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CARICOM–Canada trade negotiations back on track

16 May 2014

Press reports indicate that after a “lengthy impasse”, negotiations between CARICOM and Canada for a reciprocal preferential trade agreement are back on track. The non-reciprocal trade preferences extended to CARICOM officially lapsed at the end of 2013, but were extended on an interim basis while negotiations for a WTO-compatible agreement were concluded. CARICOM officials are reportedly optimistic that the negotiations can now be concluded by the middle of 2014.

A representative of the Jamaica Exporters’ Association commented that “the Canadians are being very tough in their bargaining and there still [remain] some contentious issues in terms of market access”, in a context where CARICOM member states themselves have “differing interests”. The press reports maintain that “a new trade agreement would avert a potentially serious fallout in the second largest market for Jamaica’s food exports” (notably rum and processed products such as sauces, condiments and bakery products). For example, without a trade agreement, CARICOM exporters could face an addition duty of 25 Canadian cents/litre (€0.16/l) on rum, up to 11% duty on pepper sauces, and 9.5% on arrowroots and yams. (for more details see Agritrade article ‘ Jamaican companies concerned over possible loss of preferences on Canadi...’, 26 May 2013, and ‘ Executive Brief Update 2013 – Caribbean: Agricultural trade policy debat...’, 2 December 2013).

The original decision to discuss a possible trade agreement was announced on 19 January 2001 following a Canada–CARICOM Summit, and negotiations were officially launched in July 2007. By the end of March 2014, six rounds of negotiations had been held. The Canadian Foreign Affairs department’s website notes that progress was made on “market access for goods, … rules of origin, … customs procedures, competition, monopolies and state enterprises”. This follows progress in January 2014 on “government procurement, technical barriers to trade, sanitary and phytosanitary measures, labour and environment”. Agricultural and fisheries exports have been identified as areas where Canada could benefit from a reciprocal trade agreement with CARICOM. 

Editorial comment

The end of non-reciprocal trade preferences for any poor state not classified as a least developed country (LDC) comes ever closer. The EU’s autonomous post-Cotonou preferences for the ACP are due to end this year. In the Pacific, negotiations with Australia and New Zealand under PACER-Plus continue. And in the Caribbean, by extending the Caribbean–Canada Trade Agreement (CARIBCAN) for only one year, Canada has given the Caribbean notice of the end to non-reciprocal preferences.

These negotiations on free-trade agreements (FTA) to supersede non-reciprocal preferences are quite different from the more usual commercial diplomacy that involves the trading of concessions, where one party offers better access to its market in return for equivalent offers from the other. The reality is that any reciprocal agreement will offer few new market access benefits to CARICOM exports to the Canadian market. It will simply maintain existing market access in exchange for reciprocal preferences.

The examples of Jamaican exports to Canada cited in the Jamaican press illustrate two features. One is that the choice placed before the ACP is to liberalise or face new barriers to exports. The other is that agriculture is normally under most pressure in the negotiations: it is agricultural exports that will be most penalised by new trade barriers if there is no FTA, and domestic agriculture that will face the most serious import competition if an FTA is concluded.

In the context of these negotiations, exploring what can be done to address non-tariff measures – which are increasingly becoming the principal obstacle to ACP exports – could offer a way forward. In the agro-food sector, this could include intensifying dialogue and support and dispute resolution procedures related to food safety and SPS measures. Indeed, in August 2013 an UNCTAD review of the application of non-tariff measures found that the way that SPS and food safety measures are applied is often of vital importance to the commercial implications of the controls applied (see Agritrade article ‘ The growing importance of non-tariff measures’, 7 October 2013).

Addressing the way that SPS and food safety measures are applied, with a view to minimising the costs incurred by developing country trading partners while at the same time ensuring food safety and SPS compliance, potentially offers a critically important new area for negotiations under pending reciprocal trade agreements between ACP members and partners that have traditionally extended non-reciprocal trade preferences.

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