Dec. 30, 2006
COMMENTARY: The Caribbean at the End of 2006…and Beyond
By Sir Ronald Sanders
Special to Huntington News Network
As dusk descends on the Year 2006, the 15 small countries of the
Caribbean
Community (CARICOM) continued to face daunting challenges in the global
community in relation to trade, investment and development assistance.
Banana exports were already badly hurt from the loss of their
preferential
access to the European Union (EU) market causing pain for small banana
growers in rural communities in several Caribbean countries. But, as
the
year was drawing to a close, Ecuador, which already controls 60 per
cent of
the world market, launched a new challenge to EU banana regime. It is
a
challenge Ecuador is likely to win in the long run simply because World
Trade Organization (WTO) rules say the days of preferences are done,
and
CARICOM states have not managed to get themselves into a category of
countries which qualify for special and differential treatment.
Therefore, Caribbean banana growers in Belize, Jamaica, St Lucia, St
Vincent
and Dominica are headed for more difficult times.
The prospects for sugar exports seemed no better. Having lost the
preferential price they earned in the EU, the sugar producers in
CARICOM
countries (Barbados, Belize, Guyana, Jamaica and Trinidad and Tobago)
were
struggling with ways to transform the industry; but at least some of
them
are coming to terms with the need for innovation such as ethanol
production.
Financial services, particularly off shore banking and insurance, once
held
out hope for the adjustment of some CARICOM economies; this hope is
fading
fast. While it is true that there has been growth in the provision of
financial services within CARICOM particularly from financial
institutions
in Trinidad, Barbados and Jamaica, participation in the global economy
is
shrinking.
Except for the Bahamas and to a certain extent Barbados (which has a
special
treaty arrangement with Canada), the Organization for Economic
Cooperation
and Development and the Financial Action Task Force (both creatures of
the
richest countries of the world), using the International Monetary Fund
as a
surrogate to implement suffocating rules that suit their own powerful
states, have effectively constrained the scope of much of the
Caribbean’s
financial services sector as a global player. The requirements for
regulation, monitoring and enforcement are out of proportion to the
scale of
money and transactions that pass through the area, and they are eating
into
profitability.
Current negotiations between Caribbean countries and the EU over
Economic
Partnership Agreements are sadly lacking in a development orientation.
The
EU is insistent on the Caribbean opening its markets to European goods,
services and investment with little compensatory mechanisms for the
dislocation which such opening will cause to local businesses and the
losses
to governments of tariff revenues.
This situation calls into question policy positions adopted by the
region in
its negotiating strategies and demands a more radical approach,
including a
re-examination of the negotiating structures themselves. The
negotiations
require the expertise of good technical officials, but they also now
cry out
for political positions to be adopted based on the realities of
economic
conditions on the ground. As the year ended, there were rumblings
within the
Caribbean over the internal workings of the negotiation strategy and
structure.
Tourism was the one bright spot in an otherwise bleak horizon in 2006.
But,
the industry boomed in the last three years on the back of a weak US
dollar
to which many Caribbean currencies are tied. European and other
tourism to
the region improved simply because the drop in the exchange rate
between the
US dollar and other major currencies created a de facto devaluation of
Caribbean currencies.
Structural changes that are desperately required for tourism, including
the
promotion of local ownership, enforceable linkages to farmers and local
manufacturers, greater pan-Caribbean cooperation in promotion, flight
scheduling and hospitality-sharing, are yet to happen. A proposal for
a
Caribbean Tourism Fund, commissioned by the Caribbean Hotels
Association,
has been produced by a UK firm, but so far no action has been taken on
it.
Global competition not only in its traditional export markets, but also
within their own domestic market stared CARICOM countries in the face
as
2006 faded away, underlying starkly the absolute necessity to integrate
or
perish.
At least the year started with six CARICOM countries at last bringing
the
much promised Caribbean Single Market (CSM) into existence, and,
despite the
uncertainties that surrounded their decision, the OECS countries joined
in
the middle of the year.
The Single Market is by no means complete and, unless a range of
measures
are established by law including common regulatory rules for services
and
the machinery for integrating production across CARICOM countries, it
will
be a flawed process giving rise more to contention than to harmony.
A key issue – the freedom of movement of labour – remains off the
discussion
table, mired in fears of a political backlash for the political party
in
each country that dares to acknowledge the reality that there can be no
genuine single market without free movement of all the factors of
production. A great insularity (if not xenophobia) continues to exist
among
groups within CARICOM countries directed at each other.
Sharp divisions are still part of the relationship between governments
and
the private sector, on the one hand, and governments and the trade
union
movement on the other, in many counties of CARICOM. Yet, until there
is a
symbiotic relationship between these three groups that is built around
an
agreed strategy for taking forward the Single Market, CARICOM will be
marking time in a world where other regions are marching forward.
It is a glaring reality - from which the Caribbean as a whole is yet to
learn – that the government negotiators in trade negotiations, whether
bilaterally, at the WTO, or through the OECD – are representing the
interests of big businesses in their countries who want access to the
markets of others on the most advantageous terms while at the same time
restricting entry to their own market through the use of non-tariff
barriers
and other ruses.
The time is now urgent when there must be substantial consultations
between
Caribbean governments, the Caribbean private sector and the Caribbean
Trade
Union movement, to determine agreed strategies for trade negotiations
in
goods and services.
The way in which CARICOM itself is to be governed is an issue that
governments continue to duck. For over fourteen years, there has been
a
blueprint for such joint governance produced by the West Indian
Commission.
It is a blueprint that would ensure through CARICOM-wide laws that
decisions
are enforced and not left to languish until the last reluctant
government
recognizes the value of their implementation.
For fourteen years, some governments have filibustered over the plan,
worried, it seems, about the loss of individual national control even
though
each structure presented so far has resided final authority in councils
of
ministers drawn from each territory and, of course, in Heads of
government
themselves.
When CARICOM Heads of Government meet early in 2007, a new report on
governance of the Caribbean Community will be before them. It is to be
hoped that this time, given the competition that the region is facing
in the
international community, for trade, investment and aid, they will be
emboldened to put the necessary machinery in place.
One thing is for sure: if the Single Market is not completed in all its
aspects, and the governance of the community remains unsettled, the
prospect
of a Single Economy in 2008 – which is a far more ambitious even though
vital project – will dim as it drifts into the distance.
CARICOM can not afford the delay. And, it can no longer live on the
laurels
of being one of the most advanced regional integration movements in
global
society. Events in world trade, in business competitiveness, in
science and
technology are overtaking it. Real empowerment has to be given to the
regional integration structure if it CARICOM and its member states are
to
advance. If such empowerment does not occur, some of the more
progressive
member states will break out on their own, and the regional process
will
wither on the vine.
Already some governments of CARICOM countries believe that, in their
individual interest, they should be entering bilateral trade and
investment
relationships with countries such as the US, Canada, India and China.
Countries such as Trinidad and Tobago, which have resources -
particularly
oil and gas - in which these larger countries are very interested, may
not
long tolerate the constraints of a slow moving and indecisive CARICOM.
The Single Market will also continue not to fulfill its promise to
farmers
and manufacturers in CARICOM until governments pay serious attention to
transportation within the region by developing a common and enforceable
transportation policy. It is not a tribute to CARICOM that after 33
years
of existence, the agricultural and manufacturing production of CARICOM
states can not be transported within the region. Yet, both farm
products
and manufactured goods can be brought to individual countries through
the
United States.
It should be noted that the region’s bill for food imported from
outside the
areas is now US$3.6 billion.
A policy of CARICOM wide incentives for creating a shipping industry
within
the region is non-existent. But, if the market were to be developed to
include all the CARICOM countries plus Cuba and the Dominican Republic,
a
profitable investment opportunity surely presents itself.
In the meantime, the absence of an agreed policy has made a complete
mess of
regional air transportation. As 2007 dawns, neither tourism to the
region
nor Caribbean travelers within the region can feel secure. Instead of
one
regional airline – or at least a merger of some of the costly
activities of
individual carriers – national carriers are continuing to compete among
themselves. Caribbean Airlines, the successor to BWIA, will compete
with
the new airline that emerges from negotiations between LIAT and
Caribbean
Star; Air Jamaica will compete with Caribbean Airlines on traffic from
the
US into the Caribbean; and Caribbean Airlines operations from the
United
Kingdom will have no Caribbean identity as British Airways aircraft
takes
BWIA’s place in a code sharing deal.
The arrangements in air transportation have been reached by individual
governments. It seems no government is willing to offend other
governments
by insisting at a CARICOM level on an air transportation policy. So,
in the
name of national pride or national control, the gains that could result
from
regional cooperation go by the way side.
At the root of this lack of progress in deepening CARICOM’s integration
arrangements are two things: political pandering to, if not
exploitation of,
the fears by groups within national communities that they will be
swamped by
an influx of other Caribbean nationals into their territory; and a
failure
to explain effectively that CARICOM should be a single space, like the
United States, where people, production, and capital of each state move
freely just as, for example, the people, production and capital of
Texas
move to New York.
2006 witnessed a small step forward in this process when the basic
foundation of the Caribbean Single Market was laid.
Beyond 2006, CARICOM must deepen the integration process and must,
particularly, facilitate the integration of the factors of production
to
make Caribbean economies more competitive in the global economy.
It is urgent that the mental construct of national boundaries be broken
down
and replaced with a realistic understanding that for the people of
CARICOM
to survive the onslaught of global competition, CARICOM must be a
single
landscape.
Sir Ronald Sanders is a business executive and former Caribbean Ambassador to the World Trade Organisation who publishes widely on Small States in the global community. He is a regular contributor to Huntington News Network. Responses to: ronaldsanders29@hotmail.com
