COMMENTARY

2005: Ringing in the Caribbean Single Market? Part 2

by Sir Ronald Sanders

Monday, January 10, 2005

A system of regional governance of CARICOM’s economic arrangements remains an unsettled question amongst governments. But, the establishment of such a system is vital to the successful operation of the Caribbean Single Market and Economy (CSME).

The Governments of Barbados, Jamaica and Trinidad and Tobago are scheduled to start off the Caribbean Single Market at a ceremony “marking compliance” on 19th February 2005 in Guyana. 

The prospect is that ten of the remaining twelve CARICOM countries will join by the end of the year. The Bahamas and Haiti are not expected to be part of the new economic arrangement.

But, already, there are signs that vested interests have begun to undermine the project. 

In some circles, particularly those companies that have benefited from protectionist barriers, there is resistance to the idea that companies in one CARICOM country could seek to establish themselves in other CARICOM countries either by acquiring ‘native’ businesses or by competing directly with them.

Yet, this is precisely what the CSME is about. As the West Indian Commission put it in 1992, “the Singe Economy must be a regional economy closely approximating a national economy”. There should be free movement of goods, services and capital across the area.

In other words, companies have to erase from their minds the idea that there are borders that either prohibit them from selling in CARICOM markets or protect them from competition from other CARICOM firms. 

The Caribbean Single Market enlarges the space for both sales and competition. It also allows for mergers and acquisitions within the CARICOM space, permitting companies to become larger, to invest in new technology, and to attract more capital and even to look beyond the CARICOM market for exports. It is the first measure toward overcoming the ‘smallness’ that has plagued the economic growth of CARICOM states.

How this arrangement is to be governed is a question that has occupied CARICOM Heads of Government since 1989 when they agreed the notion of the CSME.

In 1992, the West Indian Commission had suggested the creation of a Caribbean Commission comprising a President and two Commissioners to exercise full time executive responsibility for implementation of Community decisions and to initiate proposals for community action.

This proposal was not accepted by Heads of Government at the time. Instead, a Bureau of the Heads of Government Conference was created.

The Bureau consists of the existing Chairman of the Conference, the outgoing Chairman and the incoming Chairman, and it was charged with managing the affairs of CARICOM in between Conferences of the Heads.

In fact, the Bureau while a useful mechanism for consultation was never empowered to take decisions on behalf of Heads of Government and it could not bind member countries of CARICOM.

Decisions affecting CARICOM remained within the ambit of the Heads of Government Conference and Ministerial Councils where ‘national’ interests tend to dominate. The result was that the regional movement could only advance as fast as its slowest member was willing to proceed.

Then, in February 2003, the CARICOM Heads of Conference held a consultation in Trinidad on the ‘Options for governance to deepen the Integration Process’. An expert group was appointed, chaired by the Prime Minister of St Vincent & The Grenadines, Dr Ralph Gonsalves.

The group made an initial report to another Heads of Government Conference in Jamaica in July 2003. There, the Heads agreed ‘in principle’ to the establishment of a Commission or ‘other executive mechanism’ and asked Prime Minister Gonsalves’ expert group “to elaborate its recommendations” with the assistance of a technical group.

In fact, two technical groups were appointed and, in the course of the following months, submitted reports to Prime Minister Gonsalves who has been a champion of deeper integration. Since then, CARICOM leaders have not, collectively, considered the matter again.

But, with the Singe Market being started next month by three CARICOM countries and the expectation that ten others will join by year-end, the issue of how it is to be managed is one that requires urgent attention. 

The European Union established a European Commission with Commissioners appointed by Heads of Government to implement the decisions of Councils of Ministers and to initiate policy actions on behalf of their member countries as a whole.

The Europeans recognised that if they were to manage both their regional economy and their joint external economic affairs, they required joint machinery that was dedicated to doing so. It has worked for them, and should work for CARICOM.

One thing is for certain: the Single Market and Economy will not advance at the pace that it should to benefit the people of the Region, if decisions have to await the slowest member of CARICOM, and if implementation of such decisions does not have devoted and effective machinery.

Of course, the fear in some quarters is that a CARICOM Commission -- or whatever the machinery is called -- would become a supranational body dictating to national governments the actions they should take.

If this fear continues to exist -- even despite the European Union example -- there is no reason why CARICOM cannot structure the Commission so that it is accountable to Heads of Government, meeting in Council, and to other Councils of Ministers.

But, the Commission should not be structured so that any one member of CARICOM could exercise a veto or delay the implementation of decisions except in clearly defined areas such as taxation. If decisions have to be unanimous, nothing would have changed. 

There should be criteria for weighted voting by member countries sates applied to each area of the Commission’s work. The weight of the vote could be applied in some cases, though not all, on size of population or particular resources. 

Deciding on the criteria for weighted voting will not be easy. This is why is should be tackled now, so that due consideration could be given to it and consensus achieved. If it is left to the end, it may well become acrimonious and divisive, destroying otherwise well thought-out machinery.

Certainly two areas of regional integration now cry out for a CARICOM Commission devoted to doing nothing else. They are the Single Market and external economic negotiations. 

It should be recalled that unlike any other region in the world, CARICOM is engaged in three sets of difficult negotiations simultaneously -- the Economic Partnership Agreements with the EU, the Free Trade Agreement of the Americas, and new trade rules in the World Trade Organisation. These negotiations require an agreed CARICOM strategy and strong machinery for implementation.

The Regional Negotiating Machinery (RNM) has served CARICOM well so far, but the machinery for negotiating has to be more greatly empowered with both authority and resources. 

Again, something can be learned from the Europeans. It is the European Commission that conducts the external trade negotiations. The presence of Peter Mandelson, the EU Trade Commissioner, in Guyana in early January to meet CARICOM trade Ministers on the vexed question of the EU’s cut in the price paid for Caribbean sugar, spoke volumes. 

Europe had one representative; CARICOM had several. The European message was delivered with clarity and authority. The presence of Ministers representing several individual CARICOM countries made no difference.

It is time that CARICOM too speaks with one collective voice and through one authoritative voice to the rest of the world.

A CARICOM Commission -- or a similar executive unit -- dedicated to overseeing the Single Market, preparing for the Single Economy and managing external economic negotiations should no longer be deferred.

The Bahamas has, so far, stood apart from the plans for the CSME. But, Bahamas alone cannot face up to the rest of the world. Both the Bahamas and the rest of CARICOM should begin to study ways in which Bahamas can be accorded ‘special and differential’ treatment within the Single Market and Economy. It would serve both the interest of the Bahamas and the cohesion of the Caribbean Community.

Sir Ronald Sanders is a former Caribbean diplomat, now corporate executive, who publishes widely on the small states in the international community.

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