3. The Caribbean in ACP/EC Cooperation

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3. The Caribbean in ACP/EC Cooperation

In the early negotiations leading up to Lomé I, the Caribbean sought a model of association with the EC that was ‘sui generis’. It rejected the Arusha-type or special trade agreements of that time and the existing Yaounde model. It emphasized non-reciprocity and protection of traditional arrangements as well as equal arrangements for the independent Caribbean countries and the self-governing territories.

Reservations existed about the Yaounde model which contained reverse preferences, lacked special protective measures for important traditional commodities and offered inadequate participation in aid management. Such provisions were perceived by Caribbean countries as representing a loss of preferential status enjoyed under the Commonwealth Preference System as well as posing a threat to Caribbean integration.

The protection of traditional export staples, such as rum, sugar and bananas, was central to the region’s motives. The arrangements for these products that were attained guaranteed the region reasonable market access and an assured flow of export earnings. Trade provisions for these basic commodities strongly outweighed aid considerations.

The Caribbean enjoyed a higher per capita income than its other ACP counterparts such that less importance was attached to aid. However, this situation changed relatively as the OECS countries became members of Lomé and generally as the economic plight of the region worsened.

There was some interest in industrial cooperation since the region recognized that diversification was important and some external protection and assistance in the form of ‘GSP-plus’ preferential trade arrangements coupled with assistance from the EIB and CDI could facilitate the industrialization process by reducing its ‘infant-industry’ costs.

Within the context of the overall policy shifts (described earlier) since Lomé I, concerns of the region tended to wane, if not disappear, from the negotiation agenda. Naturally, against the backdrop of dwindling real resources and more urgent priorities relating to basic survival, the dynamics worked against the region. The main areas where Lomé experienced some significant change since 1975 were in export stabilization, grant funding, and special aid allocations (desertification, emergency aid, environment, and structural adjustment). The Caribbean’s main focus has been on the trade instruments – rules of origin, trade promotion, safeguard clause, CAP quotas, etc. – due to its higher per capita income. No major breakthroughs occurred in these areas and even though the region benefitted in some ways from some of the changes, its bottom line remained the sugar and banana Protocols.

The impact of Lomé on the Caribbean has been similar to the overall results discussed above. There has been marginal diversification of exports. Some new exports such as urea, methanol, ammonia and, recently, garments emerged. The broad pattern of commodity concentration, however, has remained.

Lomé was beneficial in the commodity arrangements. Sugar, rum and bananas gained the desired access and stable remunerative prices. The Sugar and Banana Protocols, in particular, stabilized, and at times increased, export earnings. Sugar revenues were much larger than those obtainable at world prices.

In addition, provisions which were not designed directly for this region did, nevertheless, bring some clearly identifiable benefits. Banana STABEX transfers were important for the Windward Islands, Jamaica and Belize. Emergency assistance related to hurricanes also proved useful,

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and EDF aid flows did make a more significant contribution for the OECS and Belize in areas such as agriculture, rural development, health, education and transport.

Similar to the average ACP state, however, the Caribbean continued to lose EC market share to non-ACP developing countries. This has not been offset by any increases in public or private capital flows. On the contrary, aid to the region, particularly under the regional programme, took a nose-dive in relative terms, and private capital flows have been on the downturn.