Working Paper Series: Special Edition of 2016 to 2018 Interns

and nutmegs. While they were afforded preferential trade with Britain, who once colonized these islands, in the advent of the World Trade Organization these arrangements came to a gradual end. In 1984, the conception of the Caribbean Basin Initiative (CBI), a unilateral trade programme between the United States of America and the Caribbean Islands was created. Under such an arrangement a number of tariff and trade benefits would have been offered to Caribbean islands including the ECCU territories. However, with the inception of the North American Free Trade Agreement (NAFTA – 1994), Mexico proved to be a more beneficial trade partner such that the ECCU lost their advantage relative to Mexico. The most recent form of trade aid comes in the form of the Economic Partnership Agreements (2008) which are extensions of the Cotonou Agreement first signed in June 2000. 24 Unlike the Cotonou Arrangement that provided non-reciprocal trade from ACP 25 countries to the European Union, the Economic Partnership Agreement (EPA) has now made the trade relations between these countries reciprocal. In other words, while the EU allows ACP countries to export their goods to the EU markets by receiving duty-free access, ACP counties are now required to allow EU exports into their borders with duty-free access as well. Although the arrangement has been in place for some eight years to date, OECS territories have not yet harnessed the full potential of the initiative. Moreover, some analysts are arguing that there is no benefit to be had in the current construct of the agreement. Most significantly, is the recent Brexit vote that might have some adverse implications for this arrangement. This induces uncertainty for ECCU territories and yet another shock that continues to affect trade performance.

24 Cotonou Agreement is a treaty between the European Union and the ACP countries mainly to facilitate trading from the ACP counties to the European Union. 25 ACP countries includes African, Caribbean and pacific Group of States.

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