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JIS News

Jamaica and her sister Caribbean Community (CARICOM) nations, like most small developing states, have over the past few years been buffeted by the winds of rapid globalization characterized by increased world market competitiveness as a result of liberalization and greater market deregulation.
Currently, the traditional preferential trading arrangements with the United Kingdom (UK) and the European community from which Caribbean economies have benefited are being eroded. Banana has already come under the World Trade Organisation’s (WTO’s) axe, with sugar now its latest victim. Rum and rice have also been adversely affected.
This is however not only a regional reality. Similar challenges are true for the African and Pacific states, Latin American nations and most small developing countries. To buffet this, trade blocs, which allow for preferential trade arrangements within a specific area, are proving to be the preferred mechanism chosen to ensure market survival. To date, there are more than 300 Regional Trade Agreements (RTA) or Free Trade Areas (FTA), not including the upcoming Free Trade Area of the Americas (FTAA), with a population of 830 million and a Gross Domestic Product (GDP) of US$15 trillion. All of them have to achieve a desired level of integration to benefit from the expected economies of scale.
The CARICOM Single Market and Economy (CSME) which looks toward a 2008 full implementation seeks to go further than establishing the FTA; it seeks to establish a Single Market and Economy. And for the achievement of this goal, CARICOM has earmarked US$70 million to be used over a 10-year period.
However, there are challenges posed by this massive integration process common to RTAs worldwide, since in effect, integration has to be achieved on numerous levels before benefits can be reaped. These challenges are even more compounded when the integration process goes beyond that of an FTA to a Single Economy and even further to a community as in the case of the CSME.
The Single Market is slated to come into effect by January 2006, whilst the Single Economy is earmarked for 2008.
Speaking of these challenges, CARICOM Secretary-General, Edwin Carrington tells JIS News that CARICOM is “a community which involves economic integration, foreign policy co-ordination and functional co-operation,” and notes that it is crucial that all CARICOM member states are CSM (CARICOM single Market) compliant by December 2005. “There is no scope for extension on that deadline,” he says.
Mr. Carrington also warns, “If we do not get the Development Fund and the review of the Trading Arrangement in Chapter Seven of the Treaty of Chaguaramas, clearly strengthened by the end of this year, we might have trouble getting the CSM to take off by January 2006.”
He acknowledges that integration poses social, political and economic challenges, especially since CARICOM is an association of sovereign states not a supranational grouping as the European Union (EU), but also affirms and assures that everyone recognizes the strategic benefits that will flow from “coming together”.
“Yes we are neighbourly and friendly, but each small island state is insular in their perspective. Politically, we have more Ministers and Prime Ministers than probably any other part of the world.
Economically, only 20 per cent of trade at best, is intra regional and 70 to 80 per cent of that generated through Trinidad and Tobago. This contrasts, the EU whereas 60 -80 per cent of their trade is amongst member states,” Mr. Carrington says.
In order to achieve a common vision by 2015, Mr. Carrington points out that CARICOM has to adopt common policies in the macro economic framework, company structure and upgrade and train human resources, in order to stem regional brain drain. On the macro economic side he notes, “We have to have a common tax structure, if not a common tax rate. We have to coordinate interest rate policies and if not agree on a common currency, (and) have convergence on this.”
Tourism, which Mr. Carrington says accounts for 25 per cent of the region’s GDP, is one area of apparent successful cooperation, so far, examples of which are: the region’s US$16 million joint tourism advertising campaign following the 9/11 terrorist attacks on the United States (US), spearheaded by the Caribbean Tourism Organisation; the establishment of Caribbean Cruise Tourism; the establishment of a Tourism Development Fund and the Sustainable Tourism Convention, which includes the Association of Caribbean States (ACS).
Since the greater economic integration under the Single Economy is earmarked for 2008, whilst Single Market integration is set for January 2006, there is now a greater focus on areas for market integration.
Speaking with JIS News, State Minister in the Ministry of Foreign Affairs and Foreign Trade, Senator Delano Franklyn says that there are some 350 legislations that seek harmonization in the region’s multiple industries and sectors before CSME compliance is achieved.
Two tough areas of negotiation he names are the standardization of products and the criteria for skills certificates, which replaces the work permit under the free movement clause.
Both have achieved some level of integration, but are considered a ‘work-in-progress’. Under the Free Movement of Labour clause in the CSME it is expected that the end result will see all labour moving freely, but presently agreement has been reached on five major categories and one adjunct and persons in these categories are issued skills certificates. Whilst Senator Franklyn notes that some areas are further advanced in the negotiation and integrative process than others, he points out that personalities involved in the legislative framing and negotiation process “underestimated the necessary requirements for establishing the CSME and the Herculean nature of the undertaking.”
Underscoring this, Senator Franklyn makes a comparison with the European Community, which took 35 years, between 1957 and 1992 to achieve complete implementation and CARICOM which has a 32-year time frame.
“For us to arrive at a point where three countries are ready for the CSM in just about 16 years of existence is good,” Senator Franklyn observes. “The 15 countries are at different stages of development,” he adds pointing out the other differences in constitutions, election time frames, educational levels, availability of resources and geographical makeup.
Like the CARICOM Secretary-General, Senator Franklyn insists on greater private sector input.
“The CSME is in essence an institution for the private sector. They should be playing a greater role than they are now. If we do not get full involvement of the private sector, the CSME will not come about as quickly as it should,” he says.
Continuing, Senator Franklyn tells JIS News that individual CARICOM Member States have specific areas of responsibilities, for which Prime Ministers give reports at the CARICOM Ministerial meetings.
“Guyana has agriculture; St. Lucia has justice and governance; St. Kitts and Nevis has health; Jamaica has external trade negotiations and Trinidad and Tobago has security, for example,” the Senator outlines.
Reminding CARICOM of its development mandate, the Secretary-General reiterates the need for a Development Fund, some of which is to ensure protective duties for the smaller states comprising the Organization of Eastern Caribbean States (OECS). “We have to build into the agreement, an arrangement for a special and differential treatment for OECS countries. This development fund will be similar to the EU’s (European Union) from which Ireland, one of the smaller states in the Union benefited.”
CARICOM member states saw the necessity of a regional arrangement that would offer greater market access and stability as far back as 1965 when the Caribbean Free Trade Association (CARIFTA) was crafted by the Premiers of Barbados, British Guiana and the Chief Minister of Antigua and Barbuda. As the integration drive deepened, CARICOM was formed out of the1973 Treaty of Chaguaramas.