Issue:

09/ 03
March 31, 2009

RNM UPDATE
CARICOM TACKLES THE
GLOBAL FINANCIAL
CRISIS
As evidenced by the cautions reiterated by the WTO These options reflect the wide gamut of traditional
Director-General in recent times, in the face of economic approaches to correct recessions. However, adopting
crisis, the reaction of most economies, let alone small any of these policies is not an uncomplicated
developing open economies, is to resort to discriminatory undertaking for developing economies. While the small
trade practices intended to shield local industries from island developing economies of CARICOM trade openly
competition from imports. However, the contraction of global in the international trade arena, they are vulnerable to
trade caused by protectionism can exacerbate the global world systemic shocks because as price takers, they are
economic crisis and lead to a global economic depression. affected by but do not control world market prices.
Prescriptive government actions to avoid depression and to
In the face of a global financial crisis, CARICOM
alleviate recession include the employment of policies to
economies, as price takers are particularly susceptible
maintain the circulation of money within the domestic
to various risks. In particular, these risks include
economy by encouraging government and consumer
decreasing flows of foreign investment, rapid outward
spending; or the increase of the supply of money by
flows of money and other assets, reduced exports and
lowering interest rates; or the reduction of taxation to
decline in competitiveness within the international
stimulate business investment.

CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
market, lower foreign exchange reserves and significant by making recommendations on various policy
increases in unemployment levels. All of these can lead adjustment programmes which are
to increased levels of poverty which undermine the most
1. focused on sustainable development , that is,
vulnerable within Caribbean societies, including women
peopled centered, environmentally conscious,
and the elderly. Therefore, for countries like CARICOM
and designed to be beneficial in both the short
depending on the developments in the crisis it may
and long term;
become necessary to tighten monetary policy and
increase interest rates to prevent currency devaluation 2. relevant to Caribbean circumstances; and
or the rapid capital outflow.
3. sensitive to the unequal levels of development
Regional integration has long been recognized as the within the region.
primary offensive and defensive strategy of CARICOM
In this context, the work of the Task Force will begin to
member States. Regional integration helps the individual
identify on one hand those sectors which are the most
member states to rise above the encumbrances of
vulnerable, and on the other, those which are key
constraints of small size and the related vulnerability.
economic drivers so that these may be afforded priority
Hence, the solutions to surviving and adjusting to the
assessment and treatment. These sectors include
global crisis essentially reside in a regionally
manufacturing, agriculture, tourism, energy production,
coordinated approach.
finance, government and the household.
In this context, on the 29th January 2009, at the
The Task Force will also be concerned about
Thirteenth Meeting of the Council for Finance and
capitalizing on the opportunities presented by freer
Planning (COFAP), the CARICOM Ministers of Finance
trade, which is a catalyst of economic growth. In this
mandated the formation of a task force to address the
regard, the Task Force will explore exploiting to the full
financial crisis. Since that time, the Task Force held
extent the opportunities available through bilateral trade
their first meeting on the policy implications of the global
arrangements such as the CARIFORUM-EC Economic
financial and economic crisis on February 18, 2009.
Partnership Agreement (EPA), which provides
The purpose of the regional Task Force, which is development assistance in addition to expanded market
comprised of key stakeholders groups, including the access to the European market. Furthermore, the
Caribbean Regional Negotiating Machinery, is to help adequate address of the Doha Development Agenda will
the region to mitigate the risks posed by the crisis be critical to international efforts to address the crisis.

CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
Therefore, the continuation of lobbying efforts especially
within the small vulnerable economies (SVEs) group at
TRADE AGREEMENT
the multilateral level will be for the Task Force an IMPLEMENTATION AND
important consideration.
NEGOTIATIONS UPDATE
To support this analysis of external trade, the CRNM is
expected to complete a compendium of trade measures
CARICOM-Canada Negotiations
being undertaken by the Region, international finance
and trade policies, and the implications of the crisis for The Twentieth Inter-Sessional Meeting of the
external trade negotiations and external trade policy. It Conference of Heads of Government of CARICOM
is anticipated that other analyses will be undertaken approved the draft CARICOM Negotiating Brief to be
such as the impact of the crisis on employment which used as the basis for the commencement of
will be conducted by the Caribbean Congress of Labour; negotiations, with the understanding that the
and the current business and investment conditions recommendations constitute initial negotiating mandates
which will be conducted by the Caribbean Association of which CARICOM may have to revisit in light of
Industry and Commerce (CAIC). These analyses will all developments during the course of the negotiations. The
be used to inform the development of specialized date of commencement of the negotiations has not been
initiatives. confirmed.

The next meeting of the Task Force is scheduled to take
place on April 29-3o, 2009. Until then, the continued
work of the Task Force will be paralleled by global
initiatives to address the crisis. CARICOM will
undoubtedly be monitoring the outcomes of the Meeting
of the G20 which is scheduled to begin on April 2 2009,
and the Fifth Summit of the Americas, scheduled to take
place 17-19 April 2009. The outcomes of these events
are regarded as important to creating international
consensus on global solutions. However, regardless of
the outcomes, the work of the Task Force will be
sustained as long as the threat of the crisis continues.
During the Inter-Sessional the Heads also
recommended that the CRNM, the CARICOM and
OECS Secretariats, academics and other relevant select
stakeholders should prepare a Paper to inform the
articulation of CARICOM development priorities with
respect to the negotiations with Canada.
On March 28, 2009, these stakeholders met to discuss
the concept of development and the region’s priorities
with respect to the negotiations with Canada. The
meeting yielded some positive insights into the
refinement of the concept of development into more
concretized proposals, and on the formulation of a
negotiation strategy which would help CARICOM to
realize its objectives during the negotiations.

CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
The Implementation of the EPA
During the Sixth Meeting of the CARIFORUM Council of
Ministers, no consensus was attained on the matter of
designating the CARIFORUM EPA Coordinator in
accordance with Article 234 of the CARIFORUM-EC
Economic Partnership Agreement (EPA). The Ministers
of the CARICOM Council for Trade and Economic
Development (COTED) did accept and agree to the
proposal of Antigua and Barbuda that the EPA
coordinator should be an individual and that the
individual should be the Secretary General of
CARIFORUM. Though this was also put before the
CARIFORUM Council of Ministers, the Dominican
Republic expressed the reservation that this was not an
amicable solution. Furthermore, the Dominican Republic
expressed the view that a review of the governance of
CARIFORUM was essential before this matter could be
resolved.
It was anticipated that the Heads of Government would
have been able to help the CARIFORUM region move to
closer to a resolution on this matter. In this respect, the
Heads endorsed the view that a re-visitation of
CARIFORUM’s governance was a necessary step
towards resolving this matter and mandated the
Secretary-General of CARICOM to facilitate the review.
This review of CARIFORUM governance will likely entail
an assessment of the relationship between the
Dominican Republic and the CARICOM member states
at the systemic level.
CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
Furthermore, the feasibility of accepting the offer made
by the Dominican Republic to join the CARICOM group
of states may also require examination and will have to
be weighed against the consideration of CARICOM’s
ongoing bilateral trade negotiations with the Dominican
Republic.
The Heads of Government also noted the mandate of
the CARIFORUM Council of Ministers to establish a
Working Group of Legal and Policy Officials to address
the issues of the composition of CARIFORUM
representation in the EPA Institutions and the
development of the Region’s position in respect of Rules
of Procedure for these Institutions. The Working Group
convened in a meeting to discuss such issues on March
26 -27, 2009. This meeting allowed the legal and policy
officials to reflect upon proposals put forward by the
CRNM on policy related matters concerning the
operation of the Joint Institutions and Dispute settlement
under the EPA. In this context, the Meeting arrived at
recommendations with respect to the following:
1. The designation of representatives of the
Signatory CARIFORUM States on the Joint
CARIFORUM-EC Council, the CARIFORUM-
EC Trade and Development Committee, and
the Special Committee on Customs
Cooperation and Trade Facilitation;
2. The designation of the Chair and Secretary for
the above Joint institutions;
 3. The working languages of the Joint
Institutions;
THE TRADE CHALLENGES
4. Participation in the CF-EC Consultative
CONFRONTING THE ACP
Committee; BANANA SUPPLIERS
5. Participation in the CF-EC Parliamentary As a result of a November 2008 WTO Appellate Body
Committee; ruling, the EU is obligated to reduce the tariff of €176
per tonne applied to bananas imported from all countries
6. Selection of persons to serve as arbitrators;
with which the EU does not have a preferential
7. The venue for arbitration hearings. arrangement. In February 2009, in an attempt to finally
resolve the banana dispute, the EU made a proposal on
The consensus reached on these matters helped to
the treatment of bananas imported from MFN suppliers.
inform the work of the legal officials in arriving at draft
Rules of Procedure. The EC has proposed immediately rebinding of the tariff
at €148 per tonne, which will be followed by further
annual reductions to €143 per tone by the 1st of January
2010 and to €136 per tonne by the 1st January 2011. In
addition, the EC further proposes to reimburse MFN
suppliers for tariffs paid between the 1st of January 2009
and the date of initialing provided that the initialing date
was as early as possible in 2009. However, the EC has
locked into this proposal contingencies for further tariff
reduction which are based upon the conclusion of the
Doha Round. If the Round is concluded by 2012, the EC
proposes to further reduce the MFN tariff to €114 per
tonne. However, if the Round is not concluded, the EC
proposes to freeze the tariff until an agreement is
reached or for a maximum of three (3) years. The offer
has been conditioned by the inclusion of a clause which
commits the parties to agree to a peace clause
stipulating that the agreement would settle all pending
related disputes.

CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org

While the MFN suppliers have not accepted the offer,
the view of the African, Caribbean and Pacific (ACP)
Group of States is that the offer is unacceptable as it
does not accommodate their concerns about the speed
and extent of preference erosion which will be brought
about by the implementation of the EC’s proposal. For
the CARIFORUM group therefore, notwithstanding the
market access which has been secured through the
CARIFORUM-EC Economic Partnership Agreement
(EPA), the preference erosion which CARIFORUM will
face because of MFN tariff reduction as proposed by the
EC poses a serious threat to the CARIFORUM banana
industry.
The EC has presented a compensation package to the
ACP amounting to 160 million for the fourteen banana
producing countries within the ACP. The ACP in
response has not accepted this offer as the amount and
the basis of its formulation have been deemed
inadequate. In particular, the ACP view is that the
package does not compensate the ACP for the
significant losses which have already been incurred
because of the implementation of the EC’s single tariff
system which was implemented in January 2006.
For the ACP, the threat of preference erosion is further
exacerbated by the bilateral free trade agreement (FTA)
negotiations between Central America and the EC which
are currently underway and are due for completion in
2009.
CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
The EC has presented the Central American group with
an offer which proposes to reduce the tariff from €176
per tonne to €148 per tonne and then to €95 per tonne
over a ten year period with no quota restrictions.
Given the implications of this offer for ACP preference
erosion, and in accordance with the EPA obligation for
the Parties commit to undertake prior consultations on
trade policy developments that may impact on the
competitive positions of traditional agricultural products
such as bananas, the ACP and the EC entered into
consultations on this matter in November 2008.
It appears that by presenting its MFN offer and its
bilateral offer to Central America, the EC anticipates that
it will be able to leverage an implicit agreement from
these countries that they would in turn adopt
significantly more flexible positions at the multilateral
level because these countries would wish to preserve
their margin of preference in the Doha negotiations.
However, when compared to the more conservative
market access presented by the EC MFN tariff reduction
offer, for other banana producing countries, the EC
bilateral offer to Central America pushes the envelope
with respect to the limits of the EC’s current MFN offer.
Therefore, the level of ambition of the EC at the bilateral
level would create an incentive for other banana
producing states to demand greater tariff reduction
within the Doha Round.
 There are very few options available to the ACP to try to
curtail the inevitable course of preference erosion. It is
important for the ACP to continue to lobby and place
pressure on the EC to arrive at solutions that are more
sensitive to the ACP circumstances. However, it is
more critical for the ACP to restructure the industry in
order to make it more sustainable and competitive. The
ACP should use all development assistance vehicles
available, such as the development provisions under the
EPAs, and Aid for Trade, to direct the necessary
resources to accomplish this challenging but necessary
restructuring process.

*******

CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
 NEWS ITEMS

International News

WTO Sees 9% Global Trade Decline in 2009 as Recession Strikes

The collapse in global demand brought on by the biggest economic downturn in decades will drive exports down by roughly 9% in volume
terms in 2009, the biggest such contraction since the Second World War, WTO economists forecast today (25 March 2009). ―Trade can
be a potent tool in lifting the world from these economic doldrums. In London G20 leaders will have a unique opportunity to unite in moving
from pledges to action and refrain from any further protectionist measure which will render global recovery efforts less effective,ԡ said
Director-General Pascal Lamy.

Chair of WTO Farm Talks is Set to Leave Post

The chair of the Doha Round agriculture negotiations, Ambassador Crawford Falconer of New Zealand, has told negotiators that he plans
to go back to his home country in April - seemingly reversing a decision he made in December to postpone his return. The Government of
New Zealand has indicated that Falconer will take on the post of Deputy Secretary at the Ministry of Foreign Affairs and Trade.

Regional News

The Division of Trade, Industry and Commerce Host Annual Manufacturers’ Forum

The Division of Trade, Industry and Commerce hosted its annual Manufacturers’ Forum on March 30 2009 at the Lloyd Erskine Conference
Centre in Barbados. The theme of this year’s conference was “The Economic Partnership Agreement –The Way Forward in Barbados”.
Deputy Senior Director of The Caribbean Regional Negotiating Machinery, Mr. Carl B. Greenidge presented an Overview of the
CARIFORUM –EC EPA & its Implications for the Manufacturing & Agro-processing Industries. In this presentation, the benefits of
the EPA to the manufacturing sector and some of the steps the industry should undertake to take advantage of the Agreement as well as
assist the implementation of the Agreement were emphasized.

Brazil, Chile and CARICOM Countries Back FAO's Proposal for a World Summit on Food Security

The Heads of Government of CARICOM countries as well as President Luiz Inácio Lula da Silva of Brazil and President Michelle Bachelet
of Chile are putting their support behind a proposal by FAO Director-General Jacques Diouf for a World Summit on Food Security next
November in Rome, on the occasion of the 36th Session of the Conference of the Organization. The announcement came after Dr. Diouf's
visit earlier this month to Chile and Brazil, where he had separate talks with Presidents Bachelet and Lula, and to Belize, where he took
part in the 20th Inter-Sessional Meeting of the Conference of Heads of Government of the Caribbean Community (CARICOM).

CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
Regional News (continued)

Barbadian Companies to Get Help Exploiting EPA

The Barbados Private Sector Trade Team (PSTT) is unrolling a comprehensive 12-month programme aimed at preparing companies on
the island for the increased duty free access to European Union (EU) markets provided by the new EU-Caribbean Forum economic
partnership agreement (EPA). PSST head Magnus Whitehead made the revelation as he addressed the opening of a recent workshop,
organised in collaboration with the Caribbean Regional Negotiating Machinery (CRNM), aimed at increasing Barbados private sector
awareness of the trading opportunities and benefits available through the EPA.

While promising more details soon, Whitehead told the audience that, over the next year, the PSTT would provide business owners and
employees with information on the challenges and opportunities of the EPA, through a variety of pathways including workshops, round-
table discussions and communication materials

Upcoming Events

April 2009

01.04.2009 - 03.04.2009 - Colloquium on Culture, Creativity and Development, organized by DG Culture and DG
Development, Brussels

01.04.2009 - 09.04.2009 - 16th Session of the ACP Parliamentary Assembly and the 17th Session of the ACP-EU Joint Parl.
Ass., Prague

01.04.2009 - 01.04.2009 - TWG on the CARICOM Investment Code, Barbados

02.04.2009 - 03.04.2009 - WTO Regional Workshop on Agriculture for the Caribbean, Dominica

06.04.2009 - 08.04.2009 - WTO Trade Policy Review Body – European Communities, Geneva

06.04.2009 - 10.04.2009 - Centre for Economic Studies and Sustainable Development Conference, Toronto

08.04.2009 - 09.04.2009 - OECS Consultations on Fisheries, Antigua and Barbuda

14.04.2009 - 18.04.2009 - Centre for Economic Studies and Sustainable Development Conference, New York

16.04.2009 - 16.04.2009 - ICTSD/WBI Global Dialogue on TRIPS and Public Policy Challenges, Geneva

17.04.2009 - 19.04.2009 - V Summit of the Americas, Trinidad and Tobago

22.04.2009 - 22.04.2009 - Royal Commonwealth Society Conference on the ACP-EU Process, London

29.04.2009 - 30.04.2009 - CARICOM Financial Crisis Task Force

CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org