Statement of the Outcome of the Eighth Europe/Caribbean Conference, Havana, Cuba, December 4-5 1997

Caribbean Council for Europe, December 22, 1997

In contrast to previous Europe/Caribbean conferences, the eighth, held in Havana, Cuba, was characterised by a creative, forward-looking and positive approach towards the impending negotiations for a post-2000 successor arrangement to Lomé IV.

The conference was imbued with a tangible sense of urgency when it was learnt that by April 30, 1998, the Caribbean’s detailed requirements for inclusion into the ACP post-Lomé negotiating mandate, will have to be complete. After that date the Caribbean position will be integrated into an ACP negotiating mandate for final approval when the ACP Council of Ministers meet in May 1998 in Barbados. Thereafter, the Caribbean will assume the presidency of the ACP group and the EU/ACP negotiations will begin in September 1998.

At the Havana conference, senior public sector participants made clear that against this background there were few opportunities left for consideration of the requirements of the social partners other than at the Caricom Heads of Government inter-sessional meeting due to take place in Grenada in February.

With such little time remaining in which to complete an effective Caribbean negotiating position, participants recognised that there was a pressing need to clarify and establish the detailed requirements of the social partners from a successor arrangement to Lomé IV.

The timing of the Havana meeting was considered opportune, coming soon after a number of events of central importance to the future development of the Caribbean’s relationship with Europe. These included:

• the Libreville declaration adopted by the first summit of ACP heads of state and Government on 7th November l997, which provided a framework of principles within which the ACP negotiating mandate will be constructed;

• the European Union’s approval of the communication from the European Commission setting out the basis on which the EU will develop its post Lomé negotiating position during the British presidency of the EU in the first part of 1998;

• the further deepening of functional Caricom-Cuba relations as a result of the fourth Caricom-Cuba joint commission held in the same week as the eighth Europe Caribbean Conference; and

• the US Congress’ rejection of fast track negotiating authority for the Clinton administration’s negotiations of new trade agreements, resulting in implementation of the Free Trade Area of the Americas (FTAA) being, at best, delayed and unlikely to be in place until well beyond the date originally envisaged.

Over the course of the conference, it became evident that the FTAA should no longer be afforded the highest priority in the Caribbean’s trade agenda. Senior participants suggested that the region should consider that the loss of fast track negotiating authority offered a merciful respite, given the lack of readiness of Caribbean economies for hemispheric integration. Accordingly, the immediate focus of extra-regional trade policy must, it was felt, now switch to securing the best possible set of arrangements for the Caribbean from Europe.

By 2005 - the original target date for the FTAA - the EU and ACP will have put in place the framework for a special trade, aid and other mechanisms that will link the ACP and Europe in a sustained partnership for a period of ten to fifteen years. The conference recognised, therefore, that the terms of any future phased transition to reciprocity in an EU/ACP trade relationship after 2005 in the context of a successor arrangement to Lomé IV, will also establish the basis for the Caribbean’s possible insertion into the FTAA. Participants felt that this provided an unique opportunity for the Caribbean to create an arrangement with Europe that will inform the creation of any future timetable for the introduction of the Caribbean into any reciprocal hemispheric trade arrangement. The negotiation of a WTO-compatible post-Lomé agreement with Europe should now, therefore, take precedence over all other hemispheric extra-regional trade considerations.

The conference noted that the present positions of the US and EU towards the Caribbean differ greatly. In contrast to the US administration’s lack of clarity and consistency in its policy towards the region, the EU had proposed a detailed framework for a future EU/ACP relationship. The EU policy further allowed for a convergence of EU foreign and development policy in the Americas. This will create a clear and advanced set of complimentary relationships with all of the nations south of the Rio Grande. Delegates therefore felt that the Lomé Convention as an integrated and real partnership that encompassed trade, aid and other mechanisms was a secure platform on which the Caribbean could project its development into the next millennium with the single largest economic trading block in the world, the EU.

As the Prime Minister of Barbados declared in his plenary address, the end of Lomé IV should not be considered as the end of history in the Caribbean region, but more as an opportunity to embrace the future with confidence. A successor convention would be the first major new arrangement of the next millennium and would establish a precedent for any other post 2000 agreements.

The conference noted that ACP solidarity was a pre-requisite in the ACP’s special relationship with Europe. Therefore, any attempt at differentiating the ACP by region and weakening the partnership was to be resisted. There was also value in not diagregating the ACP/EU relationship because together the ACP and EU made up the majority of nations in the WTO.

The conference recognised that it was essential to first achieve a successor arrangement to Lomé IV before setting about achieving any new trade arrangements with Europe. In this context, differentiation was not welcome in the manner set out in the EU’s post Lomé Communication, which suggested the "establishment of separate economic partnership agreements with each of the ACP regions" after 2003.

The conference acknowledged, however, that the concept of differentiation had been a traditional characteristic of the Lomé relationship. Lomé I, for example, had contained specific provisions for differentiation amongst ACP signatories such as those for small and land-locked states, which had been since maintained in successor conventions. Delegates therefore agreed that differentiation must continue to be incorporated into the text of a successor to Lomé IV but not result in the establishment in separate economic partnership arrangements with the three regions of the ACP.

A new model of development co-operation was called for which might contain, under a single agreement, modalities that recognised and provided for the differing levels of development and diverse economic trajectories of ACP states through the creation of more flexible instruments that could be applied when appropriate to the contrasting development needs of particular ACP nations.

Differentiation might be acceptable in time, within the context of a post 2005 EU/ACP trade arrangement, and only on the basis of criteria relating to the level of development in ACP states as opposed to geographical criteria. Such an approach would enable the EU to grant preferential access equivalent to Lomé terms to all least developed countries after 2005, thereby bringing the Lomé Convention into line with WTO rules regarding non-discrimination while offering all ACP More Developed Countries (MDC’s) the opportunity to enter, over time, into a new reciprocal trade relationship with the EU.

The Caribbean Chief Trade Negotiator emphasised that in this and other respects, there was a need for a leap of imagination on the part of the EU, especially in respect of future trade arrangements. There was no use in creating special arrangements under the Generalised Scheme of Preferences (GSP) after 2005 as was suggested by some EU member states if this caused the ACP/EU relationship to become little more than a framework of good intentions.

The conference heard calls from a number of senior speakers for the full integration of Cuba into the Caribbean region and for discussions to begin to ensure that a completed Caribbean might then fully participate in all aspects of successor arrangement to Lomé IV. However, the conference recognised that there would be many obstacles to be overcome in order for this to become the new reality.

The conference was reminded that 25 years ago on 8th December 1972 four Caricom states, Barbados, Guyana, Jamaica and Trinidad, has signed in Ottawa a joint diplomatic agreement with Cuba that broke the hemispheric diplomatic embargo of that island and heralded the political coming of age of those four Caribbean countries.

The conference noted that the next step will now be for the Cuban Government to make known how it wishes to relate to the post-Lomé window of opportunity and to assist its Caribbean partners by ensuring that as Cuba deepens its relationship the region can travel securely and successfully with Cuba towards whatever new relationship is sought. In this way, it was suggested, any eventual move towards an FTAA would be facilitated for the region as a whole and would more easily enable the inclusion of Cuba in hemispheric trade arrangements.

Delegates noted the recent increase in bilateral trade between Cuba and Caribbean states and the diversification of the Cuban export economy. The volume of bilateral trade between Cuba and the Caribbean has trebled since 1992. The future roles of Cariforum in particular, and the ACS were recognised in the development of a closer trading relationship between Cuba and Caricom states.

The Conference welcomed the remarks of the Vice President of the Council of State and Secretary to the Executive Committee of the Council of Ministers of the government of the Republic of Cuba about the potential positive impact of the Cuban contribution in the fields of health and education in the wider Caribbean and his suggestion that Cuba had sufficient medical staff to cover the needs of the whole of the Caribbean.

Delegates were reminded that Cuban accession to a successor arrangement to Lomé VI would be dependent on the support of all EU and ACP signatories to the Lomé Convention as well as the Cuban government itself. However, the inclusion of Cuba within the ACP grouping would offer Europe the opportunity to engage Cuba within a development co-operation agreement that contains language relating to the role of civil society as well as providing for trade, aid and other matters of mutual interest. With regards to trade, the conference noted that while Cuba saw its commercial relations with the Caribbean as being based on a principle of co-operation rather than competition, should Cuba request accession to a successor arrangement to Lomé IV, discussions would need to take place concerning the Commodity Protocols.

While there were undoubtedly areas in which Cuba’s trade is complimentary to, and not in competition with, Caricom member states, a number of private sector participants expressed concern and urged a cautious approach in respect of the trade provisions of a successor agreement to Lomé IV. The sugar, banana, rum and rice industries as well as service sectors such as tourism, were attempting to secure their competitive advantage and market share in Europe as the value of their preferential access to the EU market was eroded by new challenges to the global trading system. The example of the Dominican Republic, and its agreement not to seek accession to the sugar and banana protocols in 1990 when joining the ACP group, was cited as an option that might be relevant to the possible widening of the ACP grouping to include Cuba.

As with previous conferences, the Caribbean’s dependence on trade was highlighted. Although trade represented approximately 60 per cent of the region’s GDP it was noted that there has been little growth in either the volume or composition of the region’s exports to the EU. In this respect, delegates were reminded that the trade objectives of the Lomé Convention were not simply to increase ACP trade with Europe but to increase ACP trade with all global partners.

More generous rules of origin in a successor arrangement were called for that might allow for increased opportunities for cumulation between ACP and non-ACP states. It was suggested that this would increase the Caribbean’s competitiveness and, in the case of Cuba and the Cariforum states, enhance regional integration.

Delegates felt that a more aggressive position should be taken before the WTO in the light of the recent ruling on the EU’s banana regime. In this particular case the Caribbean, as a third party to the conflict, was denied the chance to defend its position as the complaint was introduced by four Latin American countries and the US against the EU import licensing regime. Conference noted that the judgement appeared to contradict the WTO rules that protect the most vulnerable nations.

Delegates were insistent that future WTO decisions should show more sensitivity to the difficulties faced by inherently uncompetitve island states, whose markets are not of a sufficient size to benefit from economies of scale, as they attempt to diversify their trade. Delegates warned against the WTO becoming a benign supporter of the interests of the most forceful advocates of free trade in failing to consider the social and economic implications of future rulings in regions such as the Caribbean.

Participants recognised that the value of preferences enjoyed by the ACP may be further eroded by new challenges to the global trading system that take precedence over the FTAA such as the WTO round on agriculture scheduled to begin in 1999, the reform of the Common Agricultural Policy (CAP) and the expansion of the European Union. However, they were also insistent that the longest possible gradual transition period should be sought from the European Union if the ACP/EU relationship is to move from preference to reciprocity in the future.

The rum, rice, banana and sugar industries presented industry specific positions on the future of the Commodity Protocols during which they demonstrated the respective socio-economic importance of their industries to the Caribbean. With this in mind the need for a gradual transition to reciprocal trade was considered essential so as to allow the Caribbean ACP states sufficient time to develop market share and enhance competitiveness in the face of the declining value of their preferential access. Conference heard how primary industries in the Caribbean were striving to increase their productivity and therefore needed a period of transition in which to prepare themselves for competition that the global economy will bring.

Rum: The ACP rum industry called on the EU to fulfil the commitment made at the time of the mid-term review of Lomé IV to abolish in the year 2000 all remaining quotas on ACP rum; to undertake not to extend to third countries duty-free access for rum beyond the arrangements enshrined in the recently concluded EU/US memorandum of understanding; and for the residual duties contained in that memorandum to be maintained at present levels until 2003 and thereafter be increased by an amount equivalent to the rate of inflation between 1997 and 2003. The ACP rum industry also called upon the EU to provide industry specific assistance to producers to develop ACP branded product in the EU market.

Bananas: Representatives of the ACP banana sector noted that Caribbean countries dependent on bananas recognised the need to diversify but stated that diversification was only possible alongside a substantial export trade. The WTO ruling had reduced the prospects for diversification as this gradual process could only be undertaken if underwritten by a thriving banana trade. Only bananas could produce the volume to justify economically the regular shipping service that is vital for all exports and essential imports. Therefore, the industry called for an extended transition period to a new regime that would enable the banana-dependent states to begin the lengthy process of diversification. It was suggested that the development of an agrotourism initiative might attempt to mitigate some of the socio-economic effects of the WTO ruling against the EU banana regime.

Rice: The ACP rice industry requested a post 2000 quota for ACP rice shipped directly to Europe fixed at an initial level of 250,000 tonnes for traditional (Guyana and Surinam) ACP suppliers, increased by 20 per cent annually up to 2005 at which point ACP rice from traditional suppliers should be able to enter the EU market free of quota or other quantitative restrictions. In addition, the EU was prevailed upon to end the OCT route in respect of rice and introduce further variations of the levy on rice exported by the direct route. An industry specific programme of assistance was also requested aimed at encouraging greater efficiency and productivity in production, milling and transportation within the traditional ACP exporting nations.

Sugar: The sugar industry drew delegates’ attention to the indefinite nature of the Sugar Protocol and emphasised the dramatic contribution that sugar exports had made to the development of the economies of ACP states. It was suggested that there may be external pressure on the EU from the US and others to ensure that its sugar arrangements are WTO compatible and that the next WTO round and the accession of new member states to the EU will exert a downwards pressure on EU sugar prices.

For non-state actors not directly involved in the government to government negotiations that will begin in September 1998 it was recognised that the period up to April 30, 1998 represented an historic opportunity. The ability of these actors to communicate their expectations in a coherent and unified manner to the Caribbean regional negotiating machinery will largely determine their level of participation in a successor agreement to Lomé IV.

During the debate in Havana on achieving a private sector chapter in a successor arrangement, delegates were able to assess the difficulties in achieving a consensus between the Caribbean private sectors and their governments. While it was clear that some governments had a close working relationship with their private sector there were still many doubts, misunderstandings and unfulfilled expectations on both sides. There was a lively debate on the reasons for the lack of dialogue or consultation between policy makers and economic actors. ACP government representatives noted the lack of funding for the regional negotiating machinery forthcoming from the private sector despite special tax positions in the case of one Caribbean nation. In response to this and other challenges, Caribbean private sector representatives pointed to differing levels of capacity and limited resources that the region’s private sector institutions had at their disposal which severely limited their capacity to become more deeply involved in the policy debate.

Delegates were agreed that a number of actions must be undertaken by the Caribbean private sector before April 1998 if a post Lomé arrangement were to contain language more helpful to the private sector:

1. Genuinely representative private sector institutions: Both the EU and Caribbean Governments required strong, genuinely representative private sector institutions that could legitimately represent the interests of Caribbean business. Many national private sector bodies were under resourced with little capacity to develop projects or advocate policy requirements. Despite this it would be to the future benefit of governments to have private sector institutions capable of making use of the funding increasingly likely to become available from multilateral organisations to stimulate SME and micro enterprise development. There was therefore a need for:

• institution building in the private sector;
• the development of a capacity for effective advocacy in regional private sector institutions;
• the creation of a regional forum that would ensure governments and regional institutions felt they were in dialogue with a genuinely representative body or private sector institutions.

1. Improving, formalising dialogue with Caribbean governments, regional institutions and inter-governmental organisations such as Cariforum: The private sector should seek to promote proposals for a Business Forum as contained in the Libreville Declaration or the Regional Forum proposed in the Caribbean Regional Indicative Programme (CRIP) of the Second Financial Protocol. Alternatively, the private sector could take better advantage of the public-private fora already in place in the Caribbean.
2. Core Agenda: A core agenda needed to be established, around which an efficient, coherent and effective lobby strategy might be established. To ensure the viability of such an agenda it was proposed that it should be consistent with both the Caribbean and the European Union’s development objectives and seek to engage, not bypass, Caribbean governments in the fulfilment of development objectives.
3. Tripartite solutions: The private sector should devise "tripartite" solutions to development programmes, involving Caribbean governments, the private sector and the European Commission. Initiatives would then be more realistic given the traditional government to government structure of the Lomé Convention. This was particularly recommended in respect of tourism. Establishing a continuous and structured dialogue with Cariforum was an absolute pre-requisite for an improved private sector access to Lomé.
4. Credible private sector organisations: Private sector institutions must enter the Lomé debate and present themselves as credible and responsible private sector organisations to Caribbean governments and Cariforum. Tripartite co-operation is not viable if credible private sector institutions do not engage with Lomé policy makers at a governmental and inter-governmental level. The issue of legitimacy was of vital importance if the EU is to decentralise the management of Lomé resources. Private sector institutions could instigate this process by formally adopting post-Lomé IV position papers and feeding these into the regional negotiating machinery.
5. New financial instruments: It was suggested that proposals for such instruments should come from private sector actors themselves as they are best placed to make recommendations to the EU and Cariforum for new financial instruments that seek to stimulate the development of their own institutions and economic activities. Therefore, private sector institutions should dedicate resources to submitting new and creative proposals for new financing modalities for private sector development that a successor Convention to Lomé IV might contain.

In the longer term, it was suggested that an eligibility criteria be devised for the private sector intermediary bodies wishing to participate in the planning and implementation of Lomé development projects. This might serve to reduce the existing level of mistrust between governments and private sectors in the Caribbean. Future project proposals should be based on cost sharing between the private sector and Cariforum and, if concerned with institutional strengthening, should have the ultimate aim of self-sustainability.

Conference was advised that the Caribbean Council for Europe (CCE) would work with private sector colleagues to advise on the development of proposals for a private sector chapter for a post-Lomé IV agreement. It is hoped that proposals might be submitted by the regional private sector to the Caricom Inter-sessional meeting to be held in Grenada in February.

The conference had the opportunity to hear about the experience of the Caribbean Hotel Association.

Conference was presented with a draft summary of the main findings of a recent CCE-ECDPM study. Delegates heard how it revealed that the private sector led tourism sector, more than any other sector in the Caribbean, had the potential to contribute to the achievement of the EU’s development co-operation objectives and underwrite economic growth in the region. If EU interventions through the Lomé Convention were properly targeted and managed these resources could play a catalytic role in making tourism a vehicle for sustainable development, integration in the world economy and poverty alleviation.

Conference was informed of the three levels of dialogue that operate at both the National Indicative Programme (NIP) and Caribbean Regional Indicative Programme (CRIP) levels of co-operation. These are: national/regional debate on development priorities and policies; pre-programming and negotiation of National and Regional Indicative Programmes and project identification and preparation. It was made clear to the private sector that it must involve itself with these processes if it is to take advantage of the increased provisions for decentralised co-operation in the field of tourism that a successor agreement to Lomé IV will contain.

The Conference welcomed a presentation that suggested that it was important that the OCTs (the Netherlands Antilles and the British Dependent Territories) graduate from Observer status to full membership of Cariforum to avoid their marginalisation from the Lomé Convention. A closer relationship between Caricom and the OCTs needed to be quickly established based on increased dialogue and consultation.

Conference was also made aware of the need to overcome cultural obstacles through the study of second and third languages in the Francophone, Anglophone and Hispanic Caribbean. The Guadeloupe Association of Small and Medium Size Enterprise, Union Patronale, informed delegates that this organisation had established a language teaching programme that could be introduced in the rest of the Caribbean. Further regional initiatives emanating from Guadeloupe include programmes seeking to identify renewable and non-polluting sources of energy and to prevent and manage natural hazards through co-operation with the ACS Committee on Natural Disasters.

Conference heard how the French DOMs suffer from a lack of adequate management rationale to provide the impetus for regional co-operation. In this respect it was stated that further decentralisation of control to the DOMs from the French government has to take place for a more favourable climate for regional co-operation to be created. The differing paths to regional integration being taken by the OECS, ACS and Cariforum were noted in the context of debate concerning the focus of DOM programmes for enhanced co-operation with the Caribbean.

Delegates proposed that existing financial instruments be maintained and expanded. This would reflect the growing importance of attracting Foreign Direct Investment (FDI) as a means of increasing the competitiveness and productivity of ACP states in the global economy. The particular difficulties of small states in attracting capital and FDI were acknowledged at a time when the pool of concessionary assistance is rapidly decreasing. A representative from the EIB called for proposals from Caribbean ACP states for programmes that might facilitate the development of capital markets in the region. Several concrete suggestions were made including the establishment of a "guarantee fund" with an EIB label guaranteeing part of the risk and thereby stimulating long-term finance from the risk-averse commercial banks; a Caribbean Investment Fund dedicated to the tourism sector and the extension of non-ACP financial instruments to Lomé such as the European Community Investment Partners Scheme (ECIPS) presently available to many non ACP developing nations including the whole of Latin America and Cuba. Within the context of tourism it proposed that the Centre for the Development of Industry (CDI) widen its mandate to include the tourist and service sector. In addition it was emphasised that new financial instruments in a successor arrangement to Lomé IV must reflect the widening of the Convention to include new actors, in civil society such as development NGOs and the private sector.

Caribbean micro enterprise should be made aware of the financing modalities of the EIB under Lomé IV and the potential benefits of loans offered at concessionary rates of interest that this institution can offer. The Institute of Private Enterprise Development (IPED) of Guyana and the Asociacion para el Desarollo de Micro-Empresas of the Dominican Republic could be used as regional models for the stimulation of bottom-up economic growth. Careful analysis was needed of why these two micro enterprise projects had been so successful and the feasibility of replicating these projects elsewhere in the Caribbean should be assessed.

Within a wider context, it was evident that one of the principal developmental challenges facing Caribbean governments was to make the transition from a top-down, centralised approach, to a much more bottom-up, demand driven and decentralised approach. The private sector could make a valuable contribution in this respect by drawing up proposals that: relate principally to assisting the development of indigenous micro and small and medium size enterprises; that encourage development in an environmentally sound manner; provide for training; and, if possible, result in the strengthening of private sector institutions. If such small viable projects can be developed before 2000 the EU and Cariforum will look upon the provisions for decentralised co-operation to be contained in a successor agreement to Lomé with a heightened sense of optimism and confidence.

Conference participants endorsed the suggestion from the Caricom Secretary General that a public information campaign be launched to involve those outside of government in the post Lomé debate. Training seminars were proposed to demystify the processes of the Lomé Convention and involve non-state actors in the Lomé debate.

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