EU economic crisis: Region to lose 150m euros from development aid cut
The Caribbean region may be in jeopardy of losing some of its developmental aid or being cut out from the European Union’s (EU) Economic Partnership Agreements (EPA), as the EU is in the process of a budgetary reform due to Europe's economic crisis.
The European Union, through its EPA, is planning to cut its overall development budget by 11 per cent.
This, according to David Martin, chair of the Cariforum/ EU Parliamentary Committee and member of the European Parliament.
In an interview on April 3 at the Cariforum-EU stakeholders’ engagement dinner at the Hyatt Regency Trinidad hotel, Port-of-Spain, Martin said Caribbean representatives expressed great concern about the development aid.
He said the economic crisis has put financial pressure on the EU, limiting its ability to assist developing countries.
He said the Caribbean is particularly concerned because the budgetary reform is linked to a new system whereby the EU Commission wants to concentrate on the countries with the lowest per capita income.
These countries, he said, include mainly African countries: Sierra Leone, Zimbabwe and Angola.
However, the Caribbean, including T&T, does not fall in that category, since it has a high capita per income, he said.
Martin said he was willing to fight the case for the Caribbean for two main reasons.
Firstly, he said, there are other criteria for accessing the EPA, such as susceptibility to climate change, peripherality and island status.
“We think that even though T&T has a good per capita income compared to other developing countries, it still requires EU involvement and assistance.”
Secondly, Martin said, “There is one strong card that the Caribbean has and that is they are the only region that actually signed the EPA agreements with the EU. So the message I keep taking back to the EU Commission, and I would continue to lobby when I get back home, is that the Caribbean had the courage to sign the EPA with us and they are trailblazers in terms of setting expectations and standards from the EPA.”
“And if we want to encourage other countries and regions to sign up, we have to make the Caribbean-EPA work. I think it is a good incentive to make sure that it works,” Martin said.
Martin said the EU gave 150 million euros for the period 2012-2015 for regional integration in the Caribbean in addition to bilateral aid to each country.
Martin said the EPA agreement includes both the exchange of goods and services from individuals and companies in the Caribbean region.
“But for the Caribbean, it is clear that the services are the more important sector and we do want to enhance the opportunity for the Caribbean service provider to gain access to the EU markets.”
Second thoughts
Martin said some of the challenges the EU is facing is that some Caribbean countries, like Jamaica and T&T, are having second thoughts over certain elements of the EPA.
He said there is an issue concerning certain EU-implemented tariff reductions.
Martin said Jamaica is asking the EU to hold its hand on the tariff reduction for used cars.
He said Jamaica expressed concern because “apparently, it’s a big income-earner for Jamaica Customs and Excise Division.”
“Jamaica informed the EU that the duty is significant and they don't have other sources of revenue to replace that tax as yet, so they have asked for a delay in the tariff reductions.”
Martin said the EU recommended the tariff should be heavily reduced and, if possible, bring it to zero. He said Jamaica had agreed to this, but now has changed its mind because the economic situation is so desperate, they cannot afford to reduce those tariffs now.
It’s a similar situation for T&T.
Martin said T&T has asked the EU to review its position on having the paper manufacturing included in the tariff reductions.
He said based on the EPA, it was agreed all Caribbean countries would reduce the tariff lines on 80 per cent of their products so they can still protect 20 per cent.
Paper, he said, was not included in the 20 per cent, and the T&T Government is now asking for its inclusion.
The EU, he said, went over the old document and stated T&T did not ask for paper to be excluded from the tariff reduction, and is now asking why the change of heart.
After discussions with the T&T’s Trade Minister Vasant Bharath, Martin said it was agreed to ask the EU Commission to take another look at the issue.
Following rules
Martin said there is another issue, the complex one about the rules of origin.
The rules of origin state that a certain percentage of products has to be produced in T&T for it to be exported duty-free or enjoy low levels of duty. He said there must be a high local content, but there are some products that are manufactured with a high Indian content and reworked in T&T, which often do not meet the rules of origin requirements.
In some cases, he said, manufacturers do not know how to meet the rules of origin requirements and, as a result, cannot navigate through the system. He used textiles as an example.
Based on some of the presentations made by institutions, such as the T&T Chamber of Industry and Commerce, T&T Coalition of Services Industries and T&T Manufacturers’ Association, Martin said one of the main issues was the regulatory barriers established by the EU.
He said the associations noted a lot of T&T companies were now trading with Latin America because they find fewer regulatory barriers in getting access to that market compared to the EU.
Martin said the EU would be looking to see how best it can simplify those issues.
Asked to draw an example of some of the regulatory barriers that T&T complained about, Martin said it had mainly to do with meeting the EU health and safety standards, for example, processing food and the canning mechanism.
Martin said some of the issues stem from companies not meeting required international standards. In some instances, the EU's application may be too rigid and, in others, standards may need to be re-examined.
Maximising the EPA
Martin said based on the discussions from the two-day meeting, he realised Europeans have not shown that much willingness to take up the opportunities, while the Caribbean has not pushed hard enough to access those markets.
“So there is a lot of work still need to be done.”
Martin attributes this low interest to lack of knowledge and awareness.
He said the existence of the EPA is very low among European businesses and EU governments.
“They don’t understand that the architects, accountants, nurses and doctors in the Caribbean are qualified and have a right to work in the EU if they so wish to do.”
He explained both countries had mutual recognition, so in theory, EU should recognise the Caribbean professional once they are certified in their country “because we have agreed to recognise each other’s qualifications.”
He said the umbrella body for the architect in the Caribbean has been working with professionals in the EU and have agreed on a common standard for architects through training.
However, Martin said in order for the EPA to work effectively, the Caribbean must move faster with implementation.
“Not much has been done since five years ago when it was first introduced.”
Another way, he said, T&T and the Caribbean could keep development aid by being proactive.
Martin said: “Let us know the problems and don’t sit on it and grumble about the EU is not doing this and that...keep us inform about the issues and how we can help.”
The United Kingdom’s Guardian reports on February 8:
European leaders agreed to limit EU spending to €908 billion in the next seven-year budget, which sees the first cut in the organisation's 56-year history.
Aid campaigners have expressed concern at the brakes applied to the aid budget.The European Development Fund (EDF), which targets sub-Saharan Africa, will effectively be frozen under current plans. The president of the European council, Herman Van Rompuy, had put €26.9 billion on the table compared to the European commission's proposal of €30 billion. The EDF currently stands at €26.93 billion.
Technically, the EDF is a fund outside the main budget. But the level of spending for the EDF will be agreed as part of the overall budget negotiations.
The chunk of foreign aid that does come under the budget, which includes the Development Co-operation Instrument (targeting Asia and Latin America), is €1.9 billion lower than proposed by the commission, but will still amount to a 3.4 per cent rise based on current spending levels of €58.7 billion. (guardian.co.uk)
by Dixie Ann Dickson,
Trinidad and Tobago Guardian Online
Read here: http://guardian.co.tt/
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| Date Posted | April 12 2013 |