THE JOURNEY NOW START

Richard Costas reports on the Caribbean Single Market and Economy, or CSME, which could bring about the most important economic and social changes in the Caribbean's economic history

Illustration by Russel Halfhide

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.