This will be an historic year for the Caribbean, a year when dreams and hopes that first flickered into life more than 40 years ago finally become a reality. For, by December 2005, after years of ministerial discussions, the signing of protocols, and the passage of legislative amendments, 14 members of the 15-state Caribbean Community (Caricom) are expected to inaugurate the Caribbean Single Market and Economy (CSME).
Not a name to stir deep emotion, perhaps, but a venture, nonetheless, whose aim is to transform the lives of Caribbean people for the better.
Prime Minister Owen Arthur of Barbados has said that the CSME “will be the most ambitious enterprise of any kind ever to be carried out in the Caribbean . . . As a form of economic integration, it is exceeded, among regional economic groupings, only by the European Union (EU) in respect of the depth and scope of its provisions, and in the degree of structural change it is intended to achieve in respect of the participating economies.”
Caricom’s member states (Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St Lucia, St Kitts and Nevis, St Vincent and the Grenadines, Suriname, and Trinidad and Tobago) have all, at one time or another, looked forward to a day when the nations of the Caribbean would come together to form a single entity to improve the lives of their peoples through closer economic and social integration. That day is now at hand. There are still obstacles and objections to be overcome — the only comparable grouping, the EU, took almost 50 years to establish a functioning single market. But the CSME will become a reality, and, if all goes to plan, it will bring about the most important economic and social changes in the Caribbean region since the end of the colonial era.
The CSME is a daunting undertaking requiring far more than the end of trade tariffs between its member states. It is much, much more than a simple customs union, but the benefits, it is hoped, will be enormous. The goods, services, people, and capital of member states will be free to move throughout Caricom without tariffs and without restrictions. As has happened in the 25-member EU, the members of the CSME will in effect be building a single domestic market and aiming to harmonise their economic and trade policies. This will eventually require the co-ordination of policies that are traditionally closely guarded elements of national sovereignty, such as foreign exchange, interest rate, and taxation policies.
The advantages of the CSME will be many, but there are two main areas of economic benefit. First, there will be an increase in economic activity, which will drive growth in employment, investment, production, and trade. Second, working together, the Caribbean’s small states will be better equipped to negotiate, lobby, and survive in a world composed of huge trading blocs and liberalised international trade.
While Caricom governments, like their EU counterparts, have been locked in what have sometimes seemed arcane and interminable discussions, the people and businesses of the region have been trying to decide what the CSME will mean for them, and whether its effects will be beneficial.
At times enthusiastic and at other times sceptical, some have had particular worries about the free movement of people within the CSME. They fear there will be a large movement of workers from the poorer to the wealthier nations of Caricom, resulting in nationals of the wealthier territories losing jobs to Caribbean fellow-workers prepared to work for less pay. (Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago are designated “more developed countries”, while the remaining member states are designated “less developed countries” — except the Bahamas, which is not a signatory to the CSME.) There is also a fear, especially among some trade unions, that as well as seeing a fall in the incomes of their own members, incoming workers will be exploited because of their desperate desire for adequately paid work. As a consequence, they are calling for greater protection of all working people.
As with so many aspects of the CSME, these concerns echo events in the EU, where, for instance, many northern Europeans feared an influx of workers from the poorer nations (such as Spain and Portugal) when they became EU members. As it turned out, these fears proved groundless. Membership of the EU dramatically increased economic activity in the new member states, with a consequent rise in living standards. There was simply no longer any reason for most people to leave their homeland in order to improve the quality of their lives.
For the moment, the free movement of people within the CSME will be restricted to certain groups (university graduates, workers in the culture and media industries, and sports people), but eventually all Caricom nationals will have the right to work or establish a business in any other member state.
On the whole, Caribbean businesses have been positive about the CSME, and very pro-active. To a certain degree they have been ahead of both the politicians and the general public in welcoming change.
As 2005 drew nearer, a combination of international trade liberalisation and the expected inauguration of the CSME convinced business people of the need to operate regionally. Banking is fast becoming a pan-Caribbean activity, and manufacturers and traders have been keen to get up and running in new regional markets before the CSME comes into being. Trinidad and Tobago and Jamaica, Caricom’s two largest economies, have been particularly active, and Barbados has also seen increased trans-national corporate activity.
The cross-listing of companies on the stock exchanges of different Caribbean countries is now a commonplace. Eventually, a fully Caribbean stock exchange will be established to make it easier to raise and invest capital. As a consequence, of course, personal investment will become easier, more secure, and more rewarding.
Operating Caribbean-wide is more than a matter of corporate survival. The CSME will not only enable companies to profit from a larger “home” market and the economies of scale that ensue, it will also provide a platform from which companies can begin to invest and operate outside the Caribbean. Caribbean companies, however large, are still “small businesses” in global terms. However, company growth by means of mergers, acquisitions, or investment in new territories has already enabled a number of companies, especially in the insurance and distribution sectors, to move into some of the much larger markets of North and South America.
There is a deeper aspect to Caribbean integration, of course. If a single market is to be more than a customs union, there is also a need for a common infrastructure. Examples include integrated transport links, common legislation and institutions to make possible the settlement of commercial disputes, and social legislation to ensure that the free movement of people is a reality rather than a pious hope.
The CSME will not just change the Caribbean’s commercial landscape, it will also reinforce the region’s deep cultural links, strengthen the social, legal, and political ties that already bind Caricom’s members together, and enable Caribbean nations to act more forcefully as a united group in a fractious and uncertain world.
For some, the inauguration of the CSME will seem like the end of a very, very long journey.
In fact, it will also be the first step in an unprecedented Caribbean adventure.