Examination of Witness (Questions 518-539)
Ambassador Gail Mathurin
11 JULY 2008
Q518 Chairman: Good
afternoon. Thank you very much indeed for having us, Ambassador.
Ambassador Mathurin: First of all, may
I welcome all of you to the Jamaican Mission in Geneva. It is
certainly a great pleasure to have you here this afternoon and
a great honour for me to meet and interact with all of you.
Q519 Chairman: If I might just remind
you of how we operate. Sue is taking a transcript of every word,
but you will get a look at it before we publish it at the back
of our report. We particularly wanted to see you because we want
to concentrate our questions on the matters of particular interest
to the ACP countries and the Economic Partnership Agreements.
If I may, I will start with a question on the Economic Partnership
Agreements. Do you think that the Economic Partnership Agreements
are fair to developing countries? Other witnesses have tended
to tell us that the European Union is applying a divide and conquer
approach to its negotiations. Is this overstated or is this fair?
Would you like to tell us a bit about the problems with them?
Ambassador Mathurin: First of all, I
should signal that I am a step once removed from the whole EPA
process. Obviously our Mission in Geneva made inputs, but we were
not directly involved in the negotiations because this was done
mainly from the capital. We have followed the trade negotiations
very closely. Our region is unique in the ACP Group at this point
in that we initialled a full EPA that had goods and services as
well as some of the disciplines. Certainly you are aware that
there has been much comment in my region about the validity of
this agreement, so at this point I would like to focus on my own
Government's position.
Q520 Chairman: That would be very
useful.
Ambassador Mathurin: Which is that we
recognise that we are operating in a changing global environment
and there is a need for our economy, and by extension the economies
of our regional grouping, to insert themselves into this new global
trading environment, and we see EPAs as one such vehicle. We accept
that there are going to be many challenges in implementing the
EPA because it is the first agreement of its kind, the first reciprocal
trade agreement that we have signed with a group of developed
countries where the level of economic development is so different,
so wide. We accept there are going to be many, many challenges.
At the same time, we see this as one of the vehicles which we
can use to further modernise our economy and hopefully bring benefits
to our citizens. The challenges are great because what the EPA
will do, for example, is to make many of our traditional exports
face more competition. That is not so much because of the EPA
but more because of what is happening at the multilateral level
and that is one of the issues that we are very much involved with
in the context of Doha. Also, the element of reciprocity, asymmetrical
as it is, is an important factor in trying to build greater competitiveness
within our own economy. The present Government of Jamaica feels
that times have changed since the preferential arrangements which
we had before, so we are going to have to adapt to a new environment
and the EPA is one such vehicle. However, this is not in any way
to minimise the challenges that implementing the EPA is going
to bring. I scribbled some figures earlier today. They are some
conservative estimates that the cost of implementing the EPA in
the Caribbean could be somewhere in the region of about €400
million. This is taking into account the policy changes that we
will have to put in place, the regulatory changes that we will
have to put in place, as well as the loss of revenue. This is
against a background of countries like ours still having a relatively
high dependence on trade taxes, customs duties and related taxes.
This is going to have to change once we start admitting European
goods duty free into our own markets.
Q521 Chairman: That is a brave step.
Ambassador Mathurin: Personally, I think
it is. As I said, there is still a great deal of comment and uncertainty
in the region, but it is a step forward that we feel we have to
make at this time. We are confident that given our longstanding
relationship with the European Union and with members such as
the United Kingdom that should we have difficulties along the
way we will be able to sit down with our partners and see how
we can address those. If that sense did not exist then it would
have been difficult for us to move forward on an EPA. There are
going to be challenges, there are no two ways about it. There
are going to be different parts of society that are going to benefit
and others that might not. These are things that we are going
to have to manage, but we hope we can do this collectively with
our partners.
Q522 Chairman: That is very helpful,
thank you. I am very interested in anybody who has signed an EPA
and thinks they are happy with it. I have heard people grumble,
but rather in the abstract, not against the background of having
signed one and being ready to make it work.
Ambassador Mathurin: I would like to
touch on some related issues which are causing some great uncertainty
in my region right now with regard to the EPAs. One of the factors
that led us to signing the EPA was the fact that it was one way
of insulating some of our traditional trade from further challenge
in the WTO by putting it into a WTO compatible instrument. This
was on the understanding that, yes, we were going to have to make
adjustments particularly in those traditional sectors, and I speak
here of sugar, bananas and sectors like that, but there was an
understanding that we would have some time in which to do that
before the MFN tariffs worldwide came down and increased competition.
One issue that is before us in the WTO and is very much linked
to the EPA, and it is an issue we are grappling with right now,
is the question of what is happening with bananas, for example.
Because of the dispute settlement rulings we are aware that some
decisions have to be made at the multilateral level which is going
to affect the most favoured nation tariff of Europe with regard
to bananas. Of course, we in the Caribbean either are in the process
of exiting the sector or trying to make the sector more competitive.
Particularly in the case of those countries which are trying to
make their sectors more competitive, they have started investment
restructuring and all sorts of things related to the sector. However,
on the multilateral front we see that there could be a decision
taken in the next few days possibly, we are not sure, that would
significantly reduce the MFN tariff for bananas in the European
Union and, therefore, jeopardise our ability to continue selling
bananas in Europe. I think it would be totally unrealistic to
say that we did not expect change, but we certainly felt that
there would be attempts to give us some margin of preference for
a period of time while we tried to make these internal adjustments.
I can say this is not only an issue affecting the Caribbean, there
are African countries which are affected. It is a major issue
right now for the ACP in the context both of EPAs and what we
may agree to at this upcoming mini Ministerial. The frustration
we have with bananas is that it may not even be on the table of
the mini Ministerial. We are not involved in the negotiations
and as the process unfolds we may not even be able to comment
in any substantive way on the decision. I mention this because
I sense it could cause problems in the ongoing EPA negotiations
in West Africa in particular. It could also raise issues in my
own region with regard to signing the existing EPA. This is a
very topical issue, we are all directly involved in trying to
find out what is happening as we speak, but we are not involved
in the negotiations. There are two elements for us. One is what
the actual decision is going to be and the impact of that. The
second is the process. Despite the legal parameters set out in
the context of dispute settlement issues, it is difficult for
us to appreciate that a decision could be taken that is going
to have a major impact on so many of us and we are not around
the table, we are sending our views by proxy, so to speak. I throw
this out just to say that while my Government is convinced that
an EPA is a progressive way forward, there are still these possible
fault lines which could occur before we reach the signing of the
EPA.
Q523 Chairman: If push came to shove,
could you live without the EPA—do you get Everything But
Arms?
Ambassador Mathurin: Jamaica does not
qualify for Everything But Arms. The only country in the Caribbean
that qualifies for Everything But Arms is Haiti.
Q524 Chairman: As bad as that.
Ambassador Mathurin: The rest of us are
middle income countries.
Q525 Chairman: So you really need
that EPA.
Ambassador Mathurin: Yes. The EPA covers
key sectors for us, so it is important.
Q526 Chairman: When you say that
you are not at the negotiating table, you are one of the members
of the WTO.
Ambassador Mathurin: I think we need
to look at this broader issue. There is a lot of reflection in
my region as to whether the multilateral trading system is really
bringing benefits for small countries. The banana issue falls
clearly under the dispute settlement mechanism. The region has
been taken to the panel, the panel has ruled against the EU and
we understand that the EU has to address the panel's rulings.
That is the legal situation, but the WTO is also a political organisation.
We are members of the WTO and still having difficulty at the political
level. The technicians may understand it. At the political level
we are still having difficulty coming to terms with the fact that
the WTO can take decisions regarding exports that we have, markets
that we have an interest in, and yet we have no input into the
process. Because that is a reality of the dispute settlement mechanism
we were not a party to the dispute, the dispute had to be resolved
between the two parties, in this case what are known as the MFN
suppliers of bananas and the European Union on the other hand.
The impact of the decision is going to have profound implications
for ACP countries.
Q527 Lord Trimble: I know nothing
about the mechanics of the dispute resolution mechanism, but I
can see clearly that an action has been brought against the European
Union, you are not directly a party to it but are seriously affected
by it. Is there no way within the mechanism that you could be
joined to the proceedings or you could have gone into the proceedings
in order to give the panel taking the decision your view on the
matter and your view as to how things could be resolved? In purely
legal proceedings there are very often provisions whereby other
people can come into proceedings when they are directly affected
to the extent that you are? Was there no such opportunity?
Ambassador Mathurin: We were third parties
in the dispute hearing but the ruling ultimately went against
the European Union so the settlement is one which has to be found
between the parties. As I said, one appreciates that legally but—
Q528 Lord Trimble: So you are actually
past the dispute resolution mechanism where, the ruling having
gone against the European Union, the European Union is now negotiating
with the other party?
Ambassador Mathurin: Exactly.
Q529 Lord Trimble: So your only input
into that is via the European Union?
Ambassador Mathurin: That is right. Also,
we have put our case to the MFN, to the other side as well, but
they hold on to their legal rights in this issue. I am just saying
the WTO is also a political organisation and it is difficult for
members to totally accept that they cannot have a political input
into something which is going to have profound economic impacts.
This is the case for many of us in the Caribbean. Your visit has
come at a very interesting time. There is a lot of unease in the
ACP Group right now about (a) what will emerge and (b) the process.
Chairman: I think this might bring us to the
question that Lord Woolmer wanted to ask.
Q530 Lord Woolmer of Leeds: This
is taking the views of the ACP on the Doha Round and where things
are at. Within the ACP countries, are the views of the different
countries aligned with each other as a single view or even within
ACP are there differing views and different interests?
Ambassador Mathurin: We are about 50-odd
countries here in Geneva and within any group of that size you
are going to have differences.
Q531 Lord Woolmer of Leeds: But significant
differences?
Ambassador Mathurin: No. We came together
because we have interests in common. We all have a particular
kind of relationship with the European Union and our domestic
economies are not that dissimilar in that they tend to be vulnerable.
We came together and had this relationship which is directly with
the European Union, but because the trade interests remained pretty
much the same we came together in the WTO to promote our interests.
Yes, we have divisions within the Group but we have been very
successful, certainly while I have been here, in working out those
issues in order to present common positions to the wider membership
and to pursue those. That has been very important for the ACP
Group but it has also been important for the negotiating process
in the WTO overall. Frankly, I do not think it is given enough
credit, but the fact that there are groups of countries which
have common interests who can get together and speak through one
voice greatly assists a negotiating process that is among 151
countries.
Q532 Chairman: The Chairmen of the
NAMA Group and the Agriculture Group, who we saw this morning,
did comment on how much it facilitated negotiations to have groups
who did, in fact, get themselves together.
Ambassador Mathurin: Exactly.
Q533 Lord Maclennan of Rogart: Just
reverting to what you said about the consideration by the ACP
about multilaterals, we wondered if a contributory factor in that
was not just lack of muscle, if you like, but also perhaps a limited
negotiating capacity. Are you able to throw any light on that?
Ambassador Mathurin: Yes, we do have
limited negotiating capacity and I would suggest that is one reason
why our group system works, because we share responsibility and
expertise. I fully accept we have limited negotiating capacity
and sometimes that is very daunting. I can tell you that when
we were negotiating the EPAs, particularly in the last two years,
those of us based in Geneva felt the effects because our capitals
were so engaged in the EPAs and we did not have enough trade policy
expertise on the ground to pay attention at the same time in the
same way to the WTO. Fortuitously, I think, we got the EPAs out
of the way before we reached crunch time in the WTO. Yes, it is
an issue. It is a costly thing for small countries. You are probably
aware that in my own region some years ago we took a decision
to set up a central regional body for trade negotiations and although
that body does not have the kind of authority that the European
Commission on trade has vis-a"-vis trade negotiations, certainly
they bring us to together and marshal our position in trade negotiations.
The establishment of that body was one response to the challenge
of limited trade negotiating capacity.
Q534 Chairman: Not, of course, limited
ability, but we did see it might be difficult to do two sets of
negotiations at once, and I am glad to have confirmation that
this was not just a rumour, it was actually difficult.
Ambassador Mathurin: Yes, it certainly
was.
Q535 Lord Woolmer of Leeds: On the
question of the Doha Round, you kindly answered the point about
the extent to which views were aligned, but what is the assessment
from the ACP perspective, now the latest document has been published,
of the position as it may unfold in a week or two's time?
Ambassador Mathurin: The latest revised
text, unfortunately, still leaves two major issues outstanding
for the ACP Group. We knew that it would. We are going to have
to play catch-up between now and whenever the Ministerial starts.
The issues of preference in agriculture and industrial products
are not resolved. Those are two major issues for the ACP Group
and it is really a broader issue related to the banana issue.
There is still a lot of convergence which we have to find, particularly
in agriculture, because our proposals are in direct opposition
to the proposals made by the group known as the Tropical Products
Group who want immediate liberalisation of tropical products in
markets like the EU and, of course, we would like a little more
protection so that we can get our EPAs underway. It is the same
situation in NAMA except that there is not a Tropical Products
Group in industrial products, but because some of the exports
of ACP countries are textiles imports we then run right into the
interests of the major textile exporting countries.
Q536 Chairman: If I may get this
clear, it is that the preferential tariffs you enjoy would be
eroded?
Ambassador Mathurin: Essentially, yes.
The general approach we are taking is just to have that tariff
reduction process slowed down somewhat. Essentially, that is what
we are seeking.
Q537 Chairman: But that has not gone
your way, or has not gone your way yet.
Ambassador Mathurin: Let me put it this
way: we have not reached convergence on it. I think it is too
early to say that it has not gone our way.
Q538 Chairman: I meant merely that
it has not gone your way so far.
Ambassador Mathurin: It is still one
of the major outstanding issues in both texts. There are some
other issues. We have an interest in the Special Safeguard Mechanism
on agriculture and measures that would apply to some of our members,
not all, are still in brackets.
Q539 Chairman: Could I just get you
to confirm how many World Trade Organisation members are in your
group.
Ambassador Mathurin: You have put me
on the spot here. It is 50 something, I think.
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