OFFICE OF TRADE NEGOTIATIONS

S P E CI A L
Is s u e: O T N U PD A T E
October 16, 2009

THE DISCUSSIONS OF THE 28t h

MEET I N G O F T H E C O U N C IL F O R
TR A D E A ND EC ON OMI C
DEVELOPM E NT (COTED)
The General Agenda
The 28th Meeting of the Council for Trade and Economic
Development (COTED) was held Monday 5 October 2009. The
Agenda was packed and addressed a range of Community issues.
Officials and Ministers alike deliberated on the implementation of
the CARICOM Single Market and Economy (CSME).
In this regard, the Meeting reviewed the report of an audit of the
single market which outlined the findings of the CARICOM
Secretariat’s appraisal of the state of implementation of the
CSME. The audit was conducted with the aim of:
1) Assessing the extent to which Member States have
complied with their obligations with respect to
establishing the legislative, institutional and
administrative framework in support of the Single
Market;
2) Assessing the extent to which CARICOM Nationals
were effectively participating in the single market and;
The Meeting also discussed a related matter of Contingent
Rights. Under this agenda item, the Meeting resolved to
review the status of the establishment of Protocol on
Contingent Rights, and to make recommendations conducive
to the further development and establishment of the Protocol.
Trade officials and Ministers, in sessions of Caucus, also
reviewed the August 2009 decision of the Caribbean Court of
Justice on the case of TCL vs. the Caribbean Community.
The review was performed by the Meeting with a view to
assessing the implications for due process observed in the
execution of powers related to the suspension of the CET
reserved by the Secretary-General of CARICOM and the
COTED. (The Judgment of the Court is available at
http://www.caribbeancourtofjustice.org/judgments.html )
During that meeting, specific issues related to the external
trade agenda were also addressed. The following will discuss
the major issues considered and decisions taken by the
COTED.

3) Identifying the challenges confronted by Member

States in enabling and facilitating the single market.

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
The External Trade Agenda
I. CARICOM-Canada Negotiations
A. The Finalization of the CARICOM-Canada Negotiations
College of Negotiators
It was agreed by the CARICOM Heads of Government during
their 30th Regular Meeting that the finalization of the
recommendations on the composition was to be determined by
the new Director General of the Office of Trade Negotiations,
Ambassador Gail Mathurin following her formal appointment.
During the meeting of the 28th COTED, the OTN DG submitted a
recommendation on the College for the consideration of the
COTED. That list was constituted on the basis of a review of the
initial recommendation proposed and submitted to the COTED in
March 2009 by the former DG of the Caribbean Regional
negotiating Machinery (CRNM) Ambassador Henry Gill.
Furthermore, the perspectives of Member States about the
previous composition, as well as specific recommendations and
nominations proposed by the Organization of Eastern Caribbean
States (OECS) were also considered.
During the September 11, 2009 Meeting of the trade Ministers of
CARICOM and the Canadian Trade Minister, consensus was
attained on some elements of the scope of the negotiations
which ultimately resulted in an agreement to formally commence
the negotiations on November 9, 2009. However, settlement on
some issues such as the inclusion of commitments on Labour
and Environment remains outstanding. Agreement on such
issues between the two sides is likely to affect CARICOM’s
technical treatment of the issues and by extension, the
constitution of the College. Clarity on these issues is likely to be
more apparent after the end of the first Round of Negotiations.
The proposal on the composition of the College was therefore
tabled with the proviso that it should not be regarded as final at
this time and that it would be appropriately revised in due
course. It is in this context that the COTED provided the go
ahead on the College.
B. Issues arising out of the CARICOM-Canada Ministerial
Meeting
The COTED was briefed by the OTN on the discussions, issues
and consensuses which arose out of the September Ministerial.
The briefing centered on the following issues:
1. The treatment of development
2. The treatment of Labour and the Environment
3. The Scope of Market Access in Canada
4. The Structure and Process of the Negotiations
1. The treatment of development
At their meeting with the Canadian Prime Minister in July
2007, CARICOM Heads of Government determined that
negotiations with Canada should result in an ‘Economic
Partnership Agreement’ rather than a strict Free Trade
Agreement (FTA). In subsequent exploratory discussions,
Canadian Senior Officials expressed discomfort with the term
‘economic partnership agreement’, indicating a preference for
the term ‘Trade and Development Agreement’, which they
indicated was a more suitable nomenclature.
It should be noted, however, that on May 9, 2009 Canada and
the European Union announced the launch of negotiations for
a comprehensive economic partnership agreement. Canada
and India have also commenced exploratory discussions on
the negotiation of a potential comprehensive economic
partnership agreement. Canada has amended its original
position and has expressed a willingness to incorporate
development dimension into the agreement and have
indicated a readiness to embrace co-operation in the scope of
the agreement and to include CIDA officials in the
negotiations.
They continue to stress however, that their mandate is to
negotiate a Free Trade Agreement (FTA) and that they could
not contemplate a formal reflection of development in a trade
agreement. In other words, they cannot institutionalize CIDA
(financial) support in the context of an FTA.
During the September Ministerial, the Minister of International
Trade of Canada, The Honourable Stockwell Day did not
articulate objections to the inclusion of the development in the
Agreement but it was indicated that Canada could not commit
to binding development assistance in the context of a trade
agreement.
However, the Canadian side signalled that CARICOM should
articulate some parameters to delineate the concept of
development in the context of the negotiations in more
specific terms. CARICOM was therefore invited to specify its
technical assistance and trade capacity building needs, and,

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
in this regard, to provide specific targeted proposals. At the
same time, the Canadian Minister refrained from the use of
the nomenclature ‘Trade and Development Agreement’ in his
references to the Agreement.
While noting that discomfort in the nomenclature persists on
the Canadian side, the COTED agreed that CARICOM should
continue to prioritise the inclusion of development in
substance rather than in form. The COTED further noted the
suggestion that as the demandeur for a Trade and
Development Agreement, the onus is on CARICOM to
elaborate on the development component of the Agreement
and the approach they would like to take in the negotiations.
1. The treatment of Labour and the Environment
Side Agreements on Labour and Environmental Co-operation
are a standard feature of Canada’s bilateral trade
agreements, and generally provide a framework for co-
operation and information exchange.
Although legally free-standing from the trade agreement, the
Labour and Environment Side Agreements are considered to
form an intrinsic part of the overall package of the Trade
Agreement.
Similar to the approach taken in its FTA with Peru, Canada is
seeking to negotiate a non-binding labour principles Chapter
in the body of the trade agreement and a Side Agreement on
Labour Co-operation with binding obligations. The latter would
provide a framework for co-operation to reinforce the
implementation of domestic labour laws and adherence to
core labour standards contained in the 1998 ILO Declaration
on Fundamental Principles and Rights at Work and of the
ILO’s Decent Work Agenda.
The Canadian environment model reinforces the principle that
increased trade should not undermine sound environmental
management. The agreement commits each Party to
implement its respective domestic environmental
management systems and environmental policies and ensure
effective enforcement of environmental laws and the objective
of not derogating from these laws to attract trade and
investment.
It should be noted that while the Side Agreements do not
provide a resort to trade sanctions, they create binding
obligations that are subject to dispute settlement procedures.
OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
The Region’s main concern is about the punitive sanctions
which are a feature of Canada’s most recent Labour Side
Agreement with Peru and imposes an annual monetary
assessment of up to US$15 million dollars in the event of a
sustained breach of a trade-related obligation.
By contrast, the Environment Agreement incorporates
minimalist dispute resolution procedures which stress co-
operation and consultation and which does not confer a right of
action against either Party on the ground that one Party has
acted in a manner inconsistent with the Agreement.
All CARICOM Member States are members of the ILO and
subscribe to core labour standards developed in that forum.
The majority of countries in the Region have a good record of
implementation of core labour standards including workers
rights – a situation which is not quite the same in some other
sub-regional groupings or countries in the hemisphere with
which Canada has signed Labour Co-operation Agreements.
However, there is strong concern among Member States that
detailed Side Agreements on both Labour and Environment
would prejudice the Region’s position at the multilateral level
regarding placing labour and environment on the trade
negotiations agenda.
COTED noted the OTN observation that given the centrality of
both Labour and Environment to Canada’s international trade
policy, CARICOM should be prepared for Canada taking a hard
stance and insisting on the inclusion of both issues in the scope
of the negotiations.
In this context, COTED agreed that Canada should be invited to
elaborate their proposed approach to the incorporation of
Labour and Environment during the first round of negotiations.
2. The Scope of CARICOM Market Access
To effectively facilitate the export expansion requirements of the
Region’s private sector, it is necessary for CARICOM market
access to be attained at both the Federal and Provincial levels.
This point was stressed when the Parties met at the September
Ministerial.
In response, the Canadian side acknowledged the difficulty
posed by the Provincial regulatory framework for its negotiating
partners and explained that the Federal Government could not
impose those areas of trade policy such as government
procurement, investment and services over which the Provinces
exercise constitutional authority.
Whereas the Provinces had not been involved directly in past
trade negotiations, the Federal Government is now taking
steps to involve Provincial representatives in some aspects of
the ongoing discussions with the EU. It was proposed that a
similar approach could be taken in the negotiations with
CARICOM, and Canada’s willingness to consider CARICOM’s
specific concerns during the negotiations was indicated.
In this regard, the COTED took note of the agreement
reached between CARICOM and Canada to work together to
find a mechanism for involving the Provincial representatives
in the negotiations with CARICOM.
3. The Structure of the Negotiations
COTED noted the decisions made at the September
Ministerial regarding the process and structure of
negotiations. It was agreed that Negotiating Rounds will
alternate between Canada and CARICOM, on the basis of
two meetings in the Caribbean alternating with one in
Canada.
Regarding the timeframe for negotiations, both Sides agreed
on the need for flexibility in the negotiating schedule,
recognising the capacity constraints in CARICOM Member
States and the need to take into consideration the nature of
decision-making in CARICOM. It was further agreed that to
the extent possible, use would be made of video conferencing
facilities.
Technical negotiations will be conducted on two levels,
between subject-specific lead negotiators from CARICOM and
Canada and between Chief Negotiators of both Sides. Unlike
in the EPA where separate meetings of the Principal
Negotiators were convened, the Chief Negotiators will attend
the Technical Negotiating Rounds and would have the
opportunity to meet as necessary during, and at the end of
each Negotiating Round to unblock issues in the negotiations.
COTED also took note of the agreement reached during the
September Ministerial to the effect that Ministerial oversight of
the negotiations will be facilitated without establishing a
Ministerial negotiating level, and that the process of Ministerial
engagement will remain flexible and responsive to the
negotiating process.
OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
C. Preparations for the Commencement of the
negotiations.
Before the negotiations formally commence on November 9,
2009 certain outstanding issues will have to be resolved
within the Region. They are as follows:
1. Further technical steps must be completed to
convert the negotiating mandates outlined in the
Draft Brief into specific CARICOM proposals.
2. Meetings of the Technical Working Groups (TWGs)
on the CARICOM-Canada negotiations must be
convened. These are scheduled during the week
beginning October 19, 2009.
3. The College of negotiators as currently constituted
must meet.
II. Developments in the WTO
A. Preparations for the 7th WTO Ministerial Conference
The COTED reviewed the conclusions of the informal mini-
Ministerial meeting on the re-energising the Doha Round held
in New Delhi India in September. The aim of the mini-
Ministerial was to capitalize on the political will to agree upon
a plan of action or timetable to complete the Doha Round
within the year 2010. While the intent at that forum was to
centre on process rather than to deliberate substantive
issues, during their 28th Meeting, the COTED also noted and
discussed a number of technical issues pertaining to the
Round. These discussions were timely and necessary in light
of CARICOM’s preparations for the 7th WTO Ministerial
Conference scheduled November 30 - December 2, 2009.
The Conference itself is not envisaged as a negotiating
session but will facilitate discussion on Doha Work
programme and the general contribution of the WTO to global
recovery, growth and development.
Regarding the Work Programme, the upcoming Ministerial
presents another opportunity for CARICOM to leverage its
trade diplomacy to its advantage. The COTED therefore
agreed that during the Ministerial, CARICOM should continue
to press for the entrenchment of the principle of special and
differential treatment throughout the multilateral system.
Furthermore lobbying for the effecting and honouring of Aid
for Trade commitments, as well as for the reform of the
dispute settlement mechanism are also should also be
adopted by CARICOM Member States during the Ministerial
Conference.
With respect to the negotiations specifically, the region’s focus
includes attention to issues under the Agriculture and Non-
Agriculture Market Access (NAMA) negotiations.
(i) Agriculture
Under the current Draft Text, CARICOM countries are
afforded relatively favourable flexibility with respect to their
required rate of tariff reduction. With the exception of Haiti
which is a Least Developed Country (LDC), CARICOM
Member states are categorized as Small Vulnerable
Economies (SVEs). Designated as such, CARICOM Member
States are allowed to declare any of their agricultural product
tariff lines as Special products and subject them to an
average tariff reduction of 24%. Suriname is allowed to rebind
its tariffs at the general average of CARICOM Countries’
tariffs after the application of the Doha tariff cuts. This
concession in the draft text was attained at the July 2008
mini-Ministerial and allows Suriname to honour its CSME
commitments as its bound agricultural tariffs are currently
20%, which is below the maximum tariff of 40% to be applied
on agricultural products under the CARICOM Common
External Tariff (CET).
Notwithstanding these flexibilities, under the Agriculture
negotiations there are other issues of concern. One of them in
particular is the treatment of preference erosion of agricultural
products. The EU and the African, Caribbean and Pacific
(ACP) Group of States agreed that a range of products should
be accorded special treatment that would allow preference
granting countries to extend the implementation period for
tariff reduction and thereby moderate the effects of preference
erosion for preference receiving countries. However, to date,
the proponents of Tropical Products and the ACP still have
differences on this issue. For example in the case of Rum, the
Caribbean wishes it to be subjected to ‘preference erosion
treatment’. On the other hand the Central Americans propose
‘tropical product treatment’, i.e. an 80 per cent reduction in the
EU’s tariff. Whereas in the treatment of rice, the proponents of
tropical products have agreed to remove husked rice from
their list allowing this product to be accorded full preference
OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
erosion treatment, provided that no other interested country
objects. This is a significant development, as this form of rice
remains the Caribbean’s main export line.
(i) NAMA
With respect to NAMA negotiations, CARICOM member
States are grouped under the following categories LDCs,
SVEs and Paragraph 6 countries. As in Agriculture
negotiations, Haiti is not required to liberalize but only has to
increase its tariff bindings. Suriname with its low levels of
tariff bindings is regarded as a Paragraph 6 country.
Therefore Suriname is required to bind 80 per cent of its
NAMA tariff lines and at average tariffs not exceeding 30 per
cent.
In accordance with the latest Draft Text on NAMA (The
December 2008 Draft Text) ,the rest of CARICOM as SVEs
are allowed to bind industrial tariffs at an overall average of 27
per cent and 30 per cent which is overall not injurious to
CARICOM interest. However, this current offer to SVEs needs
to be justified within the context of its comparison to the tariff
reduction formulae for all Members which are yet to be
settled.
With respect to NAMA preference erosion, the ACP has used
objective filters to generate a slate of 57 products exported to
the EC and a further 29 exported to the US market to benefit
from preferential erosion treatment. The major stumbling
block remains that of the treatment to be awarded to
“disproportionately affected members” (DAMs) and their
exports to the US. The proposed concessions to the DAMs
would have the effect of denuding the economic value of the
preference erosion treatment on 17 of the 29 tariff lines
granted to the ACP. The major Caribbean concern rests with
Haiti and the possible impact of this proposed treatment of the
DAMs on that country’s preferences on clothing exports to the
US under HOPE.
The above reflects the stabilized provisions for Agriculture
and NAMA modalities under the December 2008 Draft text.
However, the recent posture adopted by the United
States(US) with respect to the negotiations could present a
major stumbling block to the conclusion of the Round and
could result in changes made to the stabilized provisions of
the December 2008 Draft .
In this context, the COTED noted that in advance of the
informal WTO Ministerial, the US sought to rebalance the
NAMA and AGRI texts, most notably by increasing the level of
market opening in advanced developing countries. The US
has argued that it has difficulties with both the un-bracketed
texts and hitherto stabilised provisions. The US position at this
juncture is considered tantamount to an inversion of the
developmental thrust of the DDA as it would entail not only a
reopening of previous negotiations but also a diminution of
trust among other WTO Members.
III. The Treatment of Bananas.
Bananas are not to be treated under either the ‘preference
erosion’ or the ‘tropical product’ categories under Agriculture
negotiations. It will, in effect, be treated on a stand-alone
basis. In light of this, COTED discussed the salient elements
on this issue under a separate agenda item.
COTED in consideration of the history of this issue, recalled
that the European Commission (EC) and the Most Favoured
Nation (MFN) banana suppliers reached a draft agreement on
the reduction of the EC’s import tariff in July 2008 on the
margins of the min- Ministerial. The agreement would entail a
reduction of the current tariff of €176/tonne to €136/tonne by
2011 with continued reductions to €114/tonne by 2016. The
level of preference erosion that CARICOM and other African
Caribbean Pacific States (ACP) suppliers will experience as a
result of this development will be significant. The ACP group
has continued to press for a modulation of the EC’s planned
MFN tariff reductions and has also made demands for a
package of financial support from the EC. The EC has
responded positively to the latter but the quantum of funds
being offered has been deemed insufficient by the ACP.
The approach adopted by the EC in this regard has also
already been condemned by CARICOM member states and is
considered to be inconsistent with the spirit of the
commitments and the spirit of cooperation under the EPA. In
considering the adjustment package offered by the EC under
the proposal “Banana Accompanying Measures (BAM)”, the
COTED noted the EC assertions that the adjustment
measures will be
(i) one-off measures to be implemented within the
EC’s current financial framework, from 2010-
2013.
OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org
(ii) Based on country specific strategies
(iii) Integrated within each country’s wider
agricultural and development strategies.
(iv) Focused on
a. Supporting competitiveness
b. Promoting diversification
c. Addressing social adjustment
considerations
The EC also proposes that there should be allocation criteria
for each beneficiary country. These are
(i) its level of trade with the EU;
(ii) the importance of the banana sector to its economy;
and
(iii) its level of development, as measured by the United
Nation Human Development Index (HDI).
COTED however, took note of the implications of the
allocation criteria for the ACP. If the EC’s intention is to
allocate funding in an inverse ratio to the Human
Development Index, that criterion could well pose a problem
for CARICOM, given the high rating of its members on the
HDI. On the first criterion, the two main African countries and
the Dominican Republic would come out ahead of CARICOM
while on the second, some CARICOM countries may have an
advantage.
It was also acknowledged by COTED that in order to
negotiate funding under the BAM there is a need for all
banana-exporting countries to speedily undertake
assessments of their adjustment needs and revise their
national strategies. Furthermore, the prudence of creating a
regional dimension in the strategic programming was
acknowledged. Recognising that Member States may require
technical assistance in this respect, it was also noted that the
CARICOM Secretariat is already in the process of identifying
funding and personnel to provide technical assistance to
those banana-exporting Member States that require such
assistance.
COTED also acknowledged that there was a need to continue
to massage the political dynamics associated with this issue.
In this regard, COTED decided to designate a Minister to
participate in an ACP Ministerial tour of Brussels and major
EU capitals which would prioritize encounters with Lady
Glenys Kinnock, UK Minister of State for Europe and Louis
Michel (MEP).

*******

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), of the CARICOM Secretariat, formerly the Caribbean
Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy
issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation
issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as
regards trade policy developments of currency and importance to the Caribbean.
http://www.crnm.org