Canada goes to WTO for Caricom

Bert Wilkinson | 6/4/2015, 1:37 p.m.

Because neither Canada nor the 15-nation Caribbean trade bloc can agree on a new deal governing trade between the two, Canada has said it now has no choice but to ask the Geneva-based World Trade Organization to intervene in the dispute. Canada has formally written to the WTO asking it to extend CaribCan, the decades-old trade agreement with the Caribbean, to allow business between the two to operate under some form of organized legal cover.

The two sides have been negotiating a free trade deal for the past six years, and from all appearances, they are not in a position to come to an amicable agreement anytime soon. The problem is that CaribCan is basically a one-way, largely duty-free agreement allowing leather, apparel, petroleum and food products, as well as dozens of other items from the Caribbean, into Canadian markets with preferential treatment. The two sides have been trying to make the new agreement more compatible with global trading rules, meaning trade deals that allow for two-way business and with varying degrees of tax freeness.

As far as the Canadians were concerned, they were left with no choice so they recently announced that they had written to the umbrella world trade dispute resolution body to extend CaribCan until around 2023. In the meanwhile, however, the Canadians have interestingly not indicated any plans to restart talks. Both sides have been arguing that they have granted the maximum level of tax and other concessions to each other, leaving little wiggle room for a restart of talks.

Regional leaders welcomed the move to the WTO by Canada, noting that it “will ensure that existing Caricom trade with Canada will continue without disruption.”

From the very beginning, the negotiations have had problems with the smaller Eastern Caribbean bloc states being lukewarm to the sessions, arguing that they had little reason to open their economies to powerful producers and suppliers out of Canada while having little in return to export. Additionally, duty-free trade means they would lose much needed import duties, noting the fact that the U.S. and Europe have already destroyed the lifeline banana export industry and have collapsed other revenue earners, such as online gambling.

For the region, CaribCan has been kind to economies. Since the ’90s, Caricom has dominated trade with Canada, enjoying a favorable trade balance thanks largely to bulk gold exports from Guyana and Suriname, as well as petroleum products from Trinidad.

This is the second time Canada has asked the world body to approve a waiver and extension of CaribCan. The first came in the midst of negotiations for a free trade deal. Officials at bloc headquarters in Guyana say that the move by Canada means it has given up on trade negotiations with the region, but trade ministers will try to nudge Canadian negotiators back to the table. Leaders are scheduled to meet in Barbados in early July and will discuss the way forward if there is one.

While some officials still cling to hope, the latest announcement from Caricom speaks of “Canada’s recent decision to suspend trade negotiations with the community,” noting that various levels of meeting in the Caribbean “will give member states the opportunity to decide on the way forward.”