CARICOM

CARIBBEAN COMMUNITY AND COMMON MARKET

Lesson 4

OBJECTIVES1. Make a timeline of regional integration in the Caribbean

Pg. 393[M]

2. Discuss major stages in the integration movement

3. WIF, CARIFTA, CARICOM, OECS, ACS200-208[L]; 261-264 [S]; 393-399 [M]; 435-440 [M]

a) Main aims/objectives/membership 393-399[M] 435-440[M]

b) Name the administrative bodies of the OECS and CARICOM204-205[L] 407-409[M]

c) Outline the responsibilities of Administrative bodies (CARICOM Secretariat, Conference of Heads of Government, Common Market Council)

4. Define the following terms and concepts related to regional integration: Bilateral agreement, multilateral agreement, common market, single market, single economy, economic integration, independent state, underdeveloped country, developing country, developed country, trade liberalization, globalization, multinational corporation, regionalism, trading bloc, fiscal policy, monetary policy

OBJECTIVES

5. Major challenges facing the Caribbean Region

6. Major stages in the integration movement

7. Functions of the various organizations (OECS Secretariat, CARICOM Secretariat, Conference of Heads of Government)

8. Objectives of the various organizations: OECS, CARICOM, CSME

9. Factors that promote regional integration

10. Factors that hinder regional integration

11. Benefits of regional integration

12. The role of individuals, businesses and government in the integration process

13. The role of regional agencies in the integration process

AGREEMENT BY WHICH CARICOM WAS FORMED

• THE TREATY OF CHAGUARAMAS, July 4, 1973

• Initial 4 signatories:

– Trinidad and Tobago

– Jamaica

– Barbados

– Guyana

• CARICOM became operational on August 1, 1973.

CARIBBEAN FREE TRADE ASSOCIATION(1968-1973)

12 member states

1965

1. Antigua and Barbuda

2. Barbados

3. Guyana

1968

4. Trinidad and Tobago

5. Dominica

6. Grenada

7. St. Kitts/ Nevis/ Anguilla

8. St. Lucia

9. St Vincent and the Grenadines

10. Jamaica

11. Montserrat

12. Belize

** In 1973 Suriname was granted observer status

CARICOM MEMBER STATES

1. Antigua

2. Bahamas

3. Barbados

4. Belize

5. Dominica

6. Grenada

7. Guyana

8. Haiti

9. Jamaica

10. Montserrat

11. St. Kitts/Nevis

12. St. Lucia

13. St. Vincent and the Grenadines

14. Suriname

15. Trinidad and Tobago

https://caricom.org/how-we-work/

The Caribbean Community works through a governance structure which includes Organs, Bodies, Institutions, and other Stakeholders.

The Organs are decision making councils of the Community, with responsibility for key policy areas as set out in the Treaty.

PRINCIPAL ORGANS

The Principal Organs are:

1. The Conference of Heads of Government (and its Bureau which operates as a sub-committee as required; and a Quasi Cabinet through which individual Heads of Government have Lead Responsibility for specific areas)

2. The Community Council of Ministers (Ministers of CARICOM Affairs in Member States)

3. The Principal Organs are assisted by several organs, bodies, and the CARICOM Secretariat, which is the Principal Administrative Organ.

ORGANS

4. The Common Market Council of Ministers

a) Council for Trade and Economic Development (COTED)

b) Council for Foreign and Community Relations (COFCOR)

c) Council for Human and Social Development (COHSOD)

d) Council for Finance and Planning (COFAP)

e) Council for National Security and Law Enforcement (CONSLE)

CARICOM BODIES

1. Legal Affairs Committee (Attorneys General and Ministers of Legal Affairs) – which advises the Organs and Bodies

2. Budget Committee – which reports to the Community Council

3. The Committee of Central Bank Governors – which advises COFAP

4. The Committee of Ambassadors – which reports to the Community Council

ASSOCIATE INSTITUTIONSSpecialist technical agencies:-

• Caribbean Development Bank (CDB)

• Caribbean Investment Corporation (CIC)

• The Caribbean Examinations Council (CXC)

• University of the West Indies (UWI)

• University of Guyana (UG)

• Caribbean Disaster Emergency Management Agency (CDEMA)

• The Caribbean Meteorological Association (CMO)

• The Caribbean Community Climate Change Centre (CCCCC)

• The Caribbean Public Health Agency (CARPHA)

• The Caribbean Agricultural Research and Development Institute (CARDI)

• The Caribbean Court of Justice (CCJ)

The Caribbean Public Health Agency (CARPHA)

CARPHA is an umbrella organisation which will be taking over the functions of five regional health institutions:-

• the Caribbean Environmental Health Institute (CEHI)

• The Caribbean Food and Nutrition Institute (CFNI)

• The Caribbean Epidemiology Centre (CAREC)

• The Caribbean Health Research Council (CHRC)

• The Caribbean Regional Drug Testing Agency (CRDTL)

FUNCTIONS OF THE CARICOM SECRETARIAT

• The CARICOM Secretariat is located in Guyanaand is headed by a SECRETARY GENERAL.

• The staff of the Secretariat take instructions from the Community (CARICOM) and not from individual member states.

Functions of the CARICOM Secretariat

1. Organises meetings of CARICOM organs and bodies

2. Follows up on issues from meetings

3. Initiates, organizes and conducts studies on issues related to the achievement of CARICOM objectives

4. Provides services and technical assistance to member states to achieve CARICOM objectives

5. Assists in the implementation of proposals and programmes

6. Prepares draft budgets and conducts fact-finding assignments in member states

FUNCTIONS OF THE CONFERENCE OF HEADS OF GOVERNMENT

This is the principal organ of CARICOM. It:-

1. Provides policy direction to the Community

2. Concludes treaties on behalf of the Community

3. Considers and resolves disputes among member states

4. Initiates proposals for development and approval

5. Monitors the implementation of Community decisions at the regional or local level

The EXECUTIVE arm of CARICOM

MAIN OBJECTIVES OF CARICOM

1. Trade liberalisation(Caribbean Common Market)- Economic integration

2. Functional cooperation

3. Common policies for dealing with non-member states and trans-national corporations - Political integration

1. TRADE LIBERALISATION

Removal of barriers to trade:-

• Customs duties

• Quotas

• Tariffs

• Licenses

➢Increased volume of trade

➢Increased economic development

2. FUNCTIONAL COOPERATION– Shipping

– Air transport

– Meteorological services

– Health

– Education and training

– Broadcasting

– Culture

– Intra-regional technical assistance

➢Save money and other resources by not having to duplicate effort

3. COMMON POLICIES FOR DEALING WITH NON-MEMBER STATES AND TRANS-NATIONAL CORPORATIONS such as Hilton, Nestle, Unilever

–Common External Tariff (CET)

–Common Foreign Investment Policy (Harmonization of fiscal incentives)

–Common Tourism Policy

➢ ensures that each country gets the best deal when negotiating with non-member states and MNCs/TNCs

Common Policies cont’d…

• CARICOM member states depend heavily on foreign investments for purposes of royalties, taxes, job creation.

• A common policy for attracting investment is necessary to prevent one country from offering greater incentives (tax-free holidays, preferential rates on energy, etc.) than another.

• A tariff is a tax on imports . It is a form of regulation of foreign trade and a policy that taxes foreign products to encourage or safeguard domestic industry. Traditionally, states have used them as a source of income. Now, they are among the most widely used instruments of protectionism, along with import and export quotas.

• Taxing imports means people are less likely to buy them as they become more expensive. The intention is that they buy local products instead – boosting the country's economy. Tariffs therefore provide an incentive to develop production and replace imports with domestic products. Tariffs are meant to reduce pressure from foreign competition and reduce the trade deficit.

• They have historically been justified as a means to protect infant industries and to allow import substitution industrialization.

• Tariffs may also be used to rectify artificially low prices for certain imported goods, due to 'dumping', export subsidies or currency manipulation.

Protectionism

• Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations.

Import Quotas

• An import quota is a limit on the volume of a good that may be legally imported, usually established through an import licensing regime.

Anti-dumping legislation

• "Dumping" is the practice of firms selling to export markets at lower prices than are charged in domestic markets.

• Supporters of anti-dumping laws argue that they prevent the import of cheaper foreign goods that would cause local firms to close down.

Common External Tariff (CET)

• A uniform tariff rate adopted by a customs union or common market such as the European Community to imports from countries outside the union. For example, the European Common Market is based on the principle of a free internal trade area with a common external tariff applied to products imported from non-member countries.

CET

• A common external tariff (CET) must be introduced when a group of countries forms a customs union. The same customs duties, import quotas, preferences or other non-tariff barriers to trade apply to all goods entering the area, regardless of which country within the area they are entering. It inhibits imports from countries outside the customs union

• diminishes consumer choice and supports protectionism of industries based within the customs union.

BENEFITS OF TRADE LIBERALISATION

FREE TRADE

CHEAPER GOODS AND SERVICES

GREATER DEMAND FOR CARICOM GOODS

GREATER PRODUCTION TO MEET DEMAND

MORE JOBS CREATED

SAVINGS IN FOREIGN

EXCHANGE

BENEFITS OF COMMON POLICIES

1. Greater bargaining power through a united voice

– better price for extra-regional exports

– Cheaper prices for imports

2. Preferential Rates and Special Quotas can be arranged for CARICOM goods entering the European Union (EU) and the United States (US) (especially agricultural goods such as bananas, sugar, rum)

3. Reduced competition in attracting foreign investment leading to better deals with foreign investors

BENEFIT OF FUNCTIONAL COOPERATION

1. It is much more economical than having every country perform these functions as it avoids duplication of effort

1. One set of staff

2. One location/one building/one set of equipment. etc.

2. It allows for greater collaboration as the staff comes from different countries in the region

– Can function in a more informed manner

3. It is more efficient / less bureaucratic

5. AGRICULTURE: CARDI (1975): Caribbean Agricultural Research Development Institute (UWI, St. Augustine)– Develop systems to improve productivity in agriculture– Establish farming techniques to meet the needs of small

farmers– Lower production costs in agriculture– Undertake research to find solutions for plant diseases– CARDI is funded by CARICOM governments, the CDB and

other international lending agencies

* The Caribbean region depends heavily on agriculture for export and local consumption but various problems have stifled the sector resulting in a high food import bill.

CDB (Caribbean Development Bank)1. Provides assistance to CARICOM states affected by disasters

2. Stimulates and encourages the development of capital markets

3. Promotes public and private investment in development projects

4. Provides aid to financial institutions in the region

5. Finances projects and programmes to foster development

6. Provides technical assistance such as pre-investment surveys, project proposals and preparation

7. Mobilizes additional financial resources for regional development

Achievements of CARDI

• Developed a special variety of tomato suited to local conditions (CALYPSO)

• Provided solutions for brown spot disease which affects yams

• Established systems to increase peanut production in St. Vincent

• Developed feeds/rations for animals using locally available by-products

• Developed pesticides for the sugar-cane moth borer, the sugar cane mealy bug and the diamond back moth which attacks cabbage

Some Institutions of CARICOM

1. CARDI: Caribbean Research and Development Institute

2. CXC: Caribbean Examinations Council

3. CAREC: Caribbean Epidemiology Centre

4. RSS: Regional Security System

5. CFNI: Caribbean Food and Nutrition Institute

7. CEHI: Caribbean Environmental Health Institute

8. CDEMA: Caribbean Disaster Emergency Management Agency

9. CCJ: Caribbean Court of Justice

10. CMO: Caribbean Meterological Organisation

ASSOCIATE INSTITUTIONS OF CARICOM

1. Organisation of Eastern Caribbean States (OECS)2. Caribbean Development Bank (CDB)

– Located in Barbados.

3. Caribbean Law Institute (CLI)– Located in Barbados. Promotes law reform in the

Commonwealth Caribbean.

4. University of the West Indies (UWI)– 1948, Mona, Jamaica– 1960, St. Augustine, Trinidad and Tobago– 1963, Cave Hill, Barbados

5. University of Guyana (UG)6. Caribbean Investment Corporation (CIC)

BENEFITS OF CARICOM

1. Creates employment for CARICOM nationals

2. Goods imported from member states cost less

3. Greater unity and friendliness among member states

4. Assistance to member states in times of natural and national disasters

5. Crime fighting through the Regional Security Service

6. Culture boosted through CARIFESTA

7. Regional cooperation in sporting activities enhances the skills and talents of our sportsmen and women

8. Greater cooperation among member states through the Caribbean Media Corporation

9. Exploitation by transnational corporations is reduced

BENEFITS OF FUNCTIONAL COOPERATION

1. METEOROLOGY: Caribbean Meteorology Organisation located in Piarco in T&T, collects weather information and transmits it to the other CARICOM states

2. HEALTH: CAREC (1975) – Caribbean Epidemiology Centre: conducts research into certain communicable diseases e.g. polio, typhoid, cholera, AIDS

3. ENVIRONMENTAL HEALTH: CEHI (1988) –Caribbean Environmental Health Institute– Preservation and protection of the environment (air,

land, water)– Solutions for disposal of toxic waste– Coastal and marine pollution– Testing quality of drinking water– Collection and treatment of waste water

4. NATIONAL DISASTERS: CDEMA – Caribbean Disaster Emergency Management Agency (1991)– Hurricanes, earthquakes, flooding, volcanic eruptions– Coordinates relief in response to natural disasters– Provides assistance rebuilding after a disaster