CARICOM at a Crossroads

Caricom – the Caribbean Community – was established 20 years ago. David Renwick asks what it has accomplished, and where it is going

  • Photograph by Gabriel Woodham

Two pointed questions need to be asked about the Caribbean Community and Common Market (Caricom), the English-speaking Caribbean’s own economic grouping which is 20 years old this year. Has it produced net economic benefits for the area’s 5.6 million people? And where will it go in the next 20 years?

The answer to the first question is a confident yes. Indeed, Caricom has produced more than economic benefits, though stimulating the Caribbean economy was its principal raison d’être. Politically, the 11 Prime Ministers, one President and one Chief Minister who head the Caricom governments work more closely together today than they did 20 years ago, when the failure of the West Indies Federation and the subsequent ad hoc attempts at political cohesion were still bitter memories in the minds of many.

In international fora, Caricom leaders now generally speak as one, and the seven-member OECS (Organisation of East Caribbean States) sub-group within Caricom is stumbling towards some form of political unity. Trinidad and Tobago, Barbados and Guyana, for their part, are also discussing the idea of a closer relationship.

Collaboration on political matters, like foreign affairs and defence, has its uses, but they are not always apparent to the man in the streets of Georgetown, Port of Spain or Kingston. Any judgement on Caricom’s success, therefore, must focus principally on the economic record, on identifiable material gains in trade and national income.

The statistics make it clear that Caricom has made considerable trading gains. In 1973, when Eric Williams, Forbes Bumham, Errol Barrow and Michael Manley signed the historic Caricom treaty at Chaguaramas in Trinidad, the Caribbean countries were exporting EC$ 269,148,000 worth of goods to one another (EC$2.70 equals US$I at current exchange rates). In 1990, the last year for which the Caricom secretariat has complete figures, that had risen to EC$1,280,175,000. If inflation over the 20 years is stripped out, this is still a creditable performance in real terms.

While a significant part of this figure is represented by refined oil exports from Trinidad and Tobago, and to a lesser extent rice from Guyana, the rest relates to trade in a variety of light manufactured goods and some agricultural products.

The production of manufactured goods requires factories and labour and creates additional income for the people so employed. Clive Teelucksingh, general manager of the Trinidad and Tobago Manufacturers’ Association (TTMA), goes so far as to suggest that 100,000 manufacturing jobs in the region could be directly linked to Caricom trade.

Factories were set up in Barbados, Jamaica and Trinidad and Tobago solely to cater to domestic and Caricom demand. Mr Teelucksingh makes the startling claim that “at least 75 per cent of the manufacturing jobs in the region would not exist if it weren’t for Caricom”. If the regional industrial programming scheme, whereby the smaller territories were to be allocated specific manufacturing plants, had been seriously implemented that percentage would have been even higher.

Trinidad and Tobago, with the region’s main manufacturing base, started out as the chief Caricom beneficiary in 1973 and has remained so. Twenty years ago, 53.3 per cent of all domestic exports to Caricom came from Trinidad and Tobago. In 1990, it was 54.1 per cent. Jamaica has consistently remained the second biggest gainer, selling 17.6 per cent within Caricom in 1973 and 14.9 per cent in 1990.

Guyana, selling 14.6 per cent in 1973, was overtaken in third place by Barbados in 1990, which sold 11.2 per cent of domestic exports to its Caricom partners. Guyana slipped dramatically to only 2.4 per cent of regional exports in 1990, because of its own internal economic difficulties and the decline of its rice trade with Trinidad and Tobago.

Of the smaller states, St Vincent and St Lucia have made the greatest strides since Caricom was established, being responsible for 5.5 per cent and 4.3 per cent respectively of regional trade in 1990, compared with 1.1 per cent and 1.4 per cent in 1973.

So much for the first 20 years. Now back to that other question: what will happen in the next 20 years: Just the opposite of what happened in the first 20, if the prognosis of many Caricom-watchers is to be believed.

The whole concept of protected trading blocs is under threat, as the world moves rapidly towards much freer trade in manufactured goods. Caricom succeeded economically not only because there were no internal tariffs on most industries but also because of relatively high tariff barriers and protective import quotas against third countries.

Quotas, or “negative listing” as it was known in many Caricom states, is a thing of the past and tariffs are coming down quickly Caricom will have only a 20 per cent common external tariff against the rest of the world by January 1998.

Manufacturing organisations see this as spelling disaster, as lower-cost foreign goods come rushing into the market, undercutting Caricom exports despite the absence of internal tariffs. The TTMA fears that about 30 per cent of the manufacturing jobs created between 1973 and 1993 will be lost by 1997. The Barbados Manufacturers’ Association (BMA) invokes a doomsday scenario: 500,000 jobs disappearing under an avalanche of imported goods.

Whether Apocalypse 2000 does materialise in this way or not, some cherished Caricom concepts will certainly go to the wall in the years ahead. Caricom manufacturers will now be required to jettison the “little Caricom” mentality in favour of an internationalist stance. Production for export to the outside world, rather than for the internal market, will be the order of the day.

The governments are encouraging this adjustment in several ways, including rebating duties on raw materials for exporters and arranging one-way free trade deals with larger hemispheric nations. Last year’s agreement between Caricom and Venezuela is a good example.

Similar bilateral arrangements with Brazil, Ecuador, Uruguay and Colombia are in the offing. And then, of course, there is NAFTA (the North American Free Trade Agreement) or EAI (Enterprise for the Americas Initiative), call it what you will, which the United States is determined will encompass the English-speaking Caribbean in due course. The latter will be a major leap because, unlike the earlier CBI (Caribbean Basin Initiative), it will require favourable reciprocal tariff treatment for United States goods.

And that will usher in a whole new trading ball game for the entire Caribbean.

Funding provided by the 11th EDF Regional Private Sector Development Programme Direct Support Grants Programme.
The views expressed on this website are those of the the authors and do not reflect those of the Direct Support Grants Programme.