The Caricom Single Market and Economy (CSME) has officially been in the making since 1999. Leaders of the member states and advocates of the CSME agree once implemented, this body would make Community nations and by extension Caribbean citizens better off. While most do not oppose its implementation some highlight the threats it may bring.
Undoubtedly there are threats in the formation of any integrated block of individual countries as the European experience shows. However, this article seeks to identify the opportunities that can arise for the citizens of member countries. It discusses the possibilities for the broad CARICOM group of counties, not all of whom will join the CSME in its initial phase.
The Ultimate goal of the CSME is to increase the prosperity of Community nationals. The CSME is designed to facilitate greater cooperation among members in the face of globalization and increasing competition. It is geared towards minimizing the problems of small size and economies. The Community comprises 15 member nations with countries categorized as either “More Developed” or “Less Developed”
To begin with, the CSME can help in overcoming the constraints of space. The majority of Community members are constrained by limited land area. Only two are really large. For instance, Guyana is 38 times larger than Trinidad & Tobago. Suriname is 375 times larger than Barbados. Guyana and Suriname account for 81.8 percent of the total land mass. The size of most countries and often unsuitable soil types, raise among other things, the issue of individual economies being able to feed themselves. Cooperation between larger countries such as Guyana, Suriname and Belize and other community members could overcome this problem through integrated agriculture production and food processing for example.
The CSME’s trade and other policies are intended to help members import, export, travel, invest save and in general to conduct business far easier than is presently the case. Accordingly, one of the major objectives is “full integration of the national markets of all member states of the Community info a single unified and open market area.” Free movement of goods and services mean that member countries cannot impose duties, export duties and tariffs. They must also fully facilitate the free transit of goods and services throughout the Community. Trade policy also seeks to prohibit government subsidies aimed at providing an unfair advantage to competing products from other member countries.
Some Caribbean producers of agricultural and manufactured products and service providers are restricted by the sheer size of regional markets. Only three countries out of the fifteen have a population of over one million. To illustrate, the Guyanese farmer has a domestic market of approximately 600 thousand people. The CSME would allow for free movement of his/her products to a market of some 15 million people. In short, the CSME opens up a larger market to community members through the removal of trade restrictions.
Larger markets will increase production possibilities and encourage scale economies creating more employment in the process.
For consumers, the CSME can lead to a reduction in price. A hypothetical example is Antiguan consumers being able to purchase agricultural goods imported from Suriname at a cheaper price as a result of lower production cost in Suriname due to that country’s natural economies of scale and the removal of import restrictions on Surinamese products.
Countries in the region differ in terms of purchasing power measured by GDP per capita. What this suggests is that there is a wide range of markets for a wide range of products. GDP per capita ranges from US$336 in Haiti to US$16,752 in the Bahamas. The CSME would allow producers in poorer countries to sell their goods to markets. In Richer countries far easier vice versa.
While individual Caribbean countries are limited in terms of natural and human resources and hindered by artificial barriers. If the region is viewed as a “large country” a new range of exciting business possibilities can be opened up. In terms of natural resources, Community members are blessed with resources including energy in Trinidad and Tobago, mass land areas beautiful beaches in countries such as Barbados. Consideration of these resources in the context of even a partially integrated market opens up a wider range of possibilities.
Under the “Rights of Establishments” the CSME will allow companies to easily set up shop in any member territory. This means that enterprises that are owned and controlled by nationals of a Community country will be allowed to set up in other member countries. Companies will be attracted to countries where cost such as that labour, electricity and transport may be cheaper. The benefit here is that the receiving countries gain from increased investment and employment of local people. In addition, respective governments would earn tax revenues. In respect of labour cost, preliminary data suggests that Surinamese, St. Lucia and Montserrat have no minimum wage and Barbados only has a minimum wage for shop staff and domestic workers, with the latter being lower.
The CSME will encourage more open financial markets and the free movement of capital within the region. This would make available a larger pool of financial assets and ease the process of doing business across borders. Possible benefits are lower interest rates and greater intra-regional trade in financial and real assets.
The CSME will also provide for the free movement of skilled Community nationals. Skilled persons are presently defined to include University graduates, media workers, sports persons, artistes and musicians. It is intended that this list will be broadened as the CSME progresses.
To allow for the free movement of people, the CSME would eliminate the requirement of passports and work permits for Community nationals and ensure that harmonization and transferability of social security status. A major benefit of this is that companies who cannot acquire the required skills domestically could relocate or import them from the region. One ultimate benefit is the likely increase in employment opportunities in the region as a whole.
It should be clear by now that the CSME offers a wide range of opportunities for Caribbean people. It is not to be denied that the CSME also brings challenges to individuals and businesses alike. Inefficient businesses will have to compete as the market is open. Competition forces efficiency, which at the same time might result in downsizing of staff or even closure, which would result in unemployment.
As companies expand into regional markets they would face the risk of operating in relatively unfamiliar markets. Risks that will be unfamiliar markets. Risks that will be encountered straddle economic, political and social dimension.
The point is that expanding into other countries poses challenges that derive from the particular environment.
The CSME is scheduled to take effect January 1st 2006. Trinidad and Tobago, Jamaica and Barbados are supposed to be ready by January next year. The onslaught of Hurricane Ivan on Community members such as Grenada and Jamaica raises doubt over these countries becoming fully CSME compliant by the due dates. What remains certain however is that an Integrated Caribbean, will in the long run if not in the short, always offer a much wider range of possibilities for economic growth and social advancement.