Sir Ronald Sanders is a business executive and former Caribbean diplomat who publishes widely on small states in the global community. Reponses to: ronaldsanders29@hotmail.com

Banana exports were already badly hurt from the loss of their preferential access to the European Union (EU) market causing pain for small banana growers in rural communities in several Caribbean countries. But, as the year was drawing to a close, Ecuador, which already controls 60 per cent of the world market, launched a new challenge to EU banana regime.  It is a challenge Ecuador is likely to win in the long run simply because World Trade Organization (WTO) rules say the days of preferences are done, and CARICOM states have not managed to get themselves into a category of countries which qualify for special and differential treatment. 

Therefore, Caribbean banana growers are headed for more difficult times, as are those Caribbean economies to which banana exports still make a sizeable contribution.

The prospects for sugar exports seemed no better.  Having lost the preferential price they earned in the EU, Caribbean sugar producers were struggling with ways to transform the industry; but at least some of them are coming to terms with the need for innovation such as ethanol production.

Financial services, particularly off shore banking and insurance, once held out hope for the adjustment of some CARICOM economies; this hope is fading fast.  While it is true that there has been growth in the provision of financial services within CARICOM particularly from financial institutions in Trinidad, Barbados and Jamaica, participation in the global economy is shrinking.

Except for the Bahamas and to a certain extent Barbados (which has a special treaty arrangement with Canada), the Organization for Economic Cooperation and Development and the Financial Action Task Force (both creatures of the richest countries of the world), using the International Monetary Fund as a surrogate to implement suffocating rules that suit their own powerful states, have effectively constrained the scope of much of the Caribbean’s financial services sector as a global player.     

Current negotiations between Caribbean countries and the EU over Economic Partnership Agreements are sadly lacking in a development orientation.  The EU is insistent on the Caribbean opening its markets to European goods, services and investment with little compensatory mechanisms for the dislocation which such opening will cause to local businesses and the losses to governments of tariff revenues. 

This situation calls into question policy positions adopted by the region in its negotiating strategies and demands a more radical approach, including a re-examination of the negotiating structures themselves. The negotiations require the expertise of good technical officials, but they also now cry out for political positions to be adopted based on the realities of economic conditions on the ground.

Tourism was the one bright spot in an otherwise bleak horizon in 2006. But, the industry boomed in the last three years on the back of a weak US dollar to which many Caribbean currencies are tied.  European and other tourism to the region improved simply because the drop in the exchange rate between the US dollar and other major currencies created a de facto devaluation of Caribbean currencies.

Structural changes that are desperately required for tourism, including the promotion of local ownership, enforceable linkages to farmers and local manufacturers, greater pan-Caribbean cooperation in promotion, flight scheduling and hospitality-sharing, are yet to happen.

Global competition not only in its traditional export markets, but also within their own domestic market stared CARICOM countries in the face as 2006 faded away, underlying starkly the absolute necessity to integrate or perish.

At least the year started with six CARICOM countries at last bringing the much promised Caribbean Single Market (CSM) into existence, and, despite the uncertainties that surrounded their decision, the OECS countries joined in the middle of the year.

The Single Market is by no means complete and, unless a range of measures are established by law including common regulatory rules for services and the machinery for integrating production across CARICOM countries, it will be a flawed process giving rise more to contention than to harmony.

A key issue – the freedom of movement of labour – remains off the discussion table, mired in fears of a political backlash for the political party in each country that dares to acknowledge the reality that there can be no genuine single market without free movement of all the factors of production.

Sharp divisions are still part of the relationship between governments and the private sector, on the one hand, and governments and the trade union movement on the other, in many counties of CARICOM.  Yet, until there is a symbiotic relationship between these three groups that is built around an agreed strategy for taking forward the Single Market, CARICOM will be marking time in a world where other regions are marching forward.

It is a glaring reality - from which the Caribbean as a whole is yet to learn – that the government negotiators in trade negotiations, whether bilaterally, at the WTO, or through the OECD – are representing the interests of big businesses in their countries who want access to the markets of others on the most advantageous terms while at the same time restricting entry to their own market through the use of non-tariff barriers and other ruses.

The time is now urgently upon us when there must be substantial consultations between Caribbean governments, the Caribbean private sector and the Caribbean Trade Union movement, to determine agreed strategies for trade negotiations in goods and services.

To be continued... Part 2 will be published next week.