Caribbean businesses, including those in Barbados which operate in the manufacturing and retail sectors rely heavily on both imports from and exports to both regional and extra-regional markets. The United Kingdom (“UK”) and the European Union (“EU”) are our trading partners whose relationship to the CARICOM and subsequently CARIFORUM region were improved (at least on paper) for the betterment of our region with the signing of the CARIFORUM-EU Economic Partnership Agreement in 2008 (“EU-UK EPA”).
As of the time of writing this article, the UK is desperately trying to finalise an acceptable deal which would allow for an exit from the European Union which is beneficial to the UK. Attempts to reach such an agreement has thrown the UK government into turmoil. The recent third attempt at a withdrawal plan piloted by Prime Minister Mrs. Theresa May, suffered yet another defeat by MPs and the UK Parliament is now expected to vote on BREXIT alternatives on April 1.
Where does this leave private sector-led businesses in CARIFORUM? How are they likely to be affected by the UK no longer being a part of the EU? Certainly in Barbados, an import-reliant economy, it is a question which needs to be considered seriously by the business community. However, is BREXIT and its potential impact on “bottom-line” on their collective radar? Has there been a private sector-led initiative to understand BREXIT and its effects? Have companies put together post-BREXIT strategies? What of the EPA when the UK is no longer a part of the EU?
On March 22, 2019, CARIFORUM countries (inclusive of Barbados), signed the CARIFORUM-UK Economic Partnership Agreement (“UK EPA”) with the UK to preserve its current trade relations after Brexit becomes a reality. The agreement mirrors the preferential trade arrangements currently in force under the EU-UK EPA in addition to repeating the UK’s EPA commitments regarding development cooperation. This agreement would certainly invoke a collective sigh of relief among members of the business community. In fact, it has been reported that the agreement “…has been welcomed by the West Indies Rum and Spirits Producers Association…”.
Should private sector companies in Barbados be comfortable and rest assured that trading relations are indeed “safe”? In the short-term, CARIFORUM countries having signed the UK EPA is indeed a consolation of sorts. While there are large entities in Barbados such as supermarkets or pharmacies which may have felt unease with the pending exit of the UK and what this might mean for their business with the UK, others such as those which import fast-moving consumer goods whose businesses traded more within CARICOM and with EU countries did not feel the need to implement a BREXIT strategy.
In terms of long-term strategy, is there evidence that the private sector in Barbados is thinking of ways in which to extend their use of the EU-UK EPA and the UK-EPA beyond what has applied for the past 11 years? Lamentations abound from persons who were intimately involved in the negotiations of the EU-UK EPA that trade agreements of this kind tend not to be private sector driven in this country. Especially in light of the fact that the bulk of our trade remains in commodities such as sugar and rum, do we wish to go beyond such?
The purpose of going into business is to make money and particularly if the company is public, directors must answer to shareholders. In the case of Barbados, which is currently in the throes of the Barbados Economic Recovery and Transformation (“BERT”) Programme, the private sector has had, within the years prior to BERT, to manage the implementation and removal of taxes such as the National Social Responsibility Levy, high corporation taxes which have since been lowered significantly, government retrenchment of workers which further impacted the ease of doing business and the effects of the suspension of payment government debt.
Perhaps it can be argued that businesses had “bigger fish to fry” at the domestic level than to concern themselves with trade policy issues which are typically seen as more of an abstract concept than the day-to-day reality. At its most basic level, while the business person is aware of the occurrence of BREXIT and may look at it from the point of view of its current business model, it is important for him to take the time to really understand how these current major agreements can drive growth.
It is recommended that a private-sector focused refresher on the EU-UK EPA and the UK EPA is carried out by government which would bring current opportunities into view for companies. It is acknowledged that there are companies in Barbados which have already heavily explored options and established businesses either on their own or with joint venture partners in Central and South America and North America. However, considering that we have current, extremely forward-looking agreements already with both the UK and the EU, our businesses should look seriously into how to take our exports into these markets beyond traditional commodities. The space has been there for 11 years, it is time to make serious use of it.
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