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CARICOM’s Orientation in External Trade Negotiations:

CARICOM’s Orientation in External Trade Negotiations:. Dr. Claudius Preville*. Regional Integration and Economic Growth. Paper presented at the International Conference on Small States and Economic Resilience, University of Malta, Valetta, Malta. April 23-25, 2007. OUTLINE. INTRODUCTION

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CARICOM’s Orientation in External Trade Negotiations:

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  1. CARICOM’s Orientation in External Trade Negotiations: Dr. Claudius Preville* Regional Integration and Economic Growth Paper presented at the International Conference on Small States and Economic Resilience, University of Malta, Valetta, Malta. April 23-25, 2007

  2. OUTLINE • INTRODUCTION • REGIONAL INTEGRATION THEORY • CARICOM’s EXPERIENCE • PATTERN OF TRADE • GROWTH PERFORMANCE • EXTERNAL TRADE ORIENTATION • GROWTH AND TRADE POLICY • CONCLUDING REMARKS

  3. CARICOM – Caribbean Community and Common Market; 15 members; Notified under GATT Art. XXIV October 1974; Active FTA negotiations with EU; Existing FTAs – Costa Rica, Venezuela, Colombia, Dominican Republic, Cuba; FTAs contemplated with: USA, MERCOSUR, Canada; USA and Canada interested in renewing non-reciprocals; Little progress with MERCOSUR; Paraguay holding out on renewal of CBI; CARIBCAN seems ok; INTRODUCTION

  4. INTRODUCTION • GDP – $ 50.7 Bn; • Per capita – $8,112; • Inflation < 5%; • Trinidad and Tobago main growth pole; • Growth driven by: Services; Agriculture; and Manufacturing;

  5. Countries come together to create an economic bloc; FTA; Customs Union; Common Market; Economic Union; Rationale for integration: Expand economic space, increase efficiency via specialization, exploit scale economies and common governance; Security; REGIONAL INTEGRATION THERORY

  6. REGIONAL INTEGRATION IN PRACTICE • WTO GATT Article XXIV – Countries must liberalize tariffs on substantially all the trade among members of the integrating bloc; • Substantially all the trade commonly means 90 percent or more; • In FTAs between WTO members further liberalization must take place, incl. other restrictions on commerce;

  7. CARIFESTA; LIAT (1974); WISCO; ENLARGEMENT – HAITI (2002); CSME; SINGLE SPACE INITIATIVE (CWC); REGIONAL INTEGRATION IN PRACTICE

  8. IMPORTS Machinery and Transport Equip.29.3% - US; EU; ASIA; Manufactured goods –US, EU, CSME; Mineral fuels and lubricants – LAIA; M = USD 10 BN; EXPORTS Mineral fuels – 29.7% - US, CSME, other Caribbean; Food – 17.5% - EU, CSME, US; Chemicals – US, EU, CSME; X = USD 6.6BN; PATTERN OF TRADE - GOODS

  9. IMPORTS Commercial Services 39% - US; EU; ASIA; Transport -34% – US, EU, CSME; Travel – US, EU, CSME; M = USD 3.97BN; CS=1.55; TN= 1.35; EXPORTS Travel – 72.4 %; - US, EU, CSME, other Caribbean; Commercial Services -Food – 14.9 - EU, CSME, US; Transport – US, EU, CSME; X = USD 6.98BN; TR = 5.05; CS=1.04; PATTERN OF TRADE - SERVICES

  10. CHART - SERVICES

  11. GROWTH PERFORMANCE • GDP (1999) = USD 17.7BN; • GROWTH (1999/98) = 3.2%; • UNEVEN; • CONTRACTION – Jamaica, Montserrat, Guyana; • Manufacturing sector weak; • Trinidad – major growth pole – oil and gas; • Others – Services; Light manufacturing;

  12. GENERALLY Defensive; Exclusions; Long Phasing; Development assistance; Non-reciprocal preferences; Services – more offensive; WTO – SVEs work programme; Redressing imbalance from UR; Market access v development; Importance of policy space; Contribution less than other developing countries; TRADE ORIENTATION

  13. GROWTH AND TRADE POLICY • Services – main driver of economic growth for most members; • Distributive trade very important in services; • Liberal import regime enables growth of the manufacturing-oriented members; • But, fiscal reform is necessary as a pre-condition;

  14. CONCLUDING REMARKS • Economic integration, as is being pursued through the CSME process can maximize efficiency by encouraging specialization according to comparative advantage, resulting in higher levels of economic growth for all; • But, more liberal trade policy is needed especially in Services and fiscal reform ahead of liberalization in manufacturing;

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