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Caricom: Meeting Challenges to Maintain Competitive Edge
The Wall Street Journal / November 18, 1998

By Larry Luxner

When Barbados, Guyana, Jamaica and Trinidad & Tobago established the Caribbean Free Trade Association (Carifta) in 1968, few islands enjoyed direct air service from Miami. No one had touch-tone phones, and much of the English-speaking Caribbean was still calculating prices in shillings and pence.

On July 4, 1973, the Treaty of Chaguaramas transformed Carifta into the Caribbean Community, and now -- 25 years later -- the dollar is the region's currency of choice, tourism is a booming industry and schoolchildren from the Bahamas to Barbados regularly correspond via e-mail.

Some things, however, haven't changed over the past quarter-century: bananas are still the economic mainstay for many poorer eastern Caribbean islands, and Fidel Castro -- still the president of Cuba -- continues to be a thorn in the side of U.S. presidents and politicians.

Through it all, Caricom has tried to bring together its culturally and geographically diverse member states. Although the organization is headquartered in the Bank of Guyana building in Georgetown, only two of Caricom's 15 member nations -- Guyana and Suriname -- are located in South America. Except for Central America's Belize and French-speaking Haiti, all the rest are English-speaking Caribbean islands with a common heritage and similar problems.

David Lewis, deputy executive director of Caribbean Latin American Action, a Washington-based lobby, says that since its formation, Caricom has evolved into "an effective voice for 15 nations speaking as one bloc, giving them all much stronger negotiating power than their combined population of 12 million would otherwise give them in the international arena."

"Pretty much for the first 20 years, Caricom was seen as probably one of the world's best examples of regional integration schemes," says Mr. Lewis. "Over the past five years, things have slowed down a bit, but it's really a result of the comparative advance of other integration schemes like Mercosur. Caricom has been moving swiftly in terms of establishing a single market and economy, and creating a free trade area within its member nations. But the organization has limited financial and human resources."

Sir Shridat Ramphal, a former Guyanese foreign minister who's been active in Caricom from the very beginning, agrees with Mr. Lewis.

"We are more pressed than most groups because we have Europe and the Western Hemisphere to contend with," says the 70-year-old diplomat, appointed last year to head Caricom's newly established Regional Negotiating Machinery. "There's a danger of being marginalized in the new configuration of the global economy, which places a premium on the large trading blocs like the European Union and NAFTA, and in which the whole process of globalization and liberalization threatens the Caribbean as a region of small economies."

As a consequence, Caricom is gradually moving toward adoption of a single currency for all its members -- a process the EU has already launched and one which much larger trade blocs such as Mercosur and the Andean Pact have at least begun to consider.

"Several of our members already have a single currency, but we do have a big task ahead of us," said Edwin Carrington, secretary-general of Caricom. "One of the first things we need is convertibility between the various currencies and a fixed exchange rate."

Mr. Ramphal, who's based in London, says the Caribbean's chief problem is its smallness. The combined population of Caricom's 14 full-fledged members is only around six million, and while Haiti's entry into the club more than doubles its population, Haiti is so poor that its eventual membership will bring down Caricom's per-capita income considerably. In addition to Haiti, the British Virgin Islands -- currently an associate member of Caricom -- will likely be admitted as a full member. Other associate members of Caricom are Anguilla and the Turks & Caicos Islands.

"Our economies are extremely fragile and vulnerable, and even collectively, they need the support of special regimes," said Mr. Ramphal. That's why it's so important, said the veteran diplomat during a recent visit to Guyana, that the EU be allowed to continue giving trade preferences for bananas produced in former European colonies in Africa, the Caribbean and the Pacific. On Nov. 10, the U.S. Trade Representative's Office published a list of European products ranging from sewing machines to suitcases that may be hit with 100% import duties in the United States early next year if the European Commission -- the executive arm of the EU -- fails to abolish those banana preferences by Jan. 1.

The unilateral sanctions, if imposed, would take effect Feb. 1, though the penalties could be delayed until Mar. 3 if the EU requests arbitration before the World Trade Organization in Geneva. While the U.S. itself doesn't produce bananas, U.S. companies led by Chiquita Brands and Dole have invested heavily in Latin American banana plantations, which are put at a competitive disadvantage by the EU trading preferences.

Other issues that divide the United States and Caricom include the continued U.S. trade embargo against Cuba, Congressional reluctance to grant President Clinton "fast-track" negotiating authority to sign the Free Trade Area of the Americas and other deals wth foreign nations, and its failure to grant beneficiary nations of the Caribbean Basin Initiative (CBI) the same unfettered access to the U.S. market that Mexico enjoys under NAFTA.

Except for Washington's strident anti-Castro policy, which Mr. Ramphal calls "an anachronism that must change," the diplomat says the Caribbean ranks pretty low on the Clinton administration's list of priorities these days.

"The United States is quick to pay negative attention, but the contradiction is that it's been doing so while adopting the rhetoric of positive action," says Mr. Ramphal, adding that the results of Clinton's visit to Barbados last year has been nothing short of a letdown. "The U.S. lectures us about bananas, while its own subsidies [on sugar and other commodities] are protected."

Says Mr. Lewis: "Bananas are important and critical, but this is not about bananas. This is about where preferential arrangements for small, developing countries fit into this new trade environment. The message we're getting is that they don't fit in at all."

Few leaders expect the United States to change its position on the issues that matter most to Caricom. In fact, one leading lobbyist in Washington, Michael Barnes of Hogan & Hartson, says he's not optimistic at all about trade liberalization in the next few months.

"I wish it were otherwise, because I think we ought to be moving more rapidly to implement the Free Trade Area of the Americas, but it's difficult to be optimistic given the climate in Congress on these issues," says Mr. Barnes, a former Maryland congressman whose firm represents several governments including the Bahamas and Jamaica. "The CBI-NAFTA parity bill has a better chance than fast-track, but that won't be easy either."

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