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CARICOM trade gets five year WTO Waiver for US market

4/14/2009

THE uncertainty which has shrouded CARICOMĖUS trade relations has finally been removed. On March 24, 2009, the World Trade Organisation (WTO) Council for Trade in Goods approved the long standing waiver request from the US on the Caribbean Basin Economic Recovery Act (CBERA). The approval of the waiver which will remain valid until 2014, now provides the legal authorisation for CARICOM to export goods covered under CBERA to the US duty free.

CARICOM beneficiaries of CBERA preferences are Antigua and Barbuda, the Bahamas, Barbados, Be-lize, Dominica, Grenada, Guyana, Haiti, Jamaica, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago, Montserrat, Saint Kitts-Nevis.

The US unilateral, non-reciprocal trade preferences available to the Caribbean were established under the Caribbean Basin Initiative (CBI), which was initially launched in 1983 through the Caribbean Basin Economic Recovery Act (CBERA).Those preferences were later expanded in 2000 through the US-Caribbean Basin Trade Partnership Act (CBTPA), in 2006 (and later in 2008) by the Haitian Hemispheric Opportunity through Partnership Encouragement Act.

To operate legally under the World Trade Organisation (WTO), the CBERA and CBTPA required a waiver approved by all other WTO Members. The previous waiver on CBERA expired on 31 December 2005 but the request by the US for the renewal of the waiver was blocked because of objection from a number of WTO members, chief among them being Para-guay. Therefore, the US was for over three years unilaterally.

In addition to the expiration of the waiver, the Federal legislation of the CPTPA was scheduled to expire in September 2008. However, in May 2008, the US Congress approved the 2007 Farm Bill which extended CBTPA preferences until 2010. Though Congressís approval of the CBTPA extension brought some comfort to Caribbean exporters, the legal uncertainty remained in light of the failure of the US to attain the renewal of the WTO waiver.

The approval of the waiver is therefore a positive development in US-Caribbean trade relations. The achievement is linked notably to some level of compromise reached between the US and Paraguay whose objections to the waiver related to concerns about unfair competition to its local producers because of the US unilateral preferential trade regimes with the Caribbean, and other countries.

The language of the Councilís Decision heavily implies US assurances to third countries such as Paraguay, that the preferences awarded under CBERA and the other similar unilateral trade regimes, will not impact the USí offer in the Doha Round to reduce or even eliminate tariffs on goods, including those covered under CBERA. The Caribbean Community (CARICOM) has been deeply concerned about preserving long standing preferences within the context of multilateral negotiations. The implication that the US may not give due consideration to addressing the speed and degree of the erosion of preferences such as CBERA during the WTO negotiations, is for the CARICOM quite worrisome.

Therefore, notwithstanding the benefit realised in the renewal of the WTO waiver, CARICOM countries will need to sustain its lobbying efforts to ensure that its objectives and needs will not be prejudiced during the multilateral process. (SB)

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