CSME

CARICOM SINGLE MARKET & ECONOMY

In 1989, 13 of the now 15 members of CARICOM decided on an integrated development strategy to chart their way into the 21st century. This strategy, elaborated in the Grand Anse Declaration has as its key features.

Deepening economic integration by advancing beyond a common market towards a Single Market and Economy.
Widening the membership and thereby expanding the economic mass of the Caribbean Community – thus Suriname and Haiti were admitted as full members in 1995 and 2002 respectively.
Progressive insertion of the region into the global trading and economic system by strengthening trading links with non-traditional partners

The strengthening of CARICOM’s participation in the global trading arena has been done through a series of bilateral trade agreements – Venezuela, Colombia, Dominican Republic, Cuba and most recently, Costa Rica – as well as by the full and effective participation in multilateral and other major trade negotiations, e.g., the World Trade Organization, the renegotiation of the Lomé and Cotonou arrangements with the European Union and the FTAA.

As a result, CARICOM has been very active in implementing all three components of this strategy.

The Revised Treaty of Chaguaramas provides the legal basis for the operation of the CSME. Matters regarding the legal interpretation of the Treaty will be addressed by the Caribbean Court of Justice (CCJ) which is due to be inaugurated in 2005.

The CSME is designed to represent a single economic space where people, goods, services and capital can move freely. This will also require the harmonisation and coordination of social, economic and trade policies by participating Member States.

Many of the required changes have been made by participating territories on a gradual basis, in keeping with national Programmes for the Removal of Restrictions on the Right of Establishment, the Provision of Services and the Movement of Capital. Jamaica notified its Programme to CARICOM in 2000.

Jamaica, Trinidad and Tobago and Barbados have agreed to lead the CSME implementation process by completing all of the required provisions as of 31 December 2004 in order to be fully CSME compliant on 1 January 2005. The remaining 11 countries will complete the process by 31 December 2005 to enable the region-wide launch of the CSME on 1 January 2006.

What has been achieved?

Jamaica has enacted the Revised Treaty into domestic law through the Caribbean Community Act. This means that the provisions of the Treaty can be enforced by the courts in Jamaica. The Act will come into force on a day designated by the Minister of Foreign Affairs and Foreign Trade.

Caribbean Court of Justice

The Government of Jamaica has taken steps to the Agreement establishing the CCJ into domestic law. In this regard, we have passed the CCJ Act, amended Section 110 of the Constitution to make the CCJ the highest Court of Jamaica in place of the Judicial Committee of the Privy Council, and amended the Judicature (Appellate Jurisdiction) Act to make the CCJ the final Court of Appeal. Steps are now being taken to amend the final piece of applicable legislation i.e., the Diplomatic Privileges and Immunities Act to ensure that the court and its staff have the necessary privileges and immunities to function as an International Judicial Institution.

Trade in Goods

The regime governing the free movement of goods is fully implemented. Jamaica, together with Most Member-States, applies the Common External Tariff (CET). All goods which meet the CARICOM rules of origin are traded duty free throughout the region (except The Bahamas). There are, however, some areas still to be developed:

Treatment of products made in Free Zones – there is need for regional agreement on how these goods are to be treated.
The removal of some specific non-tariff barriers in various member-states – national action required/none for Jamaica

Harmonization of Standards

In order to engage in the free movement of goods there has to be a guarantee that goods and services are of an acceptable standard. To this end, CARICOM members have established the Caribbean Regional Organization on Standards and Quality (CROSQ). This Organization was established by a separate agreement and has been implemented in domestic law in Jamaica by the Caribbean Regional Organization on Standards and Quality Act. The Organization will be responsible for establishing regional standards which all Member States must adhere to in the manufacture and trade of goods.

Regional Accreditation

The free movement of persons requires that there be regional accreditation bodies which can assess qualifications for equivalency. Member States have begun this process by the conclusion on the Agreement on Accreditation for Education in Medical and other Health professions. This Agreement establishes an Authority which will be responsible for accrediting doctors and other health care personnel across the region. The Agreement is in force among six states including Jamaica which will be the Headquarters of the Authority. Legislation is to be drafted to enact this Agreement into domestic law.

Work Permits and Movement of Factors

It will be recalled that under the existing Caribbean Community (Free Movement of Skilled Persons) Act, 1997, in Jamaica, work permits are not required for the following five categories of CARICOM nationals:

University Graduates
Media Workers
Sportspersons
Artistes and
Musicians

In keeping with the provisions of the Revised Treaty, work permit restrictions are also to be removed for self-employed service providers, technical, managerial and supervisory staff, their spouses and immediate dependent family members.

Jamaica will give effect to this via the Caribbean Community (Movement of Factors) Act, 2004.

Given that this Act is still at the Bill stage it has been decided that as a temporary measure, an amendment will be made to the Foreign Nationals and Commonwealth Citizens (Employment) Act. The amendment will remove CARICOM nationals from the ambit of the Act, thereby removing a work permit requirement for these persons.

It should be understood, however, that clear eligibility criteria will be applied in relation to persons who wish to benefit from the waiver of work permit requirements. The Ministry of Labour and Social Security will maintain ultimate responsibility for this process with appropriate support from the Ministry of National Security and other agencies.

Nationality Criteria

In relation to some professional services, existing legislation discriminates in favour of Jamaican nationals. Specifically, the Professional Engineers Act and the Architects’ Registration Act among others, are being amended to remove the discriminatory provisions regarding registration in the respective professions. These amendments are due to be in place by 1 January 2005 and will therefore entitle CARICOM nationals to be eligible for registration in the respective professions on an equal footing with their Jamaican counterparts.

Action being taken by Trinidad and Tobago and Barbados
CARICOM Heads of Government met in Port of Spain, Trinidad and Tobago from 8-9 November 2004. At this meeting, the Prime Ministers of Trinidad and Tobago and Barbados reaffirmed their commitment to the 31 December 2004 deadline and indicated that steps would be taken to implement the required legislative and administrative procedures.

The CSME in 2006

On 1 January 2006 the remaining eleven Member States will have implemented their CSME obligations thereby bringing the arrangement into full effect. This means that the benefits of the CSME will be available to Jamaicans in all CARICOM member states and will provide greater opportunities for trade and investment.

Trade in Services

Chapter 3 of the Revised Treaty provides the framework for the establishment of a regime for free trade in services, similar to the current arrangements for trade in goods. The main objective is to facilitate trade and investment in the services sectors of CARICOM Member States through the establishment of economic enterprises. The regime grants the following benefits:

CARICOM-owned companies will have the right to establish and operate businesses in any CARICOM member-state under the same terms and conditions as local companies. Managerial, technical and supervisory staff of these enterprises will be able to enter and work without work permits.
CARICOM service providers will be able to offer their services throughout the region, again without work permits, usually on a temporary basis, e.g., consultancies.
Since last year, Jamaica has been working on amending various pieces of legislation, which would have prevented these benefits from being granted. As mentioned earlier, legislation governing the need for work permits in specific sectors such as engineering, accountancy, and broadcasting services will be amended.

Harmonization of Legislation

The Revised Treaty also calls for harmonized regimes in a number of areas:

Customs – national consultations
Competition policy – national consultations
Consumer protection – adopted by Parliament in September 2004
Anti-dumping and countervailing measures
Banking and securities – national consultations
Intellectual property rights
Standards and technical regulations
Regulation and labelling of food and drugs
Sanitary and phytosanitary measures
Commercial arbitration

Draft model legislation is being developed by a CARICOM Legislative Drafting Facility in collaboration with the Chief Parliamentary Counsel of the region.

The CSME and External Trade Arrangements

It is increasingly being recognized that an established and functioning integration system is an important asset in contemporary trade arrangements. It is in this context that the CSME must be seen as an important platform for the region’s trade and economic linkages with the rest of the world.

Individually, CARICOM member states represent an insignificant share of global trade. Our markets are small and sometimes fragmented; we are susceptible to a range of natural disasters; we have relatively limited access to economically viable land; small populations which limit the scope for human resource development; and have highly open economies often heavily reliant on imports. The CSME helps us to overcome some of these challenges.

The framework for this is not ad hoc or unstructured – it is clearly based on Article 80 of the Revised Treaty of Chaguaramas which provides that “Member States shall coordinate their trade policies with third states or groups of third states and calls on the community to “pursue the negotiation of external trade and economic agreements on a joint basis.”

The establishment of the CARICOM Single Market and Economy (CSME) will enable CARICOM countries to adjust to more liberal international trade and investment arrangements by first operating in an integrated market with countries with which it shares geographical proximity and deep cultural and historical linkages.

The CSME gives this region of small states the benefit of greater critical mass, pooled resources, improved ability to recruit skilled workers, source inputs from resource rich locations and achieve greater economies of scale for enhanced external competitiveness.

In the establishment of harmonised rules and the creation of regional mechanisms, the CSME enables the region to simplify its approach to negotiation of relevant issues with the rest of the world.

The region has used and will increasingly be able to rely on common rules and institutions as bases for its negotiating approaches. It has relied for example, on regional rules of origin in shaping positions in external negotiations and will be able to use rules being developed and implemented in, inter alia, trade in services, competition policy, intellectual property rights, trade remedies (anti dumping and subsidies) as benchmarks for negotiations in the FTAA and other trade arrangements.

In addition to these benefits, the establishment of common, trade-related institutions and the harmonization of laws and practices have improved the readiness of member countries for participation in emerging trade arrangements including the FTAA and the ACP/EU Economic Partnership Agreement (EPA) negotiations in particular.

CARICOM negotiates as a single entity in the FTAA and is preparing to negotiate EPA’s with the European Union on a regional basis with the inclusion of the Dominican Republic with which CARICOM has a free trade agreement.

The CSME serves as a basis for a stronger and more effective negotiating and lobbying force than individual territories acting on their own. This has helped the region to win recognition of important principles such as the need for special attention to the situation of smaller economies.

The Caribbean Regional Negotiating Machinery (CRNM) gives technical support and functions as lead Negotiator in the Free Trade Area of the Americas (FTAA) negotiations.

CARICOM Technical Working Groups and Ministerial Preparatory meetings enable more deliberate and focused strategic approaches to be taken in external negotiations.

Studies commissioned at the regional level and the sharing of best practices, enable each Member State to benefit from the collective research, analysis and strategic positioning that the regional approach facilitates.

Individually, it is impossible for CARICOM territories to cover the many negotiating theatres effectively. However, as a group, CARICOM can attempt to do more – the FTAA Working Groups provide a clear example where, instead of fielding national representatives for every group we rely heavily on regional lead representatives chosen from a pool of experts in different Member Countries.

Deferral in the deadlines for completion of major international trade negotiations will allow the CSME to better function as precursor to wider FTAs. In the case of the FTAA, it is unlikely to be completed before the 1 January 2006 target for CSME, so too will the WTO Doha Development Agenda. The EC/CARIFORUM negotiations are already programmed for completion in 2007. This gives us valuable breathing space in which to build a CSME foundation for engagement in these wider fora.

Regional experts have noted that other sub-regions that have negotiated far reaching disciplines in areas for which no internal regimes exist have been ill equipped to shape these arrangements in their national and regional interest. This makes completion of the CSME work programme even more urgent.

Concerted action on the CSME is helping us to be better able to shape positions in external negotiations and will stand in a better stead in the FTAA negotiations when they resume.