Reprinted from Caribbean Net News
caribbeannetnews.com
Introduction:
In his article of November 8, 2005, Mr. Anthony Hall lamented that the Caribbean would not just get on with it and form a single trading block. He added that the Bush administration is frustrated with Caribbean leaders for what appears to be their ingratitude for American resolve in problems (i.e. Haiti) they are themselves too “feckless” to solve.
Mr. Hall’s disquisition ran through 16 distinct topics altogether, but the issue of regional integration meandered through his commentary as a reflection of his consternation. It is that which I am to address.
Here is what he said specifically:
Indeed, our failure to integrate our economies after 47 years of negotiations stands as a monumental and unprecedented achievement in political futility. And, this failure is all the more pathetic when one considers that CARICOM leaders have allowed the common heritage and economic challenges that bind us to be perverted into the divisive xenophobia and rabid nationalism that once characterized the warring nation-states of old Europe. Meanwhile, the vastly more diverse and populous countries of the Americas are negotiating their way through seemingly intractable issues to integrate their economies. (See NAFTA & CAFTA) And it is instructive that even as he rails against NAFTA, CAFTA & FTAA, Chavez delights in the influence he wields amongst the integrated economies of South America (i.e., the South American Community of Nations [SACN]). Then, of course, there’s the EU, where -- notwithstanding dramatic setbacks in ratifying their constitution -- the countries of Europe remain the world’s standard bearers for integrating regional economies.
Who does not share Mr. Hall’s exasperation with a body that can ‘negotiate’ for nearly 50 years, without reaching their goal, whilst expects to be taken seriously?
Yet, this observation is the most and least relevant point in analyzing thresholds for trade agreements. It is relevant as a starting point for dealing with the failed policy nexus within and between Caribbean nations. But it is irrelevant to the technical prerequisites for entering complex trade arrangements.
What is confusing is that Mr. Hall should move from his observation - seemingly inspired by the view that we should have a unified block - and that the European Union can in any way serve as an example to follow, without giving the slightest reason for a unified Caribbean Trade Area; except that, in his words: “this failure is all the more pathetic when one considers that CARICOM leaders have allowed the common heritage and economic challenges that bind us to be perverted into the divisive xenophobia and rabid nationalism that once characterized the warring nation-states of old Europe”
Forgetting for the moment our “common heritages”, what are the economic challenges “that bind us” which would be addressed under a Trading Block arrangement?
I have argued that before we try to enter into so complex an arrangement, first we must address the problems which are set to asphyxiate our individual countries. One needs not engage in xenophobia in stressing these impediments in our readiness to move toward a trading block.
On the whole, the major Caribbean nations – particularly Trinidad, Jamaica and the Bahamas – are too overwrought by violent crime and in the case of Trinidad and the Bahamas, there is too large a failure of our education systems, and in the case of them all, to great an absence of a quality judicial system to enter into such arrangements at this time.
Barbados is the best managed of all Caribbean jurisdictions, the most law abiding, best regulated, with the best education system. However, in common with the other ‘big three’, the availability of opportunity, capital and credit on a broad economic basis is nearly nonexistent.
Copying other jurisdictions – of starkly differing types and scale – is untenable. For instance, NAFTA is not instructive or comparative, since in it, Mexico is merely the labour market for American corporations, and on the Canadian side, the removal of restrictions meant freer trade over a border with one of the largest trade exchanges in the world. (The case was the same between members of the EU).
Comparatively, the Bahamas trade with the rest of CARICOM is half of 1%. Trade agreements respond to existing trade, by easing restrictions. They do not invent trade where there is none.
Though Mexico has some of the same problems I identified in the Caribbean, neither the US or Canada would have to or are dependent on Mexican systems or institutions for the workings of the NAFTA. In the case of the CSME, it is the very institutions which Mr. Hall chastises rightly that will amalgamate to manage the CSME process.
As a trade proposition The Bahamas and Barbados have services largely, Trinidad has oil – which is due to run out it seems, before they make good use of the proceeds – and Jamaica with all of its enormous potential has managed only a modest, but good tourism industry, and even though its agri-business sector represents 6% of GDP, it is responsible for 20% of its labour force, which implies a low wage per capita.
Additionally, its services industry is characterised by low pay. Jamaica’s GDP per capita is USD$4,100, Barbados’ is a solid USD$16,000 per capita (in an economy that is highly concentrated in a few hands), Trinidad’s is a little over USD$10,000 and the Bahamas’ (which is a narrowly held economy as well) GDP per capita is recorded and repeated as USD$17,000 per capita. It is more likely USD$11,000, and even that is skewed by irregular market activity such that accuracy in reporting or forecasting is difficult.
What is there in CSME to correct these particular problems and before that, what is there within the national policies of each country to correct them as a prerequisite to entering a common trade co-op?
In trade activity, each of the Caribbean nations are hustling to do business with China; as well they should, since China gives them commercial and political options that were not imaginable a few years ago. However, this means that they will all be festooned generally with the same Chinese commodities, and if so, what is the impetus or demand structure that will compel the trade between them?
Each of the Caribbean nations require trade with a larger economy, as in the case of the Bahamas/Miami, providing expertise, equipment, products and services and skill, technology and information transfers necessary for development.
To show readers to the madness extant in these CSME predilections, only look at University of The West Indies. Truth be told, Mr. Hall’s indictment of fecklessness hits home here more than any other institution. UWI is the academic institution with the history and legacy in the region. (Two Noble Laureates and all of that).
Why all of the CARICOM jurisdictions insist on creating their own shop is beyond me.
Second all the talk in each jurisdiction about “building” a university at a time when the University of Phoenix Online is the world’s largest, and brick and mortar building libraries in average 80 odd degree heat, when Google is putting every book ever written online is astounding!
To top off this galloping nonsense, the idea of a bricks and mortar institution in a certain place, when the problem of the Caribbean is low income and brain drain is beyond belief.
The online platform is the perfect solution to deliver education to the largest possible group of people at the lowest possible price. How will CSME, with all the money, time and energy spent to secure it, deal with this issue?
The BMHC Quadrangle:
The question is: are there alternatives to the hosts of trade agreements being advanced currently? Our belief is that there are alternatives. We examined the GDP growth rates between groupings of countries. We do this every quarter and in a variety of combinations.
We believe that the “trending relationship” between the US and Bahamian economy for instance, and the disjunctive relationship between that of the US and other CARICOM jurisdictions make our point.
We look to these alternatives not to engage in public disagreements with those who believe otherwise, but to create as much convergence in ideas, and the proponents of trade say they wish to create in the economic life of the Bahamas and the Caribbean as a whole.
Re: The BMHC Quadrangle ©
The BMHC Quadrangle is a designation identifying the geo-economic area between and including The Bahamas, Miami, Haiti and Cuba.
There are several factors which give rise to this designation:
The Bahamas: These islands import 94-96% of their goods from abroad; about more than 70% of certain goods (according to available numbers) from the greater Miami area.
Miami: The city of Miami benefits from Bahamian commercial imports, and Bahamian consumer spending to the tune of 4.5 billion dollars annually; and probably a further USD$1.5 billion unofficially.
Haiti: It is a principle in economic analysis that risk capital can attract greater returns in distressed areas. Haiti is a distressed area, and so, following the theory, is the optimal situs for investment. It will be important however, that Haiti attains immediately market conditions rather than democracy. Market conditions will lead to democracy, whilst it is not likely that democracy will lead to market conditions.
Cuba: Cuba is an essential node in the development of a mid-Atlantic commercial quadrangle. Between itself and Haiti, Cuba is more well-poised for commercial development.
Miami has extensive direct knowledge of Cuba, its economy, culture and politics, and The Bahamas has direct contact with Haiti, and ought to have intimate knowledge of its economy, culture and politics.
Together these jurisdictions cross-reference each other as a mid-Atlantic zone in which investment a development can take place. Each can agree strategically to operate in their own and each other’s strategic best interest as proposed:
The Bahamas as a centre for Capital & Commodities Markets, Structured Financial Products, Shipping Logistics and Distribution.
Miami as a centre for trade institutions, access-points for US imports, South & Central American Capital and political leverage development in Washington DC
Haiti as a centre for labour, manufacturing, crafts making, marble and industrial fill for construction.
Cuba as a centre for medical services, art, manufacturing, strategic labour markets.
The jurisdictions should cross-pollinate in Education and Services training. Whilst the jurisdictions each in some components feature may be considered small, together they form a formidable commercial framework.
In population and demographic terms, there is a good deal to recommend as the basis for commercial and political leverage:
Florida’s population is 16.7 million (growing an average of 3 million year-to-year)
The Bahamas population is 308.000
Haiti’s population is 8.9 million
Cuba’s population is 11.2 million
This implies a BMHC Quadrangle total population of approx. 37.2 million; a genuine market by any stretch of the imagination. Is this likely to become the focus of the Bahamas foreign relations or foreign policy as an alternative to CSME?
The significance of the above, is as in the case of NAFTA or the EU, the BMHC Quadrangle strengthens that which already exists. This is an example of – in our view – a credible reason why a nation like the Bahamas, or Barbados – in it relations with South America – may say credibly, the suppositions the CSME are secondary to our economic realities.
Of course, Mr. Hall is right in the respect, that Caribbean leaders are not in restraint to conclude their agreement because of these issues, but because of a fecklessness, which leaves their populations wondering about the implications of CSME, which they seem careless to explain or do so in terms as impressionistic as Mr. Hall’s.
We believe Mr. Hall is right that the emerging relationship between Mr. Chavez and CARICOM is worrying, not because such associations are themselves inappropriate. But in light of what is left on the table with the Americans, and how we fail to use that an impetus to improve our national governments and governance is the problem.
In PART III of my response to Mr. Hall, I shall deal finally with the specific tenets of the CSME and show the difficulty of what has been proposed.
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