Opportunities to strengthen Canada-Caricom relations

Seeing Jamaican guest workers on a farm in Canada recently reminded me of the close relationship that has always existed between Canada and the Caribbean.{{more}}

Canada’s guest-worker programme for farms is as important to Canadian farmers, who need the labour, as payment for the work is to the many Caribbean workers.

There is little hassle over this programme. It has clear rules and guidelines which are strictly observed for the most part about the treatment and living conditions of workers, and it is clearly understood that, at the end of the period, the workers return to their homelands.

In the result, Canada’s agricultural produce is harvested and not wasted, and Caribbean workers earn money that helps them and their dependants to survive when they return home. The relationship could not be more mutually beneficial.

It is this sort of mutually beneficial relationship that Caribbean countries and Canada should be striving to establish in many other areas. But, it is a relationship that might have to stop short of a Free Trade Agreement (FTA) or Economic Partnership Agreement (EPA) which is now under contemplation by the two sides.

This is sad because had the Caribbean negotiated an EPA with Canada before it did so with the European Union (EU) last year, the terms of the agreement may have been more generous to the Caribbean countries and they could have been used as the basis for the negotiation with the EU.

In this connection, the Caribbean might have ended-up with two EPAs that benefitted them instead of the full EPA with the EU in which they will be at a considerable disadvantage as its terms evolve. It should be recalled that the terms include eventual free access the Caribbean markets for EU companies that will be required to be given “national treatment”. In addition, EU companies will be able to bid for contracts, including government ones, on an equal footing with domestic companies.

And, of course, over time tariffs have to be removed from EU goods entering the Caribbean markets and this will remove whatever little advantage is enjoyed by domestic producers.

Earlier this year, writing about Canada’s trade relationship with the Caribbean Community and Common Market (Caricom) countries, I recalled that under the existing CARIBCAN arrangement Caribbean countries enjoy duty-free access to the Canadian market for 83.2 percent of their exports, but even so trade in goods with Canada is relatively small for the Caribbean.

For Canada, trade in goods with Caricom countries constitute a mere 0.02 percent of its total trade. Therefore, whether or not Canada concludes an FTA with CARICOM countries is neither here nor there for Canada economically.

Canada would like to conclude an FTA or EPA with Caricom countries because it has a strong free trade position globally, and an FTA with Caricom would be symbolically important.

But, as Professor Norman Girvan has pointed out, any EPA with Canada would have to use the EPA with the EU as a baseline. Canada cannot now accept any lesser terms than has been accorded to the EU. For their part, Caricom countries cannot afford a further EPA of the kind signed with the EU, and especially not in the midst of a global financial crisis which is hurting their economies.

In the context, even though Caricom countries have reportedly agreed a mandate for their joint negotiations with Canada, now may not be the most prudent time to pursue it.

Nonetheless, the relationship with Canada is too valuable to leave it unattended in a meaningful way. Canadian banks dominate the Caricom domestic financial sector, and they constitute the majority of the offshore banks in Barbados. Further, Canadian firms are heavily involved in tourism, oil exploration and gold mining in the region.

Against this background, and until an EPA with Canada could be considered meaningfully, there are still many areas of cooperation that Canada and Caricom could meaningfully pursue.

Amongst these could be: Investment promotion and protection agreements with CARICOM countries; Tax Information Exchange Agreements with CARICOM countries; Double Taxation Agreements with CARICOM countries; Cooperation agreements with CARICOM countries in relation to drug trafficking; Agreements with CARICOM countries for the provision of temporary labour in certain skilled or unskilled areas.

Such agreements could help both sides since Canadian investment into Caricom countries would be promoted and, once there, be protected; double taxation agreements would also encourage investment from Canadian firms that would not fear being taxed twice; cooperation agreements on drug trafficking could provide Caricom countries with training and equipment that they need to fight drug traffickers and this would help to retard escalating crime in the region while curtailing drug trafficking into Canada.

And if there were agreements on the provision of skilled and unskilled labour, the practice of poaching Caribbean doctors, nurse and teachers could be regulated with Canada making a financial contribution to tertiary education in the region. In this way, Canada could have a reliable source of qualified people, but the institutions could train enough people to ensure that Caricom countries still have a pool to cater for its own needs.

Separately, Canada could continue its aid programme to the Caribbean which, in a statement in February this year, it listed as a priority. And that aid programme should have both regional and national components directed at deepening the regional integration process and tackling areas of social need from which international financial institutions shy away.

As a matter of urgency, Canada could provide Caricom with technical assistance and financial help in establishing a pan-Caricom financial services regulator. Recent global and Caribbean experiences have shown that Caricom needs such regulation and Canada, whose banks survived the toxic assets of the US and Europe, were effectively regulated.

There should also be a real effort to make Canada-CARICOM consultations meaningful and productive at the level of foreign ministers and prime ministers. Maybe there should be a structured format of biennial meetings of Prime Ministers and a meeting of Foreign Ministers in the in-between years as is now the case between Caricom countries and Britain.

Deferring a Free Trade Agreement should not delay strengthening the Canada-Caricom relationship.