KEYNOTE ADDRESS FOR PLENARY LUNCHEON OF 28TH MIAMI CONFERENCE ON THE CARIBBEAN BASIN ON 7th DECEMBER 2004 BY THE MOST HON. P.J. PATTERSON

Thank you for your gracious welcome and generous introduction.
As one who was involved in the Miami Conference at Ministerial level from the very beginning, I am pleased to contribute some reflections and perspectives to this distinguished gathering of Heads and Ministers of; representatives of the public sector, labour and the business community, academics and our critical social partners as we seek to advance economic integration within our region.
Relevance of Theme
All the countries of this hemisphere have demonstrated greater inter-dependence, becoming important economic partners, as we work together towards achieving the ultimate goal of sustainable development and promoting the well-being of our peoples.
The cataclysmic events of 9/11 have served to remind us that the inter-connectivity of the Caribbean and the United States is much more than a fact of geography.
In the post 9/11 era, we were both impelled to face an obvious reality: considerations of our mutual interest demanded that your Third Border to be secure must be strengthened and competitive. So as to achieve this, it must become fully integrated and hence the relevance and your theme for this Conference – An Integrated Third Border.
It is against this panorama, that I welcome the opportunity to share with you today the steps we are taking to advance Caribbean regionalism, to sharpen the prospects for advancing US/Caribbean relations and to cope with the rapid pace of globalization, with its attendant problems.
The Summit of the Americas process, launched here in Miami, has provided a sound platform for defining the nature and accelerating the pace of hemispheric relations. In recent years, noteworthy progress has been made in the areas of economic and trade integration. I refer specifically to CARICOM, MERCOSUR, the Central American Common Market and SICA – the Central American Integration System, the Andean Pact.
In addition, intra-regional cooperation and a number of bilateral and multilateral trade Agreements have set the stage for deeper integration. There has been added focus on human resource development, financial and capital market development, free movement and harmonization of economic policies.
Within the Americas, we are seeking to encourage partnership and cooperation as we pursue our vision of a Third Border to satisfy the aspirations of our peoples for an improved quality of life.
The Integration Vision
It was this vision which led CARICOM Heads of Government to the decision at Grande Anse, Grenada in 1989, to deepen the CARICOM integration process by creating a Single Market and Economy, extended to incorporate additional members of the Caribbean family.
That vision, to deepen and widen the integration framework as the natural consequence of our common history and shared geographical space, has now become a cornerstone of our strategic response to the onset of globalization and the profound challenges that now face small, vulnerable economies such as ours.
The Integration Process The Revised Treaty of Chaguaramas created a new framework for regional integration, strengthened the Community’s institutions and unambiguously set the goals of the integration process.
We identified the challenges to the region’s international competitiveness posed by globalization, while recognising the need to deepen economic integration in order to “achieve sustained economic development based on international competitiveness, coordinated economic and foreign policies, functional cooperation and enhanced trade and economic relations with third states”.
Today, CARICOM has fifteen members – from Suriname in the South to the Bahamas in the North, Belize in the West to Barbados in the East – with a combined population, including Haiti, of 15 million speaking three distinct languages.
Any discussion on Caribbean integration at this time has to focus on the Caribbean Single Market and Economy (CSME). This bold initiative will see CARICOM territories united in a single economic space. It will mark the apogee of the economic integration process in our region.
The main pillars of the CSME are:
provision for the free movement of capital; provision for the free movement of goods, services and people within the CSME; the establishment of a common trade and economic policy in dealing with the rest of the world;
Eventually, there will be a harmonization of economic, fiscal and monetary policies to create one single bloc. We have now turned our attention with increased urgency to removing the significant differences in economic policies which still exist among our Member States.
The Benefits of Integration
Firstly, the CSME will help member territories overcome many of the constraints of small size and paucity of natural resources.
Our strategic location confers an advantage on which we must capitalise, but we must never forget that the greatest asset of all is our people, so creative, energetic and versatile.
Individually, the CSME brings together the smallest territories of our hemisphere, its poorest, and some of the most economically challenged, in a single market and economy that will be greater than the sum of its parts.
By removing barriers to the cross border movement of services, capital and goods and improving conditions for the movement of people, the CSME promises to create significant new opportunities for investment, business and trade. There has already been a remarkable increase in the intra-regional flow of investments and the trade in goods and services over the past decade.
The removal of barriers to the movement of goods and services, the measures for social security, portability and the Double Taxation Agreements, now in place, are key elements of the integration process. Along with the ongoing programmes to remove legal and regulatory restrictions and facilitate the movement of key personnel, these steps grant to CARICOM nationals greater opportunities for doing business in member territories.
The revised Treaty provides for functional cooperation and collaboration in sectoral development. Initiatives for the diversification and transformation of agriculture, strengthening of tourism, improving regional transportation and promoting industrial development, are all part of the framework to help member territories transform their economies.
In addition to removing barriers and promoting cooperation for development, the revised treaty also provides for the establishment of a range of institutions that will promote rule making, predictability and order in regional commerce.
The establishment of the Caribbean Court of Justice as the arbiter of disputes under the Treaty, will be among the foremost contributions to regional institution building and the shaping of a modern, rules- driven integration process.
But the CSME is not only about survival of our sub- region. It is also a critical element in our strategic effort to shape the processes of globalization to our benefit. It provides a valuable incubator within which Caribbean companies can prepare themselves for global competition, by taking advantage of the unique benefits and facilities afforded CARICOM nationals and businesses.
All of this is vital to the vision of the CSME as the foundation for a stronger Caribbean presence and performance in international trade. It is the strengthening of regional firms through increased flows of investments, mergers, partnerships and other cooperative measures that will make the CSME a valuable tool of Caribbean economic integration.
The Challenges
While undoubtedly, much has been done to further the cause of economic development and cooperation through the integration process, serious challenges still remain.
The progress towards a Single Economy continues to lag in the face of significant differences in economic policies among member states. This is an area to which we must turn our attention with increased urgency.
We have to acknowledge the challenge of limited capacity and the impact of natural disasters have had a significant impact on the ability of some territories to meet agreed commitments and fixed deadlines. On January 5, Barbados, Jamaica, Trinidad and Tobago will launch the Single Market provisions and all the others are expected to join us by year-end.
At the regional level, work is now in progress on protocols for E-commerce, free-zones and government procurement, and soon to be started on free circulation and contingent rights.
Integration and External Trade
Of great significant value is the foundation which the CSME provides for more effective negotiation and structuring of trade and economic ties with third countries. Nowhere is this more important than in the development of our trade relations those traditional partners and those nations with which we share a common space or a common border.
In shaping relations with our neighbours, the FTAA represents an important framework. CARICOM participates in these negotiations as a coordinated and cohesive group, with a unified negotiating structure anchored by the Caribbean Regional Negotiating Machinery.
The CSME, by building common rules, procedures and mechanisms for trade and economic relations among Caribbean territories provides an invaluable tool for negotiations in the FTAA and with third parties.
While working to establish the CSME, CARICOM must simultaneously navigate the difficult waters of complex negotiations at the hemispheric and international levels, many of which have significant implications for the CSME. In the case of the WTO, the FTAA and The EC/Caribbean EPAs, we are at times confronted with efforts to expand the negotiating agenda to include issues on which the region has yet to develop a settled position, let alone established regimes.
In a number of cases, the promise of the CSME as a practice ground for bigger and more challenging trade arrangements could well be overtaken by the very agreements for which it was seen as a possible stepping stone.
Legislation and regulatory measures, which have been harmonized, provide a common basis for negotiation on related measures in international negotiations. By binding Member States to common approaches to trade negotiations and committing ourselves to treating no third country better than a CARICOM partner, the Revised Treaty reinforces the centrality of the CSME.
These developments will help many territories to overcome the constraints posed by limited capacity.
The history of cooperation among and beyond the Community is not new. CARICOM negotiated the Cotonou Partnership Agreement with the EU in cooperation with the Dominican Republic and is currently embarked on a similar exercise in the case of EPA negotiations.
The Case for Smaller Economies
The future of the Caribbean lies in the strengthening of our economies in the creation of a more favourable trading environment for our products; in more rapid and effective debt relief; in the protection of legitimate areas of economic progress such as our financial services industry; in tailoring globalisation and the dogma of liberalization to the needs of small economies.
CARICOM provides a vehicle for advancing common goals and interests of member countries. By negotiating as a group, we are able to overcome some of the challenges of small size by pooling resources and building alliances.
If smaller economies of CARICOM are to have any negotiating advantage, a coherent and organized response to developing negotiating positions is vital. We are faced with the dilemma of participating in negotiations on the same terms as larger economies, despite our limitations in human and financial resources.
The recognition given so far to the interests of smaller economies in the FTAA process is yet to be reflected in terms of the practical measures which would redound to the benefit of our countries.
As smaller economies, we expect the FTAA process to engender fair trade rules that would take into full account our size and disparate strengths. These must include our levels of development, our vulnerabilities to external shocks and natural disasters. This must then be translated into effective measures that would allow countries to fully take advantage of the opportunities created in order to increase our present levels of development. Unless this is a principal goal, the FTAA will not be to the advantage of the Caribbean Community.
“Justice requires equality between equals,but proportionality between unequals” Aristotle
The 34 nations involved in the FTAA negotiations, are of disparate economic strengths and so we cannot be expected to bear the same weight or proceed at equal speed.
Adjustment
Adjustment is the key. Smaller economies will have to be afforded the breathing space to adopt the appropriate measures which facilitate their integration into the hemispheric trading system. Successful adjustment will mean taking advantage of the economic opportunities and minimizing any dislocations in the domestic economy.
For smaller economies, the capacity (financial, human and institutional) to adjust is not as readily available as in larger more developed countries therefore the process of integration will be slower than in larger economies. Additionally, “adjustment costs are likely to be a significantly larger percentage of the GNP for smaller economies” when compared to larger countries.
I call upon our negotiating partners to recognise this. Due accommodation is required for implementing transitional policies to mitigate the cost of adjustment, flexibility in the implementation of certain rules and disciplines, such as differentiated timeframes for the application of rules in specific areas, and technical support for both national and sub-regional institutions. Without these, we could not afford the costs of national commitments which would be extracted.
Lowering tariffs implies significant loss of revenue, and preponderantly so, for those economies where income tax is not applicable.
The level of trade taxes as a percentage of government revenue in the Americas is therefore an important consideration. Twelve CARICOM countries are among nineteen in the hemisphere, which rely on trade tariffs for over 15 per cent of their revenue. The CARICOM range is from 55.1% at the highest level and 8.7% at the lowest with only one country below 10%. Jamaica, in effect, obtains 23.6% of its revenue from tariffs.
The replacement of this important source of revenue, which provides essential services such as security, health and education, is imperative. Measures need to be taken to mitigate these effects of liberalization well in advance of the tariff cuts, to be undertaken in conformity with the FTAA so as to allow the economy and indeed the people to adjust.
Jamaica – CSME-Ready
At last month’s Special Meeting of Heads of Government in Port of Spain 2005 was declared as the Year of the Caribbean Single Market.
Jamaica is firmly committed to the regional integration process, and we have taken the legislative and administrative steps to ensure that our obligations under the CSME can be met.
We recognise that we have a responsibility to ensure that civil society, our social partners and the private sector fully appreciate their rights and obligations under the Single Market and Economy.
Ultimately, the CSME is being pursued with a view to enhancing the development potential of all CARICOM territories with specific consideration given to nationals and their prospects for a better quality of life.
Conclusion
The task to which we have committed ourselves is enormous. The creation of the CSME is an ambitious exercise, in terms of both its depth and the scope of its provisions. Second only to the European Union, it will represent, when finally consummated, the most complete form of economic integration between sovereign nations.
However, as agreed at our recent Special Meeting, we “remain convinced of the logic of the CSME, its embodiment of the essence of a mature integration enterprise and its potential for unleashing the entrepreneurial spirit that is inherent in the Caribbean people”. We are therefore fully committed and prepared to go as long and as far as possible to realize our vision.
We live in a rapidly changing world. New and powerful blocs are emerging in Europe, Asia and this hemisphere. This leaves us no option but to make the necessary adjustments to ensure our competitiveness and indeed our very survival.
A more integrated Third Border presents a number of economic advantages. It will also further define who we are as a people. We tend to forget that our Region possesses a range of human resources unmatched by any economic entity of similar size in any other part of the world. Throughout our history, we have demonstrated our ability to compete internationally in various fields. We will meet this new challenge with our accustomed confidence and resilience.