EPA's Investment Commitments: International Standards as Facilitators of Integration and Compliance
| Author | Katharina Serrano |
| Pages | 332-347 |
EPA’S INVESTMENT COMMITMENTS:
INTERNATIONAL STANDARDS AS FACILITATORS OF
INTEGRATION AND COMPLIANCE
Katharina Serrano
23
Introduction
The region has been blessed in the past
with leaders having the capacity and
the will to provide [...] leadership [on
the world stage]. We expect no less in
future. However, our high profile could
also work to the region’s disadvantage.
It is especially so when countries of the
region fail to adopt and implement inter-
national standards and are perceived to be
indifferent in their commitment to such
standards.
Curtis A. Ward (2006)1
From a global perspective, the European
Union (EU) is the largest economic entity
and the EU’s presence in the world economy
manifests itself not only through its
participation in multilateral trade governance,
but also through its intense regulatory activity
and a web of legally binding agreements that
impact considerably on the commercial,
political and social behaviour of non-EU
countries.2 A prime example of such a high-
impact instrument of external economic
policy is the EU-CARIFORUM Economic
Partnership Agreement (EPA), signed in
October 2008.
Not only does this EPA belong to a ne w
generation of WTO-compatible, reciprocal
trade arrangements between ACP countries and
the EU, but it also goes beyond commitments
made by all Member Countries at the WTO
level. And because the EPA ‘locks in’ reforms
already made at the regional level, it potentially
results in a ‘policy of encirclement’3 with little
or no manoeuvre space for CARIFORUM
signatories to the EPA. But while the former
may be considered a necessary part of a move
towards market-oriented sustainable economic
development, the latter cannot and should
not be taken as the inevitable consequence of
an interdependent economic order. In other
words, although the EPA has been signed and
sealed, it is not an irreversible agreement.
In this chapter, it is proposed that
CARIFORUM countries take the signing of
the EPA as an opportunity to demonstrate
presence and unity on the international stage,
particularly through participation in the setting
of international standards. Simultaneously,
they should be pursuing their own harmonised
agenda of regional integration in areas of
immediate relevance to their economic
development. Once CARICOM countries
start overcoming their differences through
agreement on welfare-enhancing, international
standards, the benefits for the CARICOM
Single Market and Economy (CSME) will
be tangible. In this context, foreign direct
investment (FDI) and its regulation will be
examined at the international level as well as
through the EPA.
But international standards cannot only
help Caribbean countries to pursue their own
integration in the area of FDI. They can also
facilitate the strengthening of CARIFORUM’s
negotiation position vis-à-vis the European
333
EPA’s Investment Commitments: International Standards as Facilitators of Integration 333
Commission during the first renegotiation
of EPA investment provisions in 2011. This
is because the Commission, for its own
sake, cannot afford to ignore international
standards with the potential to affect European
businesses. Also, it might be easier for
Caribbean countries to push for development-
friendly standards in relevant forums with the
support of a wider community of developing
states rather than in bilateral negotiations with
the Commission. As such, the forums can act
as facilitators of pro-Caribbean consent even
before a renegotiation of the EPA begins.
After a brief introduction of WTO-
plus issues in the EPA and their effect on
regional integration, FDI as an international
concern will be discussed to demonstrate
why the decision to include it in the EPA
was not unreasonable from a developmental
perspective. Arguments in favour and
against developing countries’ participation in
international investment standard setting will
subsequently be presented. On the basis of a
pro-participatory conclusion, some practical
propositions will be suggested concerning the
institutional structure for a regional approach
to international standard setting. In conclusion,
an alternative route to liberalisation of FDI,
one under true ownership of the Caribbean
region, is proposed.
WTO plus issues and regional
integration
The Fifth WTO Ministerial Conference
held in Cancun, Mexico, in September 2003,
collapsed due to wide divergences amongst
WTO members on, amongst other things,
the four so-called Singapore Issues – trade
and competition, trade and investment,
trade facilitation and transparency in
government procurement – also known as
WTO-plus issues. Investment provisions in
the EU-CARIFORUM EPA allow the EU to
circumvent resistance by developing countries
to include these in currently ongoing Doha
Development Round (DDR) negotiations.
This strategy led to the criticism that the EPA
is primarily about opening markets for large
EU corporations; protecting their intellectual
property rights; and limiting opportunities
for ACP countries to regulate their economies
in the interest of their people and the
environment.4
EU’s Global Europe project, aiming
at “opening new markets abroad for EU
companies to trade and ensuring that
European companies are able to compete fairly
in those markets” 5 can easily be perceived as
standardisation of EU’s free trade policy along
neoliberal norms and philosophies – mostly
concerned with deregulation and market
opening – heavily promoted by DG Trade.6
This strategy has significantly contributed
to the European Commission’s insistence on
inclusion of WTO-plus issues in bilateral and
regional trade agreements between the EU and
Third Countries, where the imperative to pay
sufficient attention to the development status
of the latter is absent.7 In this context, there has
been considerable criticism of the integration-
distorting effect of such provisions, if included
in North-South trade arrangements.
In terms of fostering regional integration
and harmonisation in the area of investment
regulation between CARIFORUM states,
Part I, Article 4(4) seems to be a particularly
troublesome provision in that it subordinates
any regional efforts to commitments of
CARIFORUM states under the EPA. This
means that the EPA is de facto becoming a
lex specialis towards any regional efforts at
harmonisation of approaches to FDI. Seeing
that considerable regional efforts in this area
await implementation in 2010, CARICOM
countries may have manoeuvred themselves
into a difficult position. Once again, the
policy space to negotiate a regional consensus
is determined by the scope of investment
provisions in the EPA. In other words, the EU
has indirectly pre-determined the contents of
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