Overview of Services and Investment in the EPA and

Challenges for Implementation

Ramesh ChaitooHead, Services Trade Unit

CRNM - www.crnm.org

rchaitoo@crnm.org

CARIFORUM-EU Business Forum

Barbados, Nov 24-25, 2008

Economic Partnership Agreement

• Comprehensive agreement covering bilateral trade and investment relationship

• Trade in Goods - tariffs, origin, agriculture, etc.• Services, Investment, E-commerce• Trade related issues - sustainable development,

procurement, innovation, etc.• Dispute settlement & institutional provisions

EU-Cariforum Services Trade Summary

• UK accounted for an average of 33% of services exports to CARIFORUM between 1999-2003

• UK accounted for an average of 59% of services imports from CARIFORUM between 1999-2003– A major proportion of this was due to UK residents traveling to

CARIFORUM countries, especially Barbados and Jamaica

-

500

1,000

1,500

2,000

2,500

EUROS MILLIONS

1999 2000 2001 2002 2003 Average

UK SERVICES IMPORTS FROM ALL CARIFORUM

EU SERVICES IMPORTS FROM ALL CARIFORUM

EU Versus UK Services Imports from CARIFORUM 1999-2003

EU Versus UK Services Exports to CARIFORUM 1999-2003

0

100

200

300

400

500

600

700

800

900

Euros Millions

1999 2000 2001 2002 2003 Average

UK Services Exports to CARIFORUM

Total EU Services Exports to CARIFORUM

Computer and information services

0%

Construction services

1%

Financial services1%

Insurance services

4%

Communication services

3%

Royalties and licence fees

0%

Other business services

9%

Personal, cultural and recreational

services0%

Government services, n.i.e.

1%

Undisclosed14%

Transport7%

Travel60%

EU Services Imports from CARIFORUM as % Total Services Imports (Average1999-2003)

Undisclosed18%

Transport7%

Communication services

0%Travel15% Construction

services7%

Government services, n.i.e.

0%

Personal, cultural and recreational

services0%

Other business services

34%

Insurance services

12%

Royalties and licence fees

0%

Financial services

4%

Computer and information

services3%

EU Services Exports to CARIFORUM as % Total Services Exports (Average1999-2003)

Service categories where EU imports from CARIFORUM exceed exports

(average 1999-2003)

• Travel

• Transport

• Communication services

• Government services

CARIFORUM SERVICES

TRADESURPLUS

Service categories where EU exports to CARIFORUM exceed imports

(average 1999-2003)

• Other business services

• Insurance

• Financial

• Construction services

• Computer & Information services

• Royalties & licence fees

• Personal, cultural and recreational services

CARIFORUM SERVICES

TRADEDEFICIT

Total FDI Flows to Cariforum by Source 1997-2003

Total EU Total USA Other/Undisclosed

% Share of Total EU FDI in Cariforum by Source 1997-2003

UK

Spain

France

Dutch

Italy

Germany

Basic Structure of S& I provisions

1. Rules or disciplines on Services & Investment

2. Market access commitments (Schedules)

3. Protocol on Cultural cooperation

4. Link with other parts of EPA - dispute settlement, competition, etc.

Key Points

1. Services supplied by government excluded

2. Subsidies not covered by Agreement

3. Government free to regulate

4. Government procurement not covered

5. Immigration policies & procedures not covered

Structure of Services & Investment Title

• Chap 1 - General provisions

• Chap 2 - Commercial Presence (Investment)

• Chap 3 - Cross Border Supply of services

• Chap 4 - Temporary Presence of Natural Persons for Business Purpose

• Chap 5 - Regulatory Framework (with sectoral rules)

Sectoral provisions

• Computer• Courier• Telecoms• Financial services• Maritime transport• Tourism6. E-commerce7. Cooperation

Investment Interests

• Address the declining interest of EU firms in Caribbean by a new complete framework

• CF wanted comprehensive Investment provisions: EC had limited mandate

• Create a regime for investment & trade in EPA to attract EU & 3rd country firms to CF states

• Eliminate the need to negotiate new bilateral investment treaties

Investment Rules1. Market access2. National Treatment and MFN3. Excludes - nuclear materials; arms;

audiovisual; cabotage; air traffic rights4. Forbids corruption by investors5. Maintains core labour standards6. Safeguards the environment7. Forbids lowering of environmental, labour or

occupational health & safety standards to attract investment

Market Access for investment1. EC - commitments very broad and deep except

for a few sectors such as energy, health, education

2. EC - limitations on landholding, and other restrictions in mainly new Members

3. CF - commitments in manufacturing, mining, etc but limitations re landholding, type of corporate entity, SMEs, etc.

4. CF - Reservations in agriculture, forestry, fishing, mining, food & beverage, furniture, in some states; Only Dominican Republic liberalized electricity & gas

Rules on Services1. Mainly GATS approach2. National Treatment, MFN3. Similar exclusions of sectors as investment chapter4. Mutual recognition of qualifications5. Special categories of natural persons for temporary

entry: – Key personnel (managers, specialists) & graduate

trainees– Business services sellers– Contractual services suppliers– Independent professionals– Short term visitors for business purposes

Short term visitors for business purposes

EC and CF states to facilitate temporary entry for the following activities for up to 90 days:– Research & design– Marketing– Training seminars– Trade fairs and exhibitions– Sales & purchasing– Tourism personnel

Services Market Access Granted• CF - Positive list for services commitments like

GATS template; limited sectoral coverage to 65% of services sectors; Some OECS states are just about 50%. (Dom Rep is 76 %). Some opening in the future. Very limited Mode 4 commitments.

• EC - Different structure but positive list• Very broad sectoral coverage - more than 90

%; much greater access granted for Mode 4 to CF suppliers than in WTO; Limitations in new member states & starting in 2011 & 2014

Tourism

• Rules to prevent anti-competitive behaviour by large tourism operators

• Support for SMEs

• Cooperate re mutual recognition of tourism requirements. qualifications, licences

• Development support for training, standards, environmental management

Cultural Industries

• Major gains - in market access and Cultural Protocol which provides for collaboration, support, movement of artists and cultural practitioners and special provisions for audio-visual collaboration

• 26 EU states granted access for Contractual Service suppliers in Entertainment services

• First time ever for EC in a sector that is very sensitive and for which trade commitments are not normally taken

Entertainment Services

CPC 9619 Entertainment services (other than audio-visual)

96191 Theatrical producer, singer group, band and orchestra entertainment services

96192 Services provided by authors, composers, sculptors, entertainers and other individual artists

96193 Ancillary theatrical services n.e.c.

96194 Circus, amusement park and similar attraction services

96195 Ballroom, discotheque and dance instructor services

96199 Other entertainment services n.e.c.

Temporary entry access for CF Contractual Service Suppliers (CSS) in 29

sectors in EU1. Legal advisory services in respect of international public law and foreign

law2. Accounting and bookkeeping services3. Taxation advisory services4. Architectural services5. Urban planning and landscape architecture services6. Engineering services7. Integrated Engineering services8. Medical and dental services9. Veterinary services10. Midwives services11. Services provided by nurses, physiotherapists and paramedical personnel12. Computer and related services13. Research and development services

Temporary Entry for CSS in EU14. Advertising services15. Market Research and Opinion Polling16. Management consulting services17. Services related to management consulting18. Technical testing and analysis services19. Related scientific and technical consulting services20. Maintenance and repair of equipment21. Chef de cuisine services22. Fashion model services23. Translation and interpretation services24. Site investigation work25. Higher education services (only privately-funded services)26. Environmental services27. Travel agencies and tour operators' services28. Tourist guides services29. Entertainment services other than audiovisual services

Access for Independent Professionals in EU

1. Legal advisory services in respect of international public law and foreign law (i.e. non-EU law)

2. Architectural services3. Urban planning and landscape architecture services4. Engineering services5. Integrated Engineering services6. Computer and related services7. Research and development services8. Market Research and Opinion Polling9. Management consulting services10. Services related to management consulting11. Translation and interpretation services

Technical Cooperation

1. Improve ability of CF suppliers to meet regulations and standards in EU

2. Improve export capacity of CF suppliers (culture, tourism, SMEs, MRAs)

3. Interaction & dialogue between CF and EC firms4. Address quality and standards in CF5. Develop & implement regulatory regimes6. Establish mechanisms for promoting investment

& joint ventures7. Other activities

EPA Implementation and follow up

1. Official/govt process - legislative or regulatory changes; information dissemination; support to business initiatives; seeking and programming of funding at national and regional levels

Business side of implementation

• Private sector process - learn about market access; organize by sector; interface with Europeans; develop standards and credentials; position firms to get contracts by using entry provisions for business purpose in EPA

Joint initiatives for services

1. Aid for Trade for services plan

2. Need to develop proposals to get support under Development Cooptn provisions of the EPA. Article 121

Professional services

• Have to discuss mutual recognition regionally in order to have common position for bilateral discussions with EU services associations

• Need common standards

• What is status of Profess services regime in Cbbean (CSME)?

Entertainment services

• Need to understand the provisions and figure out how to take advantage of them

• Use contacts in UK, Belgium, France, Guadeloupe, Martinique, etc.

• ICT - CF needs to plug into global value chains in ICT sector

Animation sector

• Tremendous potential as it is global industry - outsourcing contracts

• CF would like to develop animators in Cbbean. Need partners in government and industry

• Develop animation studios - attract young people in activities they like