How the Creation of the Caribbean Single Market and Economy (CSME) will Strengthen Caribbean Economies

Abstract

The current institutional arrangements which govern the Caribbean Single Market and Economy are fully realized based on attempts of preceding Caribbean economic integration. The first significant attempt was disastrous. With myopic dreams of unification, the West Indies Federation was formed in 1958 and consisted of 10 British West Indian territories, where Trinidad and Tobago, Jamaica, and Barbados were the principal members. Most of the Leeward and Windward islands, which were then under British control, were also apart of the federation. The seat of government was in Port of Spain, Trinidad who was then, slated for independence in 1962. Consequently, the federation saw little hopes of surviving its troubled infancy because it was an institution built on self interest, rather than symbiosis. Before Trinidad left, however, Jamaica, the most populous and prosperous member, voted (1961) to leave the federation, fearing that it would have to shoulder the burdens of the economically underdeveloped members. Trinidad and Tobago, inevitably, followed suit and the federation disintegrated in May, 1962.

Further attempts date back 1968, with the establishment of the Caribbean Free Trade Area (CARIFTA) to serve the purpose of only removing the tariff and other barriers to intra regional trade in goods. This resulted in a reticent ten percent (10%) growth in intra- regional trade of the Caribbean economies. The integration process was later intensified through the Treaty if Chaguaramas which outlined directives to create a Common Market in the region. Added to the existing agenda of supporting liberalization on trade in goods, was the establishment of a common external tariff, intended to provide protection to regional industries. The 1973 treaty contained further provisions for the removal of restrictions in the establishment of businesses, provisions of services, the movement of capital and the coordination of economic policies. These stipulations barely made a difference to the volume of intra- regional trade which still lingered at 10% mark of total trade. It failed to catalyze new investments and though it intended to support regional import substitution, it miserably addressed evolving and pressing issues concerning international competitiveness and export penetration. In the following years the Caribbean economies, under the auspices of multilateral lending institutions, implemented structural adjustment programs that targeted of economic, financial and trade liberalization which surpassed their commitments as expressed by the treaty of Chaguaramas. By the end of the 1980’s, through precipitating trading blocs and the inception of economic globalization, there was ubiquitous face-lifting of economies. This accommodated the working of free and private market forces to construct robust capital and other factor flows, and to endorse an export oriented growth and international competitiveness.

Henceforth, at Grand Anse Grenada, 1989, Heads of Government, being properly convinced of the necessity to reinforce and extend the Caribbean Community in all of its dimensions, decided to convert the limited Common Market as conceived in 1973, into a Single Market and Economy in as short a time as possible.