Beware the consequences should these negotiations falter…
CARICOM and Canada started to explore the possibility of negotiating a free trade agreement (FTA) in 2001. For Caricom, such an agreement should take account of the different levels of development between Caricom member states and Canada. Thus, an agreement should be development-centred.
A reciprocal free trade agreement between Caricom and Canada would supersede the non-reciprocal Caribbean/Canada Trade Agreement (CARIBCAN), which has existed since 1986. CARIBCAN provides one way (non-reciprocal) duty-free access to the Canadian market for exports, with a few exceptions, from the Commonwealth Caribbean. As a non-reciprocal arrangement, CARIBCAN required a waiver from the Most Favoured Nation (MFN) non-discrimination principle of the World Trade Organisation (WTO).
The most recent waivers requested by Canada were for five years from 2006 – 2011 and for two years from 2011 – 2013. Canada has indicated that it will not return to the WTO to seek a new waiver after the expiry of the current waiver at the end of 2013.
In July 2007, (Canadian) Prime Minister Stephen Harper announced, at a meeting with Caricom Heads of Government in Barbados, that his Government had given the mandate to commence negotiations for a free trade agreement with Caricom. At the same time, Prime Minister Harper announced a C$600-million development support package for Caricom over 10 years, through the Canadian International Development Agency (CIDA). This was later extended to 12 years.
The trade negotiations commenced formally in November 2009. The agreement to be negotiated was expected to go beyond WTO commitments, that is, to be WTO plus. It was also supposed to be comprehensive, covering the liberalisation of trade in goods, services, and investment, as well as trade-related issues (competition policy, and government procurement, among others). Canada’s position was for the inclusion of side agreements on labour and environment standards. Canada also expressed its interest in further market access in the financial services sector.
Caricom’s position was that the agreement should have a strong development orientation, with benefits in services and investment. It was envisaged that the negotiations would be completed in 18 months, by mid-2011.
Negotiations moving at a sluggish pace
As the negotiations were announced and set to begin, the global economic crisis began to manifest. It deepened as the first round of negotiations was held in 2009. Caricom was seriously affected by the global recession. By May 2011, Caricom and Canada had held only two rounds of negotiations. It was clear that these negotiations could not be completed by mid-2011 in keeping with the agreed time-frame.
In 2012, one more formal round of negotiations was held, with limited progress. In 2013, with the negotiations continuing to move at a sluggish pace, it was clear that the negotiations would not be completed before the end of 2013 when the WTO MFN waiver for CARIBCAN would expire.
Caricom trade ministers sought a meeting with the Canadian international trade minister in March 2013, to assess the negotiations and consider the way forward. The meeting between Canada’s trade minister and Caricom trade ministers did not materialise. Canada subsequently advised Caricom that it wanted the negotiations to end before the end of 2013. By this time, only four rounds of negotiations had been held.
Discussions on the state of the negotiations moved to the level of prime ministers (Jamaica’s Prime Minister Portia Simpson Miller represented Caricom) and produced an agreement that the negotiations should continue until June 2014. Throughout the negotiations, Caricom and Canada have not had a convergence of views on several issues, including services and investment, market access for goods, alcoholic beverages, side agreements on labour and environment, and the issue
of trade-related development support.
In December 2013, the WTO MFN waiver for CARIBCAN expired, with Canada following through on its earlier decision not to seek a new waiver at the WTO. The CARIBCAN trade regime will continue unless revoked by Canada.
In 2013, Canada announced in its Federal Budget that all Caricom countries, except Belize, Guyana and Haiti, were among 72 countries to be graduated from Canada’s General Preference Tariff, that is, its Generalised System
of Preferences, effective January 1, 2015.
The Caricom/Canada trade negotiations are now at a critical stage. A fifth round of negotiations was held in Barbados in January 2014. Part one of the sixth round was held in Kingston, Jamaica, from March 3 to 7, 2014. Part two of this round will be held in Ottawa, Canada from March 31 to April 4, 2014. There is little time remaining in which Caricom and Canada can seek to bridge the gaps in the negotiations. The gaps remain in a number of areas.
Should these negotiations falter, Caricom countries would, potentially, face the prospect of trading with Canada on very different terms, including the possibility of having to compete in the Canadian market on WTO global terms, that is, at the MFN tariff level.
Jamaica has been involved in regional preferential trading regimes with Canada since 1925.