CARIFORUM and UK EPA Study

Whereas, between CF countries, product concentration varied significantly over the PoA, CF countries’ diversification Index was generally closer to 1, and in fact clustered in the same band (i.e., between 0.5 to 0.9). Interestingly, the results of the Empirical Analysis 16 indicated that openness and liquidity are the major driving forces behind the volume of trade. Additionally Productive capacity in the region is also a significant factor. This underscores the important of role of trade, which has the potential of increasing diversification. 17 The CF-UK EPA, as with most Preferential Trade Agreements (PTA), is meant to increase trade between partner countries, in a context where this arrangement is intended to continue the relationship formed under the CF-EU EPA. It is, therefore, unique in the sense that it continues terms that existed with twenty seven other trading partners, and by extension similar terms with other regions. If the UK is in fact seen as a gateway market, then it may not be surprising to see that there is significant diversification among CF in terms of top trading partners. This diversification in trade partners means that a shock in the UK market will not necessarily translate so easily to the other markets. This is indeed significant for the region whose exports to the UK are concentrated in a few main tariff lines. 4.5 Trade Partner Diversification

16 See Appendix IV. 17 See Appendix IV.

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