Caribbean: Caribbean Single Market Celebrates Partial Implementation

Socioeconomic Challenges and General Concerns

The Caribbean Community (Caricom) was due to start 2006 with the launch of the perpetually postponed Caribbean Single Market and Economy (CSME). Instead, only six of 15 full members will celebrate its inauguration in the special ceremony being hosted by Jamaica on 23 January. Successful signatories - Barbados, Belize, Jamaica, Guyana, Suriname and the twin-island state of Trinidad and Tobago - brought the CSME into operation on the first day of 2006. However, the remaining nations will lag behind until later this year, at best. Haiti's participation is uncertain, since it was suspended from the Caricom and is beset by security and governance problems. The ambitious Caribbean economic integration project was supposed to come into force at the close of 2004, but ultimately only market integration aspects of the regional accord were finalised in the flagship nations of Barbados, Jamaica and Trinidad and Tobago (see Caribbean: 11 November 2005: Caribbean Single Market to Meet Deadline, but Economic Integration Measures Delayed). A year later, only the Caribbean's largest and/or economically strongest countries consented to comply with the 31 January 2005 deadline. The CSME effectively means the lifting of trade barriers among the aforementioned states, allowing for the free movement of capital, goods, services and labour; a regional passport should be implemented in 2007.

The early days of 2006 were nonetheless marked by the absence of the smaller Organisation of the Eastern Caribbean States (OECS) - Antigua and Barbuda, Dominica, Grenada, St Lucia, St Vincent and the Grenadines, St Kitts and Nevis and Montserrat - which were concerned about the detrimental effect that liberalisation could have on their less competitive economies. These small island states fear that more competitive and larger economies will benefit most from the single market, and there are concerns on a regional level regarding the expected increase in migration within the bloc. According to Trinidad and Tobago Premier Patrick Manning, six other nations will join by March 2006, including St Vincent and the Grenadines, the only country that has failed to ratify all of the documents paving the way for the implementation of the accord. Questions remain over struggling Grenada, despite its tentative commitment to the scheme.

OECS Lags Behind, Fears Prejudicial Effects

OECS members contended that they were not in a position to proceed with the trade accord at this stage. Their smaller size and inability to capitalise on economies-of-scale render them vulnerable to more cost-effective enterprises originating from their larger Caribbean neighbours. The Caricom has striven to allay such fears by establishing the Regional Development Fund (RDF), which is set to direct funds to more exposed economies to assist the OECS and compensate for revenue losses. Financing will come from regional powerhouses and the international community, but no consensus has been reached as to the initial amount to be dedicated to the RDF. The debate now focuses on US$50 million or US$120 million as the basis for the fund. Financial and technical experts will soon release a report, expected this month, on the RDF's methods of accessing benefits and the ideal amount of the fund.

St Vincent and the Grenadines seems to be indecisive. Recently re-elected Premier Dr Ralph Gonsalves reiterated its commitment to the scheme, but is waiting for the Caricom to address some of the issues he deems to be of utmost importance to Vincentians, such as the existence of the RDF, prior to signing further documents and giving his approval. St Kitts and Nevis initially bid for a month's delay in the accord's implementation (31 January 2006), but it is as yet unclear whether the islands will be ready to withstand greater competitive forces by then. St Lucia also affirmed its desire to see the dawn of the single market on its territory, but wished to co-ordinate efforts with other OECS members to ensure that the CSME becomes an opportunity and not a threat to its national productive apparatus. Grenada's Prime Minister Keith Mitchell announced in a broadcast earlier this month that his country would join 'sometime in 2006'. He explained that the delay was 'necessary' to provide 'time to finalise a number of outstanding legal matters, in addition to providing a much-needed window to complete our public education programme'. In a boost to the OECS, Trinidad's Premier Manning pledged to help nearby Grenada and St Vincent in the event of further natural disasters. Grenada was devastated by Hurricane Ivan in September 2004 and is still in the process of recovering. In the same statement, published by influential daily the Trinidad and Tobago Express, Manning announced plans to travel around the Caricom over the next six months to oversee the effective implementation of the CSME.

Outlook and Implications

The varied development status of Caricom members and the different sizes of their economies complicate the integration process. With this in mind, the bloc is using the European Union (EU) as a model, which inspired the RDF. Delays to the establishment of that fund have left smaller nations jittery. Dominica, which is in the process of promoting eco-tourism in the face of its declining traditional industries, has refused to provide an implementation date. Its prime minister, Roosevelt Skerritt, instead asserted that the OECS intends to join the CSME as a single bloc. Montserrat's entry has been delayed; still a British colony, it is awaiting permission from the British government for membership. The timing of Antigua and Barbuda's entry is also uncertain. Barbados's Prime Minister Owen Arthur is expected to step up his efforts in the coming quarter to reach a consensus to ensure that the outstanding states enter the CSME. Trinidad's Manning is supporting his work and is set to visit Guyana and Jamaica this month, prior to hosting the Caricom Intercessional meeting on 9-10 February. In advance of those talks, the opening ceremony provides a pertinent opportunity for larger nations to offer the necessary support to the OECS that would give them the confidence to make a final commitment.