Commissioner Nielson's Speech at the Opening of negotiations between CARIFORUM and the EU in Jamaica

Honourable Prime Ministers,
Honourable Ministers,
Ambassadors,
Distinctive Representatives of Regional Organisations,
Ladies and Gentlemen

It is a distinct pleasure and a great honour for me to take part in this official opening of the negotiations for an Economic Partnership Agreement or EPA between the European Community and the countries of the Caribbean Forum of ACP States.

I wish, first of all, to thank the CARIFORUM and the Government of Jamaica for the gracious hospitality extended to the Commission's delegation to this meeting.

The negotiations we are launching today are guided by the central objective of the Cotonou Agreement that is the reduction of poverty via a sustainable development and the gradual integration of the ACP countries into the world economy. In fact, the developing countries are of course part of the world economy already but mainly as producers of raw materials only. What we really mean with the expression of "integration into the world economy" is a just integration creating a better position for the Third countries.

Trade has always been a key instrument of the ACP/EU cooperation, since it started more than thirty years ago. However, if we look at the challenges facing the ACP economies of ever increasing global competition, it is clear that we need to do more and to do better than in the past.

We need to establish a new partnership agreement based on our long-standing trade cooperation but bringing to it profound and ambitious innovations.

EPAs are instruments for development

In the preparatory dialogue of the past years between the ACP States and the European Union, the development dimension has been at the core of the discussions, which reflects well that development is at the very centre of EPAs.

As the commissioner for Development and humanitarian aid, I wish to reaffirm the engagement of the European Commission of making of EPAs an instrument to improve the prospects of the whole population in the ACP states.

Elements of the development dimension

How is an EPA response to our common development objectives? Let me underline some main issues on the development dimension of EPAs, as we see them:

Achieving the traditional benefits of trade agreements both in the North-South context and within your own region remains one of our main objectives:

A stable, transparent and predictable framework for trade and the creation of larger markets will allow for economies of scale, an increased but fair competition and for a more attractive environment for foreign investments. This will contribute to economic growth and poverty reduction.

A second fundamental element is regional integration, a key development co-operation strategy of the Cotonou Agreement. Closer economic integration between your countries will foster deeper economic integration between the ACP and the EU.

Within the Caribbean Regional Indicative Programs we've developed a close dialogue with the region on economic integration matters. The focal sector of 9th EDF, "Intensification of regional Integration" reflects this objective and will assist the Caribbean region to take full advantage of international trade negotiations.

A centrepiece of Caribbean integration is the implementation of the Caribbean Single Market and Economy (CSME). When fully completed in 2005, this economic integration mechanism will result in the creation of the harmonised economic space that the Caribbean integration has been striving for over a number of years. EPAs will be founded on this basis and will reinforce it.

Development oriented negotiation methodology

In addition to these well known elements of a "development value added" we want to attain in the final agreement, our ambition is to apply a development oriented methodology in the negotiating process.

Development considerations will draw the blueprint of the future free trade agreement in the light of the economic, social and environmental conditions and specificities of each region.

Different regions have different interests in relation to certain products or to the timeframe for the implementation of trade liberalisation. Negotiating at the regional level rather than at ACP level will ensure maximum flexibility. The Caribbean region, made up as it is of several island states and generally small and vulnerable economies faces particular constraints that need to be addressed.

We are all well aware that we are proceeding from very different starting points. The Community started liberalizing its trade policy for the ACP long ago, without requiring a reciprocal treatment. The pace and pattern of future liberalisation must take due account of these differences, which are even more visible when we look beyond simple tariff protection to consider trade-related matters.

Needs for economic adjustment

Of course, Economic partnership agreements taken alone cannot resolve all supply side constraints, ensure the full integration of the ACP countries into the world economy or promote their sustainable development. EPAs will require economic and social adjustments in your region and in your countries.

In order to maximise the benefits of EPAs, it is therefore essential that EPA negotiations and implementation be accompanied by appropriate flanking policies, in areas such as regional integration, macroeconomic and social policies, environmental policies, good governance, supply-side measures and fiscal reforms.

These accompanying measures that would enable the region to benefit greatest from an EPA are mainly measures that are not specific to the EPAs but directly linked to the needs to integrate into the world economy and to contribute to the eradication of poverty. The reality is that they would need in any case to be fully incorporated into your development policy. The special value of EPA's is that the EU-ACP perspective encompasses all this in a development partnership.

As we will agree on the terms of the EPA at the end of 2007, as foreseen in the Cotonou Agreement, the period for implementation is long enough to allow for these important adjustments.

Supporting measures

In all integration processes, transitional costs are inevitable. Although the growth made possible by EPAs is expected to clearly outweigh them, in the short term it is necessary to put in place adequate accompanying support measures, which are already foreseen.

Again: EPAs and development financing, two of the pillars of the Cotonou Agreement, must be complementary and mutually reinforcing. I believe that our common strategy should be to put everything in place to seek an optimal synergy among all cooperation instruments, in order to effectively facilitate the insertion of the Caribbean region in the world economy.

Several instruments are available to support the preparation and the implementation of the EPAs in the Cotonou Agreement. I'm referring, in particular, to the Regional Indicative Program, the National Indicative Programs and the Investment Facility. Our support to regional economic integration will certainly continue and probably expand over time. I am referring to enhancing supply capacity, private sector support, SPS compatibility, quality and standards aspects, market development, et cetera.

We need to work together to make use of them in the most effective way. The Regional Indicative Program of the Caribbean is well adapted to the needs of the EPA, with its focal sector concerning "Intensification of regional Integration", and its intention of strengthening trade related capacities.

Concerning the National Indicative Programs of your countries, the Cotonou Agreement has introduced the principle of "rolling" programming. This is to ensure that operations are in line with the objective of the agreement and priorities and objectives of the ACP States. This flexibility is attained through a review process of 9th EDF programs, comprising annual and midterm reviews. I encourage you to use these reviews to adapt the financing cooperation to your own priorities, but also to do your own assessment of necessary adjustments in your policies.

In order to deliver efficiently assistance to the regions in their preparation for the EPAs, we need to establish a link between the EPAs and the financing instruments of the Cotonou Agreement. I strongly believe that the Regional Preparatory Task Forces that we are creating for the negotiations will play this role. Nevertheless, it is equally important to ensure complementarity between them and the mechanisms already existing within the Caribbean Regional Indicative Program.

Environment and social issues

Finally, we will probably have to consider the links between trade and matters such as environmental and social aspects. Without prejudging whether or how the agreement will refer to them, it will be necessary to ensure that it has no negative impact on those important sectors.

This meeting sends a positive and concrete message to those who believe in the possibility of building a true relationship between the north and south of the world. I am convinced that the Cotonou Agreement and EPAs will greatly assist us in responding to the challenges of development and poverty alleviation in the Caribbean region.

Thank you for your attention.

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• Commissioner Nielson meets Interim Prime Minister of Haiti  (12/5/2004)
• Commissioner Lamy's Speech at the Opening of negotiations between CARIFORUM and the EU in Jamaica (19/4/2004)
• EU-Caribbean Relations in Figures  (15/4/2004)