Opinion
- Editorial- Commentary
Deven
Basdeo/STCIC:
European partnership
agreements: Challenges
facing region and energy services
Preferential
treatment for the African, Caribbean and Pacific
(ACP) countries may soon no longer
be around to safeguard those countries’ goods
entering the European Union (EU) market. A waiver
handed down by the WTO only extended this system
of preferences until the end of this year 2007.
It is highly unlikely that this will be extended
because of pressures both within and outside the
EU.
Discussions are currently taking place in regard
to an alternative trading relationship under a
proposed European Partnership Agreement (EPA).
This new alternative would call for a system of
reciprocal trade between the EU and ACP countries
which would effectively replace preferential arrangements
of market access into the EU market for ACP countries
under the old Lome Convention (1975-2000). This
new arrangement if accepted would likely pose some
serious challenges for the Caribbean region, particularly
in relation to the energy services sector.
STCIC’s
response to these proposals under the EPA have
been well documented and submitted
to the Government. This article discusses some
of the issues raised.
Regional challenges
Caricom
countries may seek to import more from Europe
as such goods will not be subject to Caricom’s
Common External Tariff (CET) thereby making them
less expensive as compared to another major hemispheric
trading partner like the US.
Assuming that US firms are more efficient producers
than EU firms, and consequently may have better
quality products in a particular circumstance,
this could have the effect of diverting trade away
from the more efficient trading producer (the US)
to a less efficient producer (the EU).
In
terms of production capacity and economies of
scale, Caribbean firms will find it difficult
to compete with their European counterparts either
in manufacturing or services. The reasons for this
have been well articulated by the Trade Minister
of Barbados, Dame Billie Miller who recently noted
that “Europe and the other OECD countries
gave themselves since the Second World War—virtually
the better part of 60 years—to arrive at
where they would like us to be. And they expect
us to do this in ten to 15 years. It is just a
human and physical impossibility.”
Many Caribbean firms do not have the capacity
to export services and those that do, they will
find it extremely difficult to compete alongside
well established EU firms. If the EPA comes into
effect, the smaller islands of the Caribbean would
lose significant tax revenues with consequence
to their small economies.
Comments
The
STCIC’s comments on the initial European
Community offer regarding energy services under
the EPAs, have focused upon three of the four modes
of supplying services under the World Trade Organisation.
1. Regarding the right of establishment of companies
in EU territories, the EU offer did not list any
reservations for energy services. From their notes
they seemed to be primarily concerned with the
upstream sector. There is some local apprehension
however, that services provided to refineries,
LNG facilities and downstream petrochemical plants
(construction, engineering, plant maintenance,
plant operations etc) are not listed under the
energy services heading.
EU clarification will therefore be needed in order
to ascertain whether such services are captured
elsewhere under other classification categories
such as general construction services or integrated
engineering among others.
2.
Another major concern of the STCIC is the lack
of commitment from France on the establishment
of services for distribution of gas by pipelines
and the transmission of electricity with respect
to the French Caribbean islands—Martinique
and Guadeloupe. The question must be asked: why
should companies from T&T be restricted from
establishing businesses to distribute gas or electricity
in Martinique and Guadeloupe?
This
applies also for the retail of fuels: why restrict
T&T from establishing service stations
in these islands?
3.
Regarding cross-border supply, there seems to
be a positive offer for T&T in terms of
upstream energy services. However, this offer seems
unclear in respect of the mid & downstream
services. One major concern relates to the apparent
lack of commitment to the cross-border supply of
gas or electricity (pipelines or cable) and such
other fuels.
Can
a T&T company supply bottled gas to the
French departments of Martinique and Guadeloupe?
It
should, however, be pointed out that whereas
T&T companies can establish operations in
EU countries, under EU restrictions they may
not utilise
any of their own employees overseas.
Our
country does not have similar restrictions in
place for European personnel who are allowed
to work in T&T so long as they satisfy the
normal immigration requirements.
In
the energy services sector, success hinges upon
the use of one’s skilled personnel which
therefore places T&T companies in a clear disadvantage
when competing in the EU market.
Efforts
must be made by both parties to negotiate this
anomaly and to compel the EU to extend the
same courtesy to nationals working for T&T
companies in Europe.
Deven
Basdeo is
an analyst in Trinidad's South Chamber of Commerce
and Industry-STCIC (deven@southchamber.org).
Petroleumworld not necessarily share these views.
Editor's
Note: This article was first publish in Trinidad
Guardian, Monday,Thursday 19th July, 2007 .
Petroleumworld reprint this article in the interest
of our readers.
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Petroleumworld
07/22/07
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