Will the Caribbean have to reset its trade relations with Britain in light of Brexit?
Once the UK formally withdraws from the EU, the EPA will no longer govern trade between the UK and the CARICOM/CARIFORUM states. Of course, trade is a reality for every state and Brexit will not result in the cessation of trade between CARICOM and the UK, rather the question becomes on what terms would this trade be conducted and what are the potential cost implications for CARICOM.
Until and unless a new preferential trade arrangement is put in place between the UK and the CARICOM/CARIFORUM states, the trading relationship would likely have to be governed by multilateral rules and the World Trade Organisation.
While the EU is a WTO member in its own right, the UK, as is the case with other EU member states, is also a WTO member but the issue here is that the UK’s WTO market access with respect to both goods and services is included in the European Union schedules.
However, we expect that although there will be a complex negotiation in the WTO that the UK will have to undertake in order to arrive at its own set of commitments, its individual membership suggests that immediately post Brexit it will continue to be bound by those commitments vis-à-vis other WTO members until those negotiations are completed.
Post Brexit therefore, we are suggesting that it will be in CARICOM’s, and indeed CARIFORUM’s interest, to seek to secure at a minimum the level of preferences currently enjoyed in the EPA with respect to trade in goods, services and investment.
However, we have to note that as a WTO member, the UK’s ability to continue to accord such preferences to the CARICOM/CARIFORUM states, and thereby discriminate between its trading partners, is constrained.
The most secure legal basis under which multilateral rules for preferential trade in goods and services between CARICOM and the UK would be a free trade agreement that is compatible with the WTO rules and trade agreements.
With respect to the bilateral trade agenda, it is very likely that the United Kingdom would have to prioritise negotiations with its major trading partners such as the EU.
Negotiations on the post-Brexit relationship with the European Union are not likely to start before the UK formally leaves the EU.
It has flagged that it is interested in pursuing major trade agreements with larger economies particularly in Asia and Australia.
So this would place us low down the list of negotiation with the UK. There are other countries in the African, Caribbean Pacific (ACP) group that are likely to be affected by Brexit and it is quite possible that Britain will prioritise negotiations with some of those ACP countries that more directly correlate with the UK’s strategic interests.
In the absence of a free trade agreement governing Caribbean-UK trade, what we need to focus on initially is seeking a waiver from the relevant WTO obligations in order that CARICOM/CARIFORUM states continue to enjoy the preferential access to the UK market with regard to goods, services, investment and, of importance, temporary entry of business persons along the same lines that this access is governed in the EPA.
Ambassador Gail Mathurin is CARICOM assistant secretary general and director general of Office of Trade Negotiations. She was speaking at a University of the West Indies Brexit symposium last week.