This article discusses the outlook for Caribbean states and territories for their future relations with both the United Kingdom (UK) and the European Union (EU) following the British vote to leave the EU in June 2016 and the triggering of Article 50 of the Treaty on European Union (TEU) in April 2017. The consternation generated in the region by BREXIT confirms the continued importance of the EU partnership for the Caribbean and of the EPA market access regime for certain sectors and economies in the region. It also highlights the significant role Britain continues to play as the major market for many Caribbean countries’ EU exports, even though CARICOM countries have had over forty years of preferential market access to the EU market in general. This has now become an additional source of vulnerability to changes that are not under the control of Caribbean actors. They are third parties and quite peripheral in the BREXIT and post-BREXIT negotiations to take place between the EU and the UK.
BREXIT illustrates the Caribbean region’s heterogeneity and the varying levels of sensitivity of Caribbean actors to the new situation. The non-sovereign UK Overseas Territories (UKOTs) may face the loss of preferential access to the EU market, development cooperation and mobility within the EU as they will no longer be part of the EU Overseas Countries and Territories grouping. But their location within the UK remains largely unchanged. For the independent Caribbean states, EU trade and development cooperation arrangements through the EPA and Cotonou are unchanged. However, they face serious questions regarding the shape of future market access to the UK once it has completely left the EU, and for many of them, the UK represents their largest share of the EU market. Finally, there is the Dominican Republic (DR), a CARIFORUM (CF) country without historical ties to the UK but which supplies a large proportion of its organic banana production to the UK, and Cuba, which trades with all the countries of the EU including the UK, on a Most Favoured Nation (MFN) basis (Razzaque and Vickers, 2016; Tvevad, 2017). This paper focuses on the CARIFORUM group and the UKOTs.
We discuss the main economic, trade policy, development cooperation and other political issues for the two groups of countries and territories. All assessments are tentative as the BREXIT negotiations are ongoing. The EU Council of Ministers published its Guidelines for the BREXIT negotiations in April 2017. Following the British general elections in June 2017, the first phase of BREXIT negotiations, August - December 2017, concluded with a provisional agreement on the financial aspects of Britain’s separation from the EU, reciprocal protection of the rights of British and EU citizens resident in each other’s domains, and respect for the arrangements governing the Irish/Northern Ireland border. Both sides expressed support for a transition period after BREXIT in March 2019 (EU Commission 2017). The EU has proposed a period of 21 months during which the UK will continue to observe all the obligations of an EU member state but will not participate in EU decision-making. The UK will be able to negotiate new trade deals with other parties during this period which will only come into effect at the end of the transition (Wesel 2018).
The second phase of talks got underway in January 2018. They were intended to focus on the details of the transition period but have also been taken up with clarifying details of the provisional agreement of December 2017. These include the status of EU citizens who might arrive in Britain during the transition period and the complexities of maintaining a flexible Ireland-Northern Ireland border and respecting the terms and conditions of the 1998 Belfast Agreement. Transition arrangements were endorsed by the EU Summit of March 22 - 23 2018. In the negotiating timeline proposed by the EU, talks on the future relationship between the two parties should run from April to October 2018, and should culminate in a draft withdrawal treaty and a political framework agreement for the future relationship. The final months leading up to March 2019 should focus on the future trade relationship (Wesel 2018).
The transition arrangements did not bring clarity on Northern Ireland issues apart from the acceptance of a last resort provision of a “backstop protocol” if a free trade agreement is not ultimately arrived at. There are marked divisions within the UK government and within the Conservative party on BREXIT which mean that the UK political leadership has a fragile basis on which to negotiate difficult concessions and far-reaching changes for the country’s economy and social fabric (Allegretti 2018). Many observers fear that protracted negotiations will compound political and economic uncertainty for third parties and for UK and EU stakeholders. The most pessimistic raise the worst-case spectre of failed negotiations and a disorganized exit from the EU for the UK. Most agree that small developing countries and territories like those in the Caribbean would be far down the list of priorities for a UK obliged to formulate a sweeping range of new trade and development policies and contractual arrangements to replace some 750 EU international agreements with third parties.
The following section does a literature review of the likely implications of BREXIT on the CARIFORUM countries and the possible options for addressing them. The second section outlines the challenges for the UKOTs and the possible options that may be explored in the negotiations. The concluding section examines the implications for the Caribbean’s relations with the EU and the UK and the recommended directions for regional organizations as well as Caribbean states and territories to pursue for more effective coordination of their external relations.