Caribbean Common Market (CARIFTA and CARICOM)

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Caribbean Common Market (CARIFTA and CARICOM)

The search for Caribbean economic viability through some form of economic integration was initiated in 1965 by the political leaders of Guyana, Barbados, and Antigua. The proposal was modeled on the European custom union, the European Free Trade Association (EFTA). By May 1968 all the other English-speaking Caribbean nations had joined in the creation of the Caribbean Free Trade Association (CARIFTA). The ultimate goals of the union were, first and foremost, to encourage the kind of economic development that would provide the highest rates of employment, and second, to reduce the region's external economic dependence.

In October 1972 Jamaica, Trinidad and Tobago, Guyana, and Barbados (called the "more developed countries" within CARIFTA) agreed to deepen the integration process, forming the Caribbean Community and Common Market (CARICOM), which was formalized by the Treaty of Chaguaramas on July 4, 1973, with the following countries as members: Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, Saint Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Trinidad and Tobago. Haiti and Suriname were later admitted as full members. This agreement called for the establishment of a common external tariff, the harmonization of fiscal incentives for industry, double-taxation agreements, and the formation of a Caribbean Investment Corporation (CIC). The latter was geared toward helping the "less developed countries" (LDGs) of the area.

The English-speaking Caribbean nations had agreed to a very comprehensive institutional structure that went beyond economics. The highest decision-making body is the annual heads of Government Conference. Its decisions are given shape by the Common Market Council and implemented by the Caribbean Community Secretariat based in Georgetown, Guyana. Finances, specifically the Caribbean Development Bank and the Caribbean Investment Corporation, are under the purview of the ministers of finance and their administrative arm, the Council of Central Banks and Monetary Authorities. Whatever the potential of such a structure for future political integration, it was always felt that CARICOM would stand or fall on the basis of its economic performance. Using the best single measure of economic success—the rates of growth of intraregional trade as a share of total trade—the record appears to be mixed. Between 1967 and 2005 that rate has oscillated between 7 and 15 percent, with export from oil and gas-rich Trinidad counting for the lion's share.

Aware that the Caribbean is facing a changed global economy, including competition from Mexico and Asia and the disappearance of privileged protocols on sugar, bananas, rum, and a series of other traditional products, the CARICOM nations have amended the Treaty of Chaguaramas to launch the CARICOM Single Market and Economy (CSME). In 2007 it was still a work in progress, but its formal goals were to "allow CARICOM goods, services, people and capital to move throughout the Caribbean community without tariffs and without restrictions to achieve a single large economic space" (CARICOM Internet site). Achieving these goals will confront two challenges: (1) the perception in the smaller islands of the Organization of Eastern Caribbean States that they are at a terrible disadvantage and, consequently, need special allowances; and, increasingly more important, (2) the impatience of more developed countries (namely, Trinidad and Tobago, and Jamaica), which leads them to engage in bilateral national deals that contravene CSME arrangements and understandings.

See alsoEconomic Development; Economic Integration.

BIBLIOGRAPHY

Bernal, Richard J. "CARICOM Single Market and Economy Charts Destiny: Progressing beyond a Common Market, Members in This Group of Caribbean Nations Are Implementing Economic Integration and Cooperative Development, Leading to a Greater Variety and Better Production of Goods and Services." Americas (English edition) 59, no. 3: 46-52.

Caribbean Community (CARICOM) Secretariat Internet site. Available from http://www.caricom.org/.

Caribbean Free Trade Association (CARIFA) Available from http://www.caricom.org/jsp/community/carifta.jsp?menu=community.

                                Anthony P. Maingot