On March 17, inst. Pascal Lamy, the former EU Trade Commissioner and WTO Director-General delivered the inaugural Henry Gill memorial lecture. The event was aimed at memorialising the professional life of the former Caribbean trade negotiator and academic. Mr’s Lamy’s intervention offered a reflection on key lessons on trade and development since the Doha Development Agenda was launched some 20 years ago. Lamy’s main argument was that the Caribbean should adjust its trade and development approaches to take account of the altered nature of international trade. In particular, the Caribbean was urged to re-dynamize its regional integration movement to navigate and help fashion the evolving global trade architecture.
- Shift in Global Trade Currents Requires Different Approaches
In his lecture, Lamy charted the nature of the bygone era of multilateral trade; offered snippets of the emerging construct; and advocated the need for enhanced regional integration in response to this development. Lamy noted that the “old world of trade” was predicated on the collective understanding that trade opening was indispensable to development. In that bygone era, trade liberalisation would be complemented by special and differential treatment for developing countries and the provision of Aid for Trade (AfT) to address the need for increased productive and regulatory capacity. The lecture could be summed up as follows – the “old world of trade” is gone, and we need to acknowledge a shift from protection to precaution by focussing on a broader policy toolbox and developing different forms of cooperation.
According to Lamy, the new world of trade’ is characterised by the shift from protection to precaution, i.e., from trade protection that shields specific industries from full market opening to precaution that protects a country’s citizens from perceived risks. The examples of Lamy food safety, food security, animal welfare, environmental standards and data privacy were cited as prime examples of this new thrust based on precaution.
In response to this emerging trend, Lamy suggested that developing countries including those in the Caribbean should pursue a new form of special and differential treatment more responsive to the surge in regulatory requirements. One plank of the proposed Caribbean response would be for the region to craft its own new agenda for engagement within the WTO. Lamy went on to suggest that regional integration was key to addressing new developments in the rules of international trade.
2. Possible Implications for Caribbean WTO Engagement
The current phase of globalisation has resulted in a considerable reduction of tariff-based trade barriers. For example, the Marrakech Agreement which established the World Trade Organisation resulted in the ‘binding’ of most trade taxes, also known as tariffs. Further, the expanding number of free trade agreements (FTAs) has also resulted in lower trade taxes.
However, the reduction in tariffs has been accompanied by a notable rise in non-tariff measures (NTMs). These non-tariff measures, tend to be less transparent and more difficult for developing countries to comply with. Indeed, these measures can have a chilling effect on the ability of developing countries, and in particular, small vulnerable economies to access the markets of the rich world.
In reflecting on the rules of international trade as contained in the WTO agreements, Lamy rightly underscored the limitations of the special treatment now available to developing countries, like those in the Caribbean, noting that similar provisions could also be accessed by China.
While accepting the limits of the existing system, it is important to note that the newest WTO agreement, the Trade Facilitation Agreement (TFA) offers a radically new architecture that can help developing countries implement new regulatory commitments. Most notably, the TFA allows for new trade commitments by developing countries to be contingent on the provision of trade-related technical assistance. The Caribbean was one of the major midwives of the TFA with Amb. Wayne McCook (Jamaica) leading negotiations culminating in the agreement at the Bali Ministerial (2013). Beyond that, Amb. Stephen Fevrier (Saint Lucia) contributed heavily to technical negotiations among key WTO delegates as the then ACP Trade Facilitation Focal Point. There is value in the region harnessing its trade negotiation successes by propagating innovative trade policy prescriptions.
Lamy urged that the Caribbean should craft its own policy agenda for engagement in the WTO. Here, it should be noted that the current Jamaican Ambassador, Amb. Cheryl Spencer leads the ACP Group in Geneva – a continuation of a now long-established tradition by diplomats from that Caribbean state. In addition, the Caribbean Group has revitalized its role and contributions to the work of the organization, including in negotiations on fisheries subsidies, e-commerce, investment facilitation, micro and small and medium enterprises, agriculture and services domestic regulation. Nevertheless, it would be instructive to understand the extent to which the Caribbean experience in developing innovative TFA SDT approaches is being propagated to the raft of trade regulatory issues under WTO negotiation.
3. New impulses in Caribbean regional integration?
At the regional level, while CARICOM has strengthened its regulatory frameworks by establishing regional bodies to address standards and regulations much work needs to be done to address other regulatory issues such as intellectual property rights, public procurement and trade facilitation.
Lamy posited the view that accelerated regional economic integration could serve as the platform to enhance Caribbean trade regulatory capacity. CARICOM has indeed enhanced its trade regulatory framework by establishing regional bodies on competition, TBT and SPS. Yet progress has been stymied by the continued absence of regional protocols on trade facilitation, intellectual property and public procurement as mandated by Article 238 of the Revised Treaty of Chaguaramas.
The sub-optimal recent record of Caribbean economic integration partially reflects the high costs of developing and administering trade regulatory regimes, an issue compounded by the relative high indebtedness of Caribbean states. Yet, the task of enhancing Caribbean trade competitiveness and capturing increased value of exports compels the region to consider and apply radical approaches to developing regional regulatory frameworks. Here, the immediate focus should centre on e-commerce, logistics, creative services, personal data protection, energy, and educational services.
Junior Lodge is an international trade consultant and former Technical Coordinator on CARIFORUM-EU Economic Partnership Agreement and World Trade Organization Negotiations at the Caribbean Regional Negotiating Machinery (now the Office of Trade Negotiations of the CARICOM Secretariat). Learn more about the SRC at www.shridathramphalcentre.com.