Trade in goods in the Economic Partnership Agreement (EPA)

Fri, Mar 2. 2012

Editor: Permit me to continue the dialogue on getting to know the EPA. The EPA signed in October 2008 between EC and CARIFOURM Member States is in provisional application. Therefore, from that date, Vincentian exporters were eligible to benefit from the commitments made by the EU to provide duty free and quota free access to markets of the European Union Member States.{{more}} The Agreement will be fully implemented when all parties ratify the Agreement and put the necessary procedures in place. The EPA covers trade in goods, services and investment and trade related issues (Intellectual Property (IP), Public Procurement, Social Issues, Environment and Data Protection). This letter will address Trade in Goods in the EPA.

Trade in Goods

The EPA provides for CARIFORUM States and the member countries of the European Union to reduce and eventually eliminate tariffs on each other’s exports. However, in view of different levels of development of member states on the two sides, the Agreement follows an unequal approach, under which CARIFORUM Sates are not required to reduce their customs duties to same extent or at the same pace as their European partners. There is a Goods Schedule that outlines the rate at which duty will be reduced on imports from the EU over the next 25 years. On the other hand, exports from St. Vincent and the Grenadines are entitled to duty free and quota free market access into the EU market provided that the product satisfy the EPA rules of origin requirements.

With the exception of goods such as arms and ammunition, each good has been placed in seven baskets that determine how they would be liberalized.

The excluded basket – goods not subject to tariff reductions, e.g. agricultural products and products which attract high rates of duty

The zero basket – Products which were zero-rated before the negotiation of the EPA and a few additional products added

Phased reduction of tariff over 5, 10, 15, 20, 25 years – The phased reduction on the remaining goods range from five to twenty-five years. In the case of motor vehicles and parts and components tariff reduction will take effect from 2018. These are items which have higher degree of revenue sensitivity.

The phased reduction was, in essence, to cushion the revenue loss resulting tariff reduction and elimination. It was determined during the negotiations that the phasing of tariff reductions would not only allow CARIFORUM Countries time to put in place other fiscal arrangements to compensate for any loss of revenue but also to provide enough time for affected industries to adjust to meet the competition from imported products originating in the Europe and elsewhere.

Agriculture and Fisheries

The EPA recognizes the importance of agriculture and fisheries in food security, rural development and poverty eradication and the attention that small-scale operations would need. As a result many of the sensitive agriculture and fisheries products have been included in the excluded basket. The Agreement also recognizes the need for sustainable fisheries through conservation and management plans. As a result of the EPA, countries have agreed to cooperate in the area of agriculture and fisheries to:

• Improve the competitiveness of potentially viable production, including downstream processing, through innovation training, promotion of linkages in traditional and non-traditional export sectors;

• Develop export market capabilities including market research and the identification of options to improve marketing infrastructure and transportation and the identification of financing and cooperation option for producers and traders;

• Comply with and adopt quality standards relating to food production and marketing, including standards relating to environmentally and socially sound agricultural practices;

• Promote private investment and public-private partnership in potentially viable production;

• Improve the ability of Vincentian companies to comply with regional and international technical, health and quality standards for fish and fish products;

• Build or strengthen the scientific, technical, human and institutional capacity at the regional level to support the sustainable trade in fisheries products including aquaculture.

Mrs Okolo John-Patrick

Project Manager

EPA Implementation Unit