and the source of the majority of our tourism market, this provides a great deal of stability to the Bahamian economy. The CSME provides for a monetary union that intends to have a single currency sometime between 2010 and 2015. The Bahamas does not want make changes that would peg our currency to CSME.
For additional information visit the Caribbean Community (CARICOM) Secretariat website.
World Trade Organization (WTO)
The World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. The World Trade Organization has the authority to administer and police new and existing Free Trade Agreements, to oversee world trade practices, and to settle trade disputes among member states. The stated goal of the WTO is to help producers of goods and services, exporters, and importers conduct their business.
The WTO was established on the 1st of January, 1995 as a culmination of GATT, the General Agreement on Tariffs and Trade, that was in operation from 1948. The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTO’s creation. GATT mainly dealt with trade in goods, however the WTO and its agreements now cover trade in services, and in traded inventions, creations and designs (intellectual property).
The critics of WTO charge that it is among the most powerful, and one of the most secretive international bodies on earth. It is rapidly assuming the role of global government, with the central operating principal that commercial interests should supersede all others. Any obstacles in the path of operations and expansion of global business enterprise must be subordinated. In practice these "obstacles" are usually policies or democratic processes that act on behalf of environmental protection, human rights, consumer rights, social justice, local culture, and national sovereignty.
The Bahamas is currently an Observer Government in the WTO. The accession to become a full member of the WTO is a long and arduous process. Each accession is decided by consensus of all interested WTO members who must be in agreement that their individual concerns have be satisfied and that outstanding issues have been resolved.
A brief summary of the steps to become a full member of the WTO is: i) application for membership is received by the WTO; ii) establishment of a WTO Working Party; iii) applicant Government presents a memorandum covering all aspects of its trade and legal regime to the Working Party; iv) a dialog of questions from the Working Party and replies from the applicant Government; v) meetings of the Working Party; vi) additional questions and replies on agriculture, services, checklists, and legislative action plans; vii) market access negotiations on goods and services; viii) factual summary; and, ix) draft Working Party report that must be approved by the General Council of Ministerial Conference in order for the applicant Government to become a full member.
The application from The Bahamas to join the WTO was received on the 10th of May, 2001 and the establishment of a Working Party was approved on the 18th of July, 2001. The Bahamas has not yet completed the third step in the accession process by submitting to the WTO a memorandum covering all aspects of its trade and legal regime.
For additional information visit the World Trade Organization website.
Free Trade Area of the Americas (FTAA)
In December of 1994 at the Summit of the Americas the Free Trade Area of the Americas (FTAA) was proposed by then U.S. President Bill Clinton as an expansion of the North American Free Trade Agreement (NAFTA) encompassing the 34 democratic countries in the Western hemisphere who agreed to negotiate an agreement to enter into a single free trade area in which barriers to trade and investment would be progressively eliminated. A declaration was made by the participating countries that the FTAA would be created by 2005. Note: because of its communist government the only country in the Western hemisphere that was not invited to be part of FTAA was Cuba.
Even though initially agreed to in 1994, the FTAA did not come to public attention until the Quebec City Summit of the Americas, held in Canada in 2001. The meeting was targeted by massive anti-corporatization and anti-globalization protests. As negotiations continued several South American countries such as Argentina, Bolivia, Brazil and Venezuela strongly opposed proposals submitted by North American countries that eventually led to them pulling out of the process.
The fourth and last Summit of the Americas was held at Mar del Plata, Argentina, in November 2005, but no agreement on FTAA was reached. Although 26 of the 34 countries present at the negotiations pledged to meet again in 2006 to resume negotiations, no meeting took place. The failure of the Mar del Plata summit to set out a comprehensive agenda to keep FTAA alive has meant that there is little chance for a comprehensive trade agreement in the foreseeable future.
For additional information visit the official Free Trade Area of the Americas website.
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