- Norman Grindley/Staff Photographer
Maurice Odle, right, Economic Adviser to the Caribbean Community (CARICOM) Secretariat, questions Jamaica's Minister of Finance and Planning, Dr. Omar Davies, left, while Byron Blake, CARICOM Assistant Secretary-General for regional trade and economic integration looks on. They were attending yesterday's opening ceremony of CARICOM's eighth meeting of the Council for Finance and Planning Ministers at the Jamaica Conference Centre in Kingston.
Claremont Kirton, Contributor
AMONG THE most important agenda items that will concern CARICOM Heads of Government at their upcoming summit in Montego Bay this week is devising strategies to revive the regional economy, geared towards enhancing the development of the Caribbean people.
As CARICOM celebrates its 30th Anniversary, there has been very little identifiable progress in terms of the development of a single regional market, let alone a single Caribbean economy.
After 30 years, CARICOM intra-regional imports represent barely 11 per cent of total regional imports, while intra-regional exports account for only 18 per cent of total regional exports. By far, the most significant country in terms of regional trade is the oil rich economy of Trinidad and Tobago.
There have been, however, significant successes in Caribbean functional co-operation, which have contributed to the promotion of critical aspects of the regional integration process.
Functional co-operation involves not only important government activities like education, which include the University of the West Indies (UWI) and the Caribbean Examination Council (CXC), but also critical non-governmental activities of which the West Indies cricket team is an integral part. No doubt, CARICOM Heads will pay special attention to policies which aim to revive economic growth in those regional economies that have recently experienced negative growth.
A CRITICAL ROLE
In the context of a competitive global environment, the CSME is expected to play a critical role in facilitating regional development. Employment creation and poverty alleviation are identified as high priority objectives.
The CSME is designed to ensure increasing exports in both intra-regional and extra-regional markets, mobilisation of significant amounts of investment, and negotiation of beneficial trade and investment arrangements internationally.
It is based on free movement of goods, services, and productive factors across the region. This will require implementation of critical support arrangements, including harmonisation of laws and regulations related to economic activities within CARICOM, as well as the functioning of effective dispute settlement mechanisms.
Successful implementation of the CSME is based on the operations of nine Protocols which have been signed by CARICOM Member States. As such, the CSME is now formalised and has been given legal status.
CARICOM political leaders have publicly acknowledged that the critical element in the CSME relates to the implementation of Protocol II.
These deal with the rights of companies to establish operations in different member states, free trade in goods, free trade in services, free movement of capital, and free movement of people.
Based on public statements by Caribbean leaders, the main priority in the short run is to implement the legal arrangements, which facilitate free movement of people across the region, free movement of capital, services, and the rights of establishment of enterprises.
All member countries have agreed to notify the CARICOM Secretariat of their current restrictions which relate to these areas, and have also agreed to refrain from implementing any new restrictions.
SERIOUS IMPLICATIONS
Most importantly, all member countries have agreed to remove all such restrictions by 2005. Barbados, Trinidad and Tobago, and Jamaica, however, have agreed to remove all restrictions by 2004. This will have serious implications for the administrative capacities and legal capabilities in these countries.
For example, in a recent speech in Jamaica, the Barbadian Prime Minister pointed out that there are over 350 current restrictions affecting movement of persons and services across regional borders, and rights of establishment.
To effect these proposed changes requires amendments to about 400 national legal and administrative instruments. Establishment of the Caribbean Court of Justice (CCJ) is expected to facilitate the effective functioning of the CSME.
The CCJ will have final jurisdiction with respect to interpretation and application of the Protocols related to CSME and act as a final appellate institution in both civil and criminal matters.
The CCJ is critical since all participants in CSME including governments, private businesses, private investors and households will be able to utilise the CCJ as a final arbiter with respect to the legal interpretation of issues related to the operations of the CSME.
In dealing with implementation of the CSME, CARICOM governments are expected to face very serious challenges. Among the most fundamental of these is the political will on the part of member governments to operationalise the various Protocols which will effect the CSME. Implementing the Protocols can generate widely differing positive as well as negative externalities in individual countries.
For example, this will require changes in individual member country legislation, in areas such as customs, private company activity, alien land owning, exchange control and fiscal incentives to ensure that local and regional economic units are treated uniformly.
This may create political as well as economic dislocation in individual countries. Implemen-tation of the CSME will require significant amounts of financial as well as human resources.
At present, Barbados is funding most of the operations of the CSME Secretariat, which is located there. However, for the successful implementation of the CSME in terms of its various instruments and institutions, funds will have to be mobilised from national governments, as well as international donor agencies and supportive governments. One can reasonably assume that donor agencies and foreign governments will not fund the entire operations of the CSME.
EXPERIENCING FISCAL DEFICITS
However, some Caribbean countries have been experiencing fiscal deficits in recent years and, in the short run, may not individually be able to provide funding to support CSME implementation.
One short-term funding option may be the regional stabilisation fund. However, given its critical nature in assisting those economies requiring critical economic support, such an approach is not recommended.
Another option might be the large amount of undisbursed financial resources accessible to CARICOM, which is estimated at over US$2 billion.
A third option can be a small cess or tax implemented in regional economies. This is likely to prove problematic in those countries which are not experiencing robust economic growth. Of course, these three sources are not necessarily mutually exclusive.
In terms of assessing the impact of CSME on individual Caribbean countries as well as the region as a whole, there exists the need for further in-depth studies. For example, a detailed evaluation of the existing constraints to fully liberalising intra-regional trade is necessary.
In addition, a comprehensive analysis of the impact of the Common External Tariff (CET) on regional economic activity, especially production, should be undertaken as a joint project involving governments and private sector interests. These studies are expected to help regional decision-makers to prioritise specific policies.
Unfortunately, only the Caribbean technicians and politicians involved in the CSME process appear to have a clear grasp of its implications.
In spite of attempts at public education programmes throughout the region, it is not clear whether the serious challenges and difficulties involved in integrating 14 separate economies into one market and one economy are fully appreciated by the Caribbean public.
DYNAMIC MARKETING
More dynamic marketing of the benefits and costs of the CSME to the Caribbean public as well as the private sector is recommended. Caribbean governments have identified the private sector as the engine of growth for the individual economies as well as the regional single market and economy.
As such, there is the need for further strengthening of the co-operation between governments and the respective private sectors of the individual countries as well as regional institutions and representatives of regional private sector groups.
This is essential for the success of the CSME process. Over the medium to long term, there are many critical areas to be dealt with.
A regional development strategy and related plan, incorporating regional sectoral policies and programmes, is an important task. Some of the sectoral policies and programmes have already been initiated. Sourcing of human and financial resources for these activities is absolutely critical.
This Heads of Government meeting presents a major challenge for those mandated to implement policies for regional development. Understandably, there are likely to be serious risks and related opportunities. Careful analysis of the costs and the benefits of the process is fundamental.
Clairmont Kirton is senior lecturer in the Department of Economics at the University of the West Indies, Mona.
