CARICOM at 50: Some Reflections on Trade for Sustainable Regional Development

Alicia Nicholls

This week I had the opportunity to moderate two panels which on the surface dealt with different topics, but in fact, had a central underlying theme. That theme, I argue, is that of how Caribbean Community (CARICOM) member States could better use trade and their trading relationships to meet their sustainable development imperatives. Read any of the speeches of our Caribbean statesmen or the writings of Caribbean scholarly giants over the years and you will see that the trade and development problematique has occupied the regional development discourse for decades. The topic bears continued significance as CARICOM celebrates its fiftieth year in existence. In this short article, I offer some cursory reflections on trade as an engine for sustainable development as we celebrate this important CARICOM milestone amidst a panoply of trade and development challenges facing not only our region but the global community.

CARICOM Heads meet this week (July 3-5) in Trinidad & Tobago for the 45th CARICOM Heads of Government meeting. Formed in 1973 and now comprising 15 member States and 5 Associate Members, CARICOM is a regional inter-governmental organization and regional integration movement built on four pillars. One of those four pillars is economic integration. While trade fits under this pillar, in reality, trade also touches and concerns the three other pillars: human and social development, foreign policy coordination, and security which was added later. Trade is not an end in itself. It is really to be an engine for promoting human and social development through creating meaningful jobs and opportunities for entrepreneurship and knowledge transfer, for example. Under foreign policy coordination, commercial diplomacy is becoming an essential part of the foreign policy imperative of countries, including CARICOM Small Island Developing States (SIDS). Finally, trade in illicit goods such as narcotics, illegal firearms and endangered species are among the most pressing security issues facing the Caribbean region. In essence, trade impacts and is impacted by all four pillars underpinning CARICOM. Indeed, trade, even more so now, cannot be viewed in a silo given its increasing intersection with development issues, such as human rights, the environment, climate change and public health.

Two key issues with which CARICOM continues to grapple as it celebrates its 50^th year in existence is first, how can CARICOM promote greater intra-regional trade for sustainable development. Second, how can it meaningfully expand its trade with both traditional and non-traditional external trading partners in a mutually beneficial and sustainable manner?

The CARICOM Single Market and Economy (CSME) envisions the creation of a single economic space. By removing barriers to the flow of each other’s goods, services, skilled nationals and allowing the right of CARICOM nationals to establish businesses in each other’s markets, it is expected that there would be greater intra-regional trade and investment, tourism and the like. However, despite the importance of the CARICOM market for some countries like Barbados, intra-regional trade as a percentage of CARICOM’s total trade with the world remains low and has declined over time due to many factors, including, but not limited to, remaining barriers which still impinge on the ability to export in a frictionless manner, as well as high costs of transport and other logistical challenges. Intra-regional transportation, including travel for business and leisure, remains a bug-bear due to high airfares and taxes, and let us face it, it is even more frustrating now in the post-COVID era due to the LIAT fiasco. The introduction of intra-regional flights by UK-carrier Virgin Atlantic is an encouraging development and I truly hope that at least in the short term this could be a partial solution to this vexing problem.

Turning to extra-regional trade, most CARICOM countries, with the notable exception of Trinidad & Tobago which enjoys a trade surplus, are net-importing countries, that is to say, their imports exceed their exports. The region’s exports have in general been underperforming and remain highly concentrated in only a narrow range of goods and services despite attempts at diversification. Guyana has discovered oil and is developing a booming oil/gas industry but has to ensure it does not fall victim to ‘Dutch Disease’. Much of this declining competitiveness is due to high costs of production in the region, lack of economies of scale, loss of preferences and preference erosion in its main export markets which has led to declining competitiveness of Caribbean countries’ exports vis-à-vis exports of other countries.

CARICOM presently has free trade agreements with the European Union, the United Kingdom, the Dominican Republic and Costa Rica. It has partial scope agreements with Colombia, Cuba and Venezuela. Not many publicly available studies exist analysing CARICOM’s trade performance under these agreements. However, a 2015 study by McClean and Khadan on the performance of CARICOM’s extra-regional agreements show the private sector’s limited utilization of the preferences under CARICOM’s trade agreements and arrangements. This is despite the many sensitization workshops, export promotion programmes and other great assistance offered by regional business support organisations (BSOs). Perhaps a more recent study is needed to see if this is still the case.

Usually where more contemporary reports exist in the public sphere, such as the latest Ex Post Evaluation of the CARIFORUM-EU EPA, these are usually reports done by our trading partners and not our region itself. For instance, the latest  biennial CBERA Report published by the Office of the US Trade Representative (USTR) in 2022 showed a marked increase in the percentage of some CBI-beneficiary countries’ imports into the US under the various components of the CBI programme. By contrast, only some 4% of Caribbean imports into Canada are under CARIBCAN preferences according to StatCan data.

I do not purport to have a magic wand to solve either of these issues and neither am I implying that these issues are easy to address or that they are not being actively worked on by the hard-working staff of the CARICOM secretariat, the BSOs and the various trade ministries across the region. Indeed, having spent two weeks in Geneva in May-June this year as part of an annual study tour offered by the UWI Shridath Ramphal Centre for students of the Masters in International Trade Policy (MITP) programme, I was able to see firsthand the hard work of our missions there, often with limited staff and resources. Perhaps it is time for CARICOM to more seriously consider having joint missions, similar to the OECS in key capitals, and pool their scarce financial and human resources. Additionally, there are clear initiatives underfoot, supported by commercial diplomacy, at expanding trade with non-traditional partners in China, Africa, Latin America and the Middle East, for example and deepening ties with the Caribbean diaspora, especially in the US, UK/Europe and Canada. Barbados’ recent opening of embassies in Ghana, Kenya and a consulate in Rwanda are examples of this outreach to non-traditional markets. Promoting digital transformation of regional economies is also another issue actively being worked on at both the regional and national levels, including how digitalization could improve the ease of doing business across the region, the role of digital technologies in building competitiveness, inter alia.

What I am offering in this article are some of my personal reflections as a trade specialist who firmly believes, like most other regional figures, that expanding intra-regional trade and diversifying CARICOM’s trading relationships are necessary in helping the region meet not just the 17 sustainable development goals (SDGs) under the United Nations (UN) 2030 Agenda for Sustainable Development but its wider development imperatives. Chief among these imperatives are reducing poverty and creating meaningful jobs for our populations (especially the youth), building resilience in an increasingly polycrisis world to climate change and other natural disasters and other shocks, and combatting the challenges of non-communicable diseases (NCDs) which are severe threats to the region’s prosperity.

With regard to extra-regional trade performance, CARICOM desperately needs to review its current trade agreements and evaluate their sustainable development impact. This means improving the data available on trade under these agreements. Have these agreements really contributed to job creation or expanded investment? This evaluation process is likely on-going but there is very little information publicly shared about the status or findings from such analyses. The point about evaluation of our trade agreements was certainly underscored in one of the panels I moderated at the CIC/CCI “Optimising the Canada-Caribbean Trade Relationship” webinar on June 29 with a key takeaway being the need to consider whether the current trade cooperation framework between Canada and the Caribbean was fit for the purpose of twenty-first century trade and development realities, where sustainability issues are increasingly recognized as being intersected with trade.

This evaluation process must include CARICOM member States’ network of international investment agreements (IIAs), particularly the older bilateral investment treaties (BITs), which, due to their broad and vague investor protection provisions, are unfit for the purpose of attracting investment for sustainable development. As I argued in a recent policy brief published by the UWI’s Shridath Ramphal Centre, such outdated IIAs could open up the region to legal exposure from foreign investor claims as the region seeks to step up its climate action.

I also think that there is still too much disconnect between CARICOM and the ordinary citizen, despite the excellent CARICOM youth ambassadors programme, the increasing public awareness campaigns, greater social media presence by the CARICOM Secretariat and to some extent, greater mainstreaming of teaching about CARICOM in schools. I think in many ways CARICOM does not do enough to tout its successes and how its work is beneficial to the ordinary CARICOM citizen. This could be focused on a lot more in its public awareness campaigns. Additionally, one of the things I would love to see is a CARICOM Young Professionals Programme, similar to what exists in other organisations, as well as greater opportunities for secondary school and university students to intern within CARICOM institutions.

CARICOM has released a 50^th Anniversary celebrations calendar of activities. As many countries in the region will be observing a one-off public holiday in celebration of CARICOM’s 50^th anniversary, it would be good if regional airlines would consider the feasibility of offering specials on inter-island routes in celebration of this important milestone. Doing such would be a win-win as it would not only make it cheaper for persons wishing travel to other CARICOM islands for these celebrations or on vacation, but also help to foster intra-regional tourism and people-to-people connection, key ingredients for promoting a common Community spirit and connection.

As trade and public health law expert Nicole Foster sagely opined in her presentation at the Public Health Law forum held June 30, it is imperative for ministries of trade and ministries of health, as well as other ministries to talk to each other to ensure policy coherence. This includes greater data sharing among ministries to ensure trade policy is being made based on actual empirical evidence and that trade policies support and do not undermine public health objectives. This latter point about empirical evidence also came up in a Barbados Coalition of Services Industries (BCSI) Breakfast Forum I moderated earlier this week. Data is key to effective trade policy making for development. As such, it is important for the private sector to recognize the need to respond to surveys in a timely and accurate manner and share data not only so governments have an accurate picture of economic activity, but also what challenges and barriers businesses face both in doing business domestically and when exporting. Governments themselves also need to improve access to data, including sharing data with the academic community whose research could be beneficial to both governments and the private sector. There needs to be deeper cooperation among government, business and academia if CARICOM is truly to prosper.

I conclude by imploring that CARICOM’s celebration of its fiftieth year of existence is an achievement. We, as lifelong ‘students’ of international politics know that CARICOM is just one (albeit an important one) chapter in a much longer history of regional integration. There have been failures and disappointments, but there have also been many triumphs. Certainly, let us use this occasion of CARICOM’s fiftieth anniversary as an opportunity for deserved celebration. But it should also be a moment for considered reflection of the lessons to be learnt from the past half a century of CARICOM’s existence and the lengthier history of the regional integration process, including the Caribbean Free Trade Association (CARIFTA) and the West Indies Federation that preceded it. Let us reflect on how we can use our trade policy to operationalize the Bridgetown Declaration on NCDs and Mental Health, for example, or how we can work more cohesively as a region to push for the creation of a more equitable international financial architecture as envisioned by the Bridgetown Initiative which has been endorsed by the Community. Let us use the lessons learnt from the past 50 years and beyond to craft a CARICOM trade policy that is truly fit for our contemporary development realities and meaningfully promotes both intra-regional and extra-regional trade for sustainable development, especially for the youth who are to inherit and continue this regional integration movement. Happy 50^th Anniversary, CARICOM!

Alicia Nicholls, B.Sc., M.Sc., LL.B. is an international trade and development consultant and founder of the Caribbean Trade Law & Development Blog www.caribbeantradelaw.com.