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EU won’t demand ’duty-free’ access to Caribbean markets - Critical of Jamaica’s high cost of business

Jamaica Gleaner, Kingston

EU won’t demand ’duty-free’ access to Caribbean markets - Critical of Jamaica’s high cost of business

8 June 2007

A European Union (EU) representative in Jamaica, moving to calm fears that duty-free goods from that region would storm the Caribbean come January 1, 2008 has said the 27-member bloc is not expecting full reciprocity on its blanket offer to eliminate duties on regionally-produced goods entering its market.

But at the same time Carlo Pettinato, the first secretary and head of section for economics, trade, politics and information of the European Delegation, was critical of Jamaica, saying its high transaction costs for doing business were "burdensome" and due to "inefficient organisation."

In May, the EU announced that it was extending to the full African Caribbean and Pacific grouping the same trade terms as the more challenged economies under the Everything But Arms pact - duty- free and quota-free trade, with one or two exceptions.

The Caricom bloc immediately questioned the implications for its industries and their competitiveness given the underlying agreement in the European Partnership Agreements for reciprocal trade.

No commercial stance

But Pettinato said in a speech at a trade forum in Mandeville that Europe had no intention of taking ’an offensive commercial stance’ in the agreements.

"In fact, the EPAs are not free- trade agreements in the usual sense," he said at the Private Sector Organisation/Mandeville Chamber of Commerce forum.

"The EU will completely open its market to Caribbean exporters. No more duties, no more quotas - full stop."

Pettinato insists that the systems in place will provide buffer for the Caribbean against the competition producers and trade negotiators fear, and the depletion of revenues from import duties that Caricom Finance Ministers anticipate.

"The Caribbean won’t be asked to match this offer, and the tariff reductions they do offer will be subject to the flexibility provided by WTO rules which means," he said, "the right to protect sensitive markets and use long transition time for change."

The offer has a transition component for sugar and rice, but does not specifically mention bananas on which a new challenge of the EU trading regime has been launched at the World Trade Organisation.

The first secretary acknowledged that the three sectors were ’difficult commodity issues’ to address.

But for all other products, the tariffs and quotas will be eliminated "from day one."

But the EU representative also said that while the Caribbean was focussed on market access, it ought to be more concerned about utilising the development assistance that comes with the agreements to reposition their economies to attract new investment and trade.

He was critical of Jamaica, suggesting the cost of doing business here was exhorbitant compared to its peers.

It costs 13.5 per cent to of the value to register property compared to 6.0 per cent in the region, while the average cost to ship a container from Jamaica was 64 per cent higher that from the rest of the Caribbean and 116 per cent more when matched against developed countries.

Citing World Bank figures, the trade official also said the cost of obtaining permits and other startup requirements for business was 1.7 times higher than the region and six times more than developed nations.

"What is quite clear is that these higher costs in Jamaica are not due to any competitive or natural disadvantage - crime related costs may play a role - but only to burdensome regulations, red tape, limited competition and inefficient organisation."

Its an area in which the EU could assist Jamaica over the next few years.

"The EU is backing EPAs with real money," said Pettinato, citing one regional sector, sugar, which is targeted to get euro77 million over four years.

"We will support regional EPA funds, help build up local industry and help offset short term revenue losses from tariff cuts."