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BREXIT trigger has implications for Caribbean

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The big international news this week, save for the continuing carnage in Iraq and Syria, which perpetuates the unbelievable suffering of innocent people there, have come from opposite sides of the Atlantic. On the one hand, US President Donald Trump, still smarting from the rejection of his effort to roll back President Obama’s health care law, has struck out at another Obama initiative, signing an executive order to undermine measures to combat climate change and develop alternative clean energy sources.

But, it is the other side of the Atlantic which has grabbed the attention of Caribbean people, or at least ought to. On Wednesday of this week, British Prime Minister Theresa May had her signed letter, formally notifying the European Union of Britain’s decision to leave the EU, delivered to EU President Donald Tusk. This has set in motion a two-year process of intense negotiations to unravel Britain’s links and to determine the nature of relations between the EU and Britain from 2019.

The break-up has serious implications for both sides – politically, economically, militarily, in security matters, trade and immigration. However, it is not only the people of the EU and Britain who will be affected. The world today is very much interlocked and interdependent and major actions like Britain’s withdrawal from the EU have repercussions well beyond those shores.

For instance, we in the Caribbean have every reason to be very much concerned. The CARICOM countries and the Dominican Republic have a trade agreement with the European Union, called the Economic Partnership Agreement (EPA), which was signed in 2008 and covers reciprocal trade arrangements between both sets of countries, fundamentally on a duty-free basis. The EPA, therefore, governs our current trade with the United Kingdom (Britain) and sets the context of Caribbean exports to that country.

However, come 2019 and the ‘divorce’ from the EU, while our arrangements with the European Union will remain intact, we will now have to negotiate the terms of trading arrangements with Britain. If there is no agreement by 2019, the rules of the World Trade Organization (WTO) will set in, and duties under what is called Most Favoured Nation (MFN) status will come into operation. These are duties applied to third countries where no alternative preferential duty arrangements, such as the EPA, are applied.

In the Caribbean, there are varying levels of dependence on trade with the UK. These range from a high of over 70 per cent in the case of St Lucia and Belize to lower levels, bordering 30 per cent, for Guyana, Jamaica, Dominica and Barbados. SVG lies in the lower half of countries with a less than 10 per cent dependency. But it is not only the total share of the market which is important, but the nature of exports. For instance, the EU applies high tariffs in the agro-food sector, thus making duty-free, quota-free arrangements very significant to those countries which benefit from such an arrangement.

One must also take into account such non-trade factors such as Sanitary and Phyto-Sanitary (SPS) regulations and food safety standards. At present EU regulations govern our entry into the British market. When the UK leaves, its own standards will apply; how will that affect us? All these indicate that the EU-UK break-up is one which we cannot ignore, and must not only follow keenly, but be pro-active in trying to safeguard our interests.

(To be continued)

Renwick Rose is a community activist and social commentator.

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