CARICOMs Orientation in External Trade Negotiations:

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CARICOMs Orientation in External Trade
Negotiations

• Regional Integration and Economic Growth

Dr. Claudius Preville
Paper presented at the International Conference
on Small States and Economic Resilience,
University of Malta, Valetta, Malta. April 23-25,
2007
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OUTLINE

• INTRODUCTION
• REGIONAL INTEGRATION THEORY
• CARICOMs EXPERIENCE
• PATTERN OF TRADE
• GROWTH PERFORMANCE
• EXTERNAL TRADE ORIENTATION
• GROWTH AND TRADE POLICY
• CONCLUDING REMARKS

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INTRODUCTION

• 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

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INTRODUCTION

• GDP 50.7 Bn
• Per capita 8,112
• Inflation lt 5
• Trinidad and Tobago main growth pole
• Growth driven by Services Agriculture and
  Manufacturing

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REGIONAL INTEGRATION THERORY

• 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

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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

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REGIONAL INTEGRATION IN PRACTICE

• CARIFESTA
• LIAT (1974)
• WISCO
• ENLARGEMENT HAITI (2002)
• CSME
• SINGLE SPACE INITIATIVE (CWC)

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PATTERN OF TRADE - GOODS

• 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

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PATTERN OF TRADE - SERVICES

• IMPORTS
• Commercial Services 39 - US EU ASIA
• Transport -34 US, EU, CSME
• Travel US, EU, CSME
• M USD 3.97BN
• CS1.55 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 CS1.04

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CHART - SERVICES
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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

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TRADE ORIENTATION

• 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

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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

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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