May 24, 2009

Caricom: Lost within a widened Caribbean Community?

Caricom: Lost within a widened Caribbean Community?
Sir Ronald Sanders
Sunday, May 24, 2009
Source: Jamaica Observer

A technical team has been appointed by the foreign ministers of the Caribbean Community and Common Market (Caricom) to consider an application from the Dominican Republic to join the 15-nation group. The team has been asked to have the report ready for consideration by Caricom heads of government when they meet in Guyana in July.

This will not be an easy process by any means.
Three factors are at play.

The first of these is that Caricom has not yet sufficiently deepened the relationship among its existing members. The second is the different interests of the Caricom countries - some might see an advantage in greater access to the DR's market, while others would regard opening their own markets to the DR as a disadvantage to local companies. The third is deep concerns of Haiti about the DR with regard to human rights issues related to labour and migration.

When the West Indian Commission (WIC) produced its report, "Time for Action", in 1992, it placed great importance on deepening the relationship between the then 13 Caricom member states - all of whom were English-speaking. The Commission regarded the 13 as a "core group" who should deepen their relationship in furtherance of their collective interest in the region, the hemisphere and the wider world.

Amongst the actions that the WIC recommended was the creation of a Single Market and Economy, the establishment of the Caribbean Court of Justice (CCJ) to resolve trade and investment disputes and to replace the British Privy Council as a final appellate court, and the institutionalisation of a Commission - similar to the Commission of the European Union - to manage the operations of Caricom including the Single Market and Economy and external economic relations.

Specifically, the WIC said: "The West Indies must both deepen the process of integration and reach out to a wider Caribbean in appropriate levels of co-operation. The dual-track approach may produce differing levels of integration within the Caribbean; it may produce circles of association that start with the intimate West Indian family and others that encompass an extended family of the non-English-speaking islands of the Caribbean, and a still larger circle of closer relations with countries of the Caribbean Basin that include territories of the South and Central American littoral."

The WIC was especially concerned that "on the economic side, we have to feel our way in enlarging the Caricom market so that we make progress in that direction without being overwhelmed by new members and end up being lost within our own widened community".
President of the Dominican Republic, Leonel Fernandez. The DR has applied for membership to the 15-nation Caricom.

This process was not followed.

Caricom admitted Suriname and then Haiti to membership before the process of deepening the relationship between its core members had advanced very far. The Single Market was not launched until 2006 - 14 years after it was proposed - and its implementation by several countries has been painfully slow since then. The CCJ, while it operates as a court of original jurisdiction for trade and investment disputes among Caricom countries, is not the final appellate court for all but two countries, and the machinery for governance of Caricom remains ineffective since neither a Commission with executive authority nor anything akin to it has been established.

This failure to consolidate and advance the Caricom inner core has weakened the organisation and the capacity of its member states to bargain effectively in the international community and to strengthen their own economies. And, the introduction of new members, before the relationship has been deepened, complicates the process even more, particularly as new members have brought different laws, different domestic decision-making processes and different ambitions.

The argument remains valid that even now Caricom should deepen its own core arrangements by completing the establishment of its Single Market before attempting to expand its membership further. Indeed, expanded membership may serve to slow down - if not derail - the process of moving toward a Single Economy which would have to include a common currency, harmonised tax policies, the development of a Caricom-wide social security system, and free movement of people for several categories of workers.

The DR may not be interested in pursuing these stated goals of Caricom.

On the external relations of Caricom, expanded membership now could also impair the development of harmonised foreign policies. While the Caricom Treaty calls for the co-ordination of the foreign policies of its member states, it is clear that to deal effectively with the international community, co-ordination will not be enough. This is a matter that both existing Caricom countries and the DR will have to consider carefully in their separate interests, for their interests will not always converge.

With regard to new market opportunities, while a free trade agreement exists between the DR and Caricom countries, it covers only trade in about 400 products; it does not cover services. The free trade agreement between the DR and Caricom countries was worth US$578 million last year. But, of that total, natural gas imports from Trinidad and Tobago alone accounted for US$546 million; the remaining US$32 million was neither here nor there. Trinidad and Tobago's natural gas exports to the DR would have taken place even in the absence of a free trade agreement.

Significantly, in 2007 every Caricom country, except Belize and Trinidad and Tobago, had a negative trade balance with the DR. In other words, they did not benefit from the free trade agreement.

But since the European Union (EU) insisted that the DR be part of the Economic Partnership Agreement (EPA) with Caricom, which was signed last year, Caricom countries are compelled to liberalise goods, services and investment with the DR at the same rate as with the EU. Therefore, from the DR's viewpoint, even though there would be benefits in participating in Caricom's single market, the obligations of the "Single Economy" and "Community" aspects of the Caricom Treaty may be too much for it to bear. In any event, it would have to seek a waiver from Caricom's common external tariff since it is higher than the DR's and would increase the cost of imports and make exports less competitive.

Then there are human rights issues over labour and migration between Haiti - already a member state of Caricom - and the DR. Even if other Caricom countries would be willing to limit the DR's membership of Caricom to its Common Market aspects only and not to the Community dimension which would include foreign policy, it is unlikely that Haiti would agree to the DR's membership without binding assurances on these two issues - they are assurances the DR may not be able to give.

The Caricom Treaty does provide for associate membership of Caricom. It is an option that both the DR and existing Caricom states might consider at this time in both their interests.
Sir Ronald Sanders is a consultant and former Caribbean diplomat

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