CARIBBEAN COMMUNITY

The Struggle for SurvivalBy Kenneth Hall Myrtle Chuck-A-Sang

Trafford Publishing

Copyright © 2012 Kenneth Hall and Myrtle Chuck-A-Sang
All right reserved.
ISBN: 978-1-4669-1106-2

Contents

Introduction.................................................................................................................................vii7. CARICOM in Multilateral Trade Negotiations................................................................................................1228. Reflection on the CARIFORUM-EC Economic Partnership Agreement: Implications for CARICOM...................................................1449. The Implementation Plan for the CARICOM 'Regional Framework for Achieving Development Resilient to Climate Change'........................19810. Future Directions Of Caribbean Foreign Policy: The Oceans................................................................................22711. ALBA, PETROCARIBE AND CARICOM: Issues in a New Dynamic...................................................................................24612. The New Geography Of Brazil-Caribbean Economic Cooperation...............................................................................26713. National Planning by Small, Non Strategic Developing States in the Face of Declining Overseas Development Assistance.....................28314. The Tourism Sector and The Global Economic Crisis Development Implications For The Caribbean.............................................30615. Future Focus: A New Diplomacy for Market Access..........................................................................................35916. Journalism for Caribbean Development: New perspectives in the Age of Economic Globalisation..............................................37917. The Future of CARICOM in a Changing International Environment............................................................................38618. CARICOM Beyond Thirty: Connecting With The Diaspora......................................................................................41419. Existential Threats in the Caribbean: Democratising Politics, Regionalising Governance...................................................432

Chapter One

Caribbean Development in a Changing Global Environment Kenneth Hall

Globalisation and its policy prescriptions have posed unprecedented challenges to Caribbean countries and it has fundamentally changed the environment in which Caribbean development has proceeded for much of the latter part of the twentieth century. In particular, globalisation has put an increasing stranglehold on small Caribbean economies that are characterisedbyahighdegreeofopenness,limitedeconomicdiversification, export-concentration in one to three products, and have significant dependency on trade taxes as a main source of government revenue.

More unfortunate for these economies have been their small size; the high import content of production and consumption goods as a share of gross domestic product (GDP); and the undiversified economic structures that have constrained their economic adjustment processes. One outcome of this situation has been that during the last decade most of these economies have experienced low or declining economic growth, resulting in part from external economic shocks and the loss of special access, preferences and subsidies from bananas, sugar and rice exports into the European Union. Consequently, it has been a difficult task for policy makers to find new approaches to foster economic development, given the changes in globalised markets. More specifically, Caribbean countries are now forced to rethink every aspect of their domestic economic and social policies, given that they must participate in the global economy. In order to do this successfully, it is clear that they must find a new development path for continued economic progress, as the old approach to economic development has been superseded by changes in the global environment.

New Approaches

In this respect, several policy makers and academics have been grappling with this problem. For example, Owen Arthur suggested that:

"The building of a post-colonial economic relationship has as its principal focus the creation of an environment to spur the diversification of the typical Caribbean economy away from its traditional mono-crop culture, to end its passive dependence on aid and colonial type protectionist trade arrangements, to end its passive incorporation as a sub-species into the metropolitan economy on which it depended, and to create a basis for its sustainable development by bringing to the fore new mechanisms for domestic development and new modalities for cooperation with its international partners, that can play positive transforming roles in strategic areas, such as human resource development and the creation of dynamic private sector economies."

Caribbean technocrats and political leaders have advanced a different approach. They argue for an intensification of Caribbean Integration. In a communiqué issued by the CARICOM Heads of Government at the July 2008 meeting, the Heads reaffirmed the view "that the regional integration process remains the only viable option for a community of small developing states in the current global economic dispensation". They further declared that the regional integration strategy for Caribbean development was the best policy direction to ensure "that our citizens live in a peaceful and safe environment, that they enjoy improved standard of living and quality of life, and that their rights are protected".

The centerpiece of regional integration is the CARICOM Single Market and Single Economy (CSME), which is a legitimate response to "globalisation and liberalisation" and "the attainment of international competitiveness." This can be achieved by means of market-led integrated production and consumption that are facilitated by "the unrestricted movement of capital, labour and technology" and "a fully integrated and liberalised internal market". In 2007, CARICOM leaders went further and approved "a single development vision" aimed at creating a platform for internationally competitive exports to global markets, while pursuing functional cooperation to exploit institutional and resource synergies among countries.

Another alternative has centered on the notion of "strategic global repositioning" defined as a "process" of repositioning a country in the global economy and world affairs by implementing a strategic medium to long-term plan, formulated from continuous dialogue in the public service, the private sector, academia and the social sector. This would involve proactive structural and institutional transformation (not adjustment) focused on improvement and diversification of exports and international economic and political relations. Broadly speaking, this strategy is aimed at an accommodation with globalisation, in order to realise the opportunities that globalisation offered.

To achieve strategic global repositioning, advocates of this approach proposed a series of measures, including abandoning the traditional mindset, diversifying exports, adjusting proactively, improving human resources,supplementingtheskillspoolwithoverseasnationals,developing strategic corporate alliances, creating a business-facilitating environment, improving physical infrastructure, modernising international marketing, and garnering capital technology and skills. Additionally, this approach called for a dynamic private sector and envisaged a redefinition of the capacity and purpose of the Caribbean state, with a view to making it more effective, while bringing it in line with the ideas associated with good governance.

Another element of the debate was drawn especially from the Commonwealth Secretariat and the World Bank that have explored the policy options of smallness and vulnerability of Commonwealth Caribbean countries. The policy options were outlined in 2005 by two World Bank studies entitled, "A Time to Choose: Caribbean Development in the Twenty First Century" and "Towards a New Agenda for Growth". The World Bank studies suggested that the Caribbean economy was "one of under-fulfilled potential and concern for the sustainability of past accomplishments".

It noted that there were formidable challenges ahead for the Caribbean and suggested a wide-ranging series of recommendations to address these challenges. These studies saw no future for export agriculture and only a limited future for industry. Economic growth, the studies argued, depended on competitiveness in services, especially information and communication technology-enabled products and services, and offshore and niche education. It strongly recommended a proactive approach to Caribbean development, including greater integration within the Caribbean Region.

It also suggested "an orderly dismantling of preferences in return for increased financial and technical support", improving the investment climate, making the public sector more cost effective and improving the quality and effectiveness of human resources.

In an effort to advance the debate on regional governance, some analysts have argued in favour of the concept of a 'variable geometry of integration; similar to the policy pursued by the European Union, whereby those countries within the Caribbean Community wishing to pursue deeper forms of integration than the others would be allowed to do so, subject to two provisos, namely, that such deeper forms of integration should not contravene the objectives of the Community and, moreover, should not preclude other members of the Community wishing to join such deeper forms of integration from doing so.

In terms of economic strategy, the reality is that despite the small size of the individual Member States, the region, viewed as a collective, disposes of a significant range of resources, including petroleum and natural gas, gold, diamonds, vast agricultural resources, significant tourism infrastructure and not insignificant human resources. For this reason, some policy makers have urged the intensification of efforts to increase production-integration in the region, both in terms of cross-border sectoral aggregation and inter-sectoral integration, in an effort to optimise the region's development potential.

Moreover, within the framework of increased production integration, some academics have advocated the establishment within the region of 'growth triangles', similar to those established within Asia, most notably the Indonesia/Malaysia/Singapore (IMS) growth triangle that integrates economic activities across Batam Island in the Riau Peninsula of Indonesia, Johor Province in Malaysia and Singapore. Part of the rationale for such a strategy is that Singapore, with limited land area but with significant foreign exchange reserves, amounting to over US$70 billion at the time of the launching of the IMS, was interested in establishing an external investment platform. This approach was based on utilising its foreign reserves and technological know-how in combination with the land area, in Johor Province and in collaboration with the abundant labour supply in Indonesia.

In the case of the Caribbean, a similar approach was proposed. For example, Trinidad and Tobago, with its significant foreign reserves derived from petroleum and natural gas, is seen as being in a similar position to Singapore at the time of the launch of the IMS Triangle. In this context, some analysts have argued that within the framework of efforts aimed at promoting production-integration in the Caribbean, growth triangles may be envisaged. One of these would involve the resource-rich countries of the region, such as Belize, Guyana, Jamaica and Suriname, in combination with the financial resources of Trinidad and Tobago, to promote an increasingly sophisticated service sector capable of competing in the global economy. In this case, Trinidad and Tobago is seen as the common denominator, since it has the potential to serve as a pivot, or what some analysts have termed a 'growth catalyst', in the context of the proposed growth triangles.

While regional economic integration has been the cornerstone of the region's development strategy, the Community has also sought to promote a pattern of concentric relations at the wider Caribbean level, within the Latin America system, at the hemispheric level and within the global system. For example, the Community has concluded trade agreements with Cuba and the Dominican Republic. It has also established trading and other economic arrangements with Brazil, Costa Rica, Mexico and Venezuela.

At the wider hemispheric level, it has significant aid and trade agreements with Canada and the US and is an active participant in the Organisation of American States (OAS). Furthermore, the Caribbean has actively participated in the work of the United Nations, which is seen as an important multilateral instrument for promoting and maximising small states development and diplomatic influence. Also evident from this framework is not so much that there are different approaches targeted at resolving the region's development problems. Instead, it is the notion that the opportunity exists for integrating all these approaches into one strategic mix that responds to a global environment, and at the same time establish opportunities for better integration and deeper functional cooperation between and among Caribbean states and other countries.

The Influence of China and India

Meanwhile, the Caribbean is, of course, keenly aware of the significant geostrategic shifts that are taking place at the global level. China, for example, has amassed significant foreign reserves amounting to some US$1.5 trillion at the end of 2007, and has become, together with the European Union and Japan, a major investor in the US economy. China also enjoys a significant trade surplus with the US. It is projected that by 2050, China with a GDP of US$22.0 trillion will surpass the US as the largest economy in the world. For this reason, writers such as Ramo (2007) have characterised China as an 'asymmetric superpower', which will achieve global dominance, not by military means, but by economic influence and diplomacy.

Similarly, with a population in excess of one billion people, India has also emerged as an economic force, based on its increased industrial capacity and its burgeoning information technology sector that is closely associated with cities such as Bangalore. It is expected that by the middle of the present century, India will rank as the third largest economy in the world, behind China and the US.

Viewed from a strategic perspective, the Caribbean is gradually becoming aware of the implications of these changes as its own long-term development prospects hinge on how best it positions itself, given that both China and India have shown an interest in the Caribbean. The former has done so largely because of its concern over the diplomatic recognition of Taiwan by a number of members of the Community, notably Belize, St. Kitts and Nevis, Saint Lucia and St. Vincent and the Grenadines, which it is determined to change through diplomatic initiatives and investments. Recently, China has been investing in the Caribbean by building infrastructure for public use. For example, China has built a number of cricket stadiums in the region in an effort to extend its diplomatic influence. They have also engaged in similar activities in financing the procurement of inputs and have been facilitating trade and investment in some sectors.

For its part, India's interest in the region is dictated by the presence of large East Indian communities in Guyana, and Trinidad and Tobago, which originated with the system of indentured labour instituted by the British in the nineteenth century, in an effort to provide replacement labour for the plantations following the emancipation of African slaves towards the middle of the century. Like China, India built a new cricket stadium in Guyana for the 2007 Cricket World Cup Competition and also maintains an extensive diplomatic presence in the region.

Given these realities, without abandoning its traditional alliances with North America and Europe, CARICOM will need to explore options for diversifying its trade and production structures in order to capitalize on the trade and investment opportunities that might arise in relation to China and India. The expansion of such linkages could also provide opportunities for stimulating new development possibilities based on the integration of the production structure of the Member States of the Community.

Diaspora's Impact and Outreach

Reference must be made to the "Diaspora's Outreach" as a significant contributor to a more cohesive regionalism and the role which the Caribbean can play in deepening and strengthening the process of regional integration. It was in June 2007 that a major milestone was recorded in the history of the Caribbean Community in its measured progress towards a state of genuine integration. There was held, in various cities of the US, a coming together of CARICOM nationals and descendants of nationals in a collective effort at making a definitive and sustainable contribution towards the integration of the Caribbean Community. Broadly described as the "Conference on the Caribbean—A 20/20 Vision", the region's Diaspora produced, through a consultative process lasting several months, a series of thought-provoking ideas and recommendations that integrally involved them through various contributions other than—or in addition to—the system of remittances which continues to make such a significant contribution to the region's several poverty amelioration programmes.

Much has been said about the value of remittances from the Diaspora to a country's development. This issue will not be debated here, other than to concede that these cross-border economic transfers contribute significantly to the survival and welfare of the recipients in their home states. The jury is still out, however, on whether remittances make any significant contribution to the national/regional development process, particularly when viewed in the context of the social and economic impact of the 'brain drain' on that very development process.

Dawson (2007), in her analysis of this issue, entitled: "Brain Drain, Brain Circulation, Remittances and Development: Prospects for the Caribbean" notes that, "the emigration experiences of China, India, Mexico, Armenia, the Philippines and elsewhere tell a compelling story of how migration can contribute to development for some countries, but produce little in the way of sustainable development for others".

(Continues...)

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