Honourable Members of Parliament, I rise to make my presentation and to provide you with an update on the ongoing negotiations by St. Kitts and Nevis to accede to the Guyana-Brazil Partial Scope Agreement.
The Government of St. Kitts and Nevis has made a strategic decision to seek preferential access to the Brazilian market for its electronics products manufactured by the enclave sector which is located at the C.A. Paul Southwell Industrial Development in Basseterre and Bourkes Industrial Estates in Sandy Point.
St. Kitts and Nevis successful accession to the Guyana- Brazil Partial Scope Agreement holds much potential for economic growth and development for the overall economy. Obvious benefits will include an expansion of the labour force to meet the increase demand in the Brazilian Market, increase economic activities from the linkages with other sectors locally and also sectors in Brazilian Market. At present, the manufacturing sector employs directly over 2200 persons and indirectly employs an additional 400 persons providing services in transportation, brokerage and handling services. It is important to note that of the 2200 persons over 90% are females in full-time employment.
According to the Economist Intelligence Unit (EIU), Brazil will overtake the United Kingdom to become the world’s sixth biggest economy this year 2011. It is expected that the Latin American giant’s GDP will hit USD$2.44 trillion. The economy grew by 7.5 percentage points last year after comfortably weathering the financial crisis of 2008 and 2009. The EIU predicts that the Brazilian economy will see growth of 3 percentage points this year 2011 and 3.5 percentage points in 2012. This significant economic growth and an expanding market represent a measure of the opportunities to flow to St Kitts and Nevis from the partial scope agreement.
To date, approaches have been made to sensitize all relevant stakeholders of the need to gain preferential market access into Brazil. The main demandeurs for such terms have been the Manufacturer’s Division of the St. Kitts and Nevis Chamber of Industry & Commerce led by two manufacturers, namely Kajola Kristada Limited and Harowe Servo (Controls) Skits and Nevis Limited. Let me salute Messrs Jose Rosa and Carol Evelyn, CEOs of the two companies named for their commitment and support to this project.
At the national levels, official correspondences have been forwarded to the Governments of Guyana and Brazil. Both parties have expressed support for our interest in acceding to the Agreement. Consultations have taken place at several levels including the electronic component industry stakeholders, the Manufacturer’s Division of the Chamber of Industry and Commerce and the wider private sector umbrella organization, the St. Kitts and Nevis Chamber of Industry and Commerce. These included representation from the Importers and Exporters Association, and ministries and departments in government. I thank all who have assisted with the process so far.
History of Engagement
In a submission to the 21st Regular Meeting of the Council of Trade and Economic Development (COTED) held in Antigua in May 2008, the Government of St. Kitts and Nevis indicated that a strategic decision was made to seek preferential market access into the Brazilian Market for its locally manufactured electronics products. On 23rd May 2009 the COTED approved the request from the Federation to proceed to negotiate towards accession to the Guyana –Brazil Partial Scope Agreement.
As a result, the Caribbean Regional Negotiating Machinery (CRNM) now the Office of Trade Negotiations (OTN) noted our interest in this project and has provided valuable technical assistance and guidance to both private sector and public stakeholders throughout the process.
At subsequent meetings of COTED, member states were appraised of all developments that had taken place in the negotiations and discussions between the three parties.
In June 2010, the Federation of St. Kitts and Nevis, through the Institutional Strengthening for Social and Economic Development (ISSED), engaged technical expertise to assist in the negotiations towards accession to the Guyana –Brazil Partial Scope Agreement. The main function of this intervention was to provide an economic assessment including impact on fiscal revenues and provide guidance on negotiating strategies towards acceding to the Guyana -Brazil PSA.
In November 2010, the Government of St. Kitts and Nevis received official correspondence from the Government of Brazil via diplomatic note, indicating its support for our accession to the Guyana -Brazil Partial Scope Agreement and expressing its desire to conclude the process. This declaration of support by the Government of Brazil was another important milestone in our attempt to accede to the Partial Scope Agreement. We accordingly advised the CARICOM Secretariat and the Minister of Foreign Trade in Guyana of this development.
In addition, at the Thirty-First COTED held on 29th November to 3rd December 2010 in Georgetown Guyana, member states were provided with another update on the negotiations indicating Brazil’s support for St. Kitts and Nevis accession to the Guyana-Brazil Partial Scope Agreement and the need to conclude the process. In that same meeting the representative of St. Kitts and Nevis made an official request of the CARICOM Secretariat for technical assistance in drafting the relevant protocols that would bring effect to this agreement.
At the beginning of the 2011, the Government of St. Kitts and Nevis contacted the CARICOM Secretariat to start developing the necessary protocols to give effect to this agreement upon signature. We were informed by Legal Council at the Secretariat to proceed with the negotiations and the reports of the meetings between St. Kitts and Nevis and Brazil and the specific agreement reached including area of departure from the PSA (if any) would be used to provide guidance in preparing the necessary protocols.
During the recently concluded CARICOM Heads of Government meeting July 3-4 2011, held in St. Kitts, the new Secretary General of CARICOM took the opportunity to visit the enclave Industries at C.A. Paul Industrial Development in Basseterre and Bourkes Industrial Estate in Sandy Point where he got a firsthand impression of the importance of the manufacturing sector in St. Kitts and Nevis.
Recently, the Ministry of International Trade and the Ministry of Finance reviewed the list of products that are of offensive interest to Brazil as indicated in the Guyana- Brazil Partial Scope Agreement. This review took into consideration the concerns of Barbados to ensure that there were no obstacles in our continued efforts to conclude this agreement.
This process provided the government with some quantifiable results that would be used to determine the levels of concessions that the federation will be able to grant to Brazilian goods entering the St. Kitts and Nevis Market and also to determine if the concerns of Barbados had any merit.
Having completed the revision exercise, the Draft Protocol and the List of Products with the specific Rule of Origins were forwarded to the Caricom Secretariat for approval at the upcoming COTED scheduled for 14TH-18TH November 2011. It is at this meeting we are hoping to get the final approval from the COTED to accede to the Guyana-Brazil Partial Scope Agreement.
I am heartened to share an excerpt from CARICOM Savingram No. 927/2011 dated November 04, 2011, captioned Updated on St Kitts and Nevis’ Accession to the Guyana-Brazil Partial Scope Agreement.
There are two (2) steps involved:
- (i) the Secretariat’s certifying of the Agreement; and
- (ii) COTED’s approval for the List of Products on which preference is granted by St Kitts and Nevis to Brazil.
Under the provisions of Article 80 (3), ‘bilateral agreements to be negotiated by Member States in pursuance of their national strategic interests shall…..prior to their conclusion, be subject to certification by CARICOM Secretariat that the agreements do not prejudice or place at a disadvantage the position of other CARICOM States vis-à-vis the Treaty. The Secretariat has done an analysis of the provisions in the Draft Agreement and is satisfied that it does not prejudice the position of other Member States. The CARICOM Secretariat is therefore prepared to certify the draft Agreement.
Article 80 (4) of the Revised Treaty provides that “where trade agreements involving tariff concessions are being negotiated, the prior approval of COTED shall be required”, in the absence of any other objections from Member States, the Secretariat recommends that COTED approve the tariff preferences to be granted by St Kitts and Nevis to Brazil.
Member States are asked to take the necessary steps to address this matter at the Thirty-Third Meeting of the COTED.
COTED meets over the period November 14-18, 2011. It will be the task of the Acting Permanent Secretary, Mr. Charleton Edwards, to provide leadership to St Kitts and Nevis’ request and facilitating my later participation at the Ministerial Meeting. I commend Mr. Edwards and the staff at the Ministry of International Trade et al for their fine work.
Honourable Members, I am pleased to provide you with this update on the developments relating to our bid to accede to the Brazil-Guyana Partial Scope Agreement, which you are aware is priority for St. Kitts and Nevis’ trade policy. I wish to re-affirm the government’s commitment to working with the private sector to advance our economic agenda.
I thank you.