David Jessop, Trade Writer

Of all the aspects of the recently initialled economic partnership agreement (EPA) with Europe, the one that remains the least defined is its development dimension.

This is because the EPA contains no guarantees about how trade liberalisation will benefit Caribbean society, nor does it detail when and how governments and the private sector are to receive support that will help them enhance their global competitiveness.

Instead, the EPA text proposes in general terms measures that aim to develop the region's productive capacity, encourage competitiveness and generally foster economic growth.

In doing so the agreement places emphasis on supporting small companies, economic diversification, enhancing the region's technological and research capabilities and facilitating compliance with internationally recognised health, safety and technical standards.

It also makes specific proposals about the ways in which development support might be given to Caribbean industries ranging from financial services through tourism to agriculture and fisheries.

The EPA makes clear that Europe will provide funding to the much discussed Regional Development Fund within two years of the date of signature of the agreement.

Despite this, there is no mention in the text of the quantum of money available to finance the development process.

Such funding will principally come through the existing EC development programmes for the region and for individual nations.

Thus, in the shortly to be finalised 10th European Development Fund (EDF), €132 million from a total of €165m will be made available for Cariforum regional programmes, and programmed in such a way that 85 per cent will be used for regional cooperation, integration and EPA capacity building.

The remainder will address vulnerabilities and social issues.

In addition a number of Cariforum states such as the Dominican Republic and Jamaica have targeted EPA implementation as a primary area to be supported in their national indicative programmes under the 10th EDF.

Much less clear is how other European Union funding — amounting it seems to as much as €1 billion — will be made available.

Regional allocation

EU member states have committed themselves to providing this figure on a bilateral basis by 2010, and outside of the sums available under the EDF. However, regional allocations for this sum within the ACP have yet to be determined and there is a sense that the lions share will go to Africa given European political priorities.

There also continue to be significant problems regarding the slow and bureaucratically cumbersome European Commission mechanisms for delivery of transitional assistance. This has a history of becoming available well after the economic change that it is meant to address has past.

To try to address this, the EU has proposed using two tools on an all ACP basis: budgetary support of euro340 million paid directly to governments, and support for the Regional Develop-ment Fund. In addition, the European Investment Bank will continue to provide euro2 billion in investment financing.

Despite this it is far from clear as to how and when such funding will be made available for Caribbean private sector programmes.

Why this lack of clarity has occurred will become apparent in coming weeks but it is already clear that as the negotiations gathered pace and the emphasis from Europe was on achieving a trade agreement, the development component of the EPA received much less attention.

One reason for this is that throughout there was no joint Cariforum technical working group on development measuring the development component against the needs of Caribbean states. In part this was because many Cariforum nations did not provide their development plans on time or even at all. As a consequence, there is a sense in many Caribbean nations that the EPA's cooperation language is not specific enough, nor sufficient.

Questions

This leaves questions in the region about whether the EPA and it emphasis on trade liberalisation and supporting measures will lead to the private sector led growth that the EPA envisages.

The EPA is based on a belief that the region as a whole has the confidence and ability to abandon past thinking and rise to the challenge of what has been agreed. However, without sufficient supporting development assistance made available in a timely and adequate manner this may be difficult to achieve.

david.jessop@caribbean-council.com