[Congressional Record Volume 149, Number 110 (Wednesday, July 23, 2003)]
[Extensions of Remarks]
[Pages E1562-E1563]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                CARICOM

                                 ______
                                 

                          HON. EDOLPHUS TOWNS

                              of new york

                    in the house of representatives

                         Tuesday, July 22, 2003

  Mr. TOWNS. Mr. Speaker, last February, members of the Caribbean 
Community (CARICOM) met to discuss the prospect of creating a single 
Caribbean market economy. In mid-April, members of the Organization of 
Eastern Caribbean States (OECS), a CARICOM subgroup, gathered to 
examine a similar proposal. Despite widespread enthusiasm among OECS 
members for economic integration, CARICOM participants Jamaica, 
Barbados, and other non-OECS members have expressed their reservations. 
In response to strains caused by declining tourist revenue and highly 
competitive pricing in the tropical fruit sector, some of the smaller 
Eastern Caribbean islands are recognizing that their interests and the 
interests of other CARICOM members do not always fully coincide. The 
disagreements between OECS members and the remainder of the CARICOM 
states merit adequate attention on Washington's part if the final 
product of FTAA negotiations is to result in maximum economic benefits 
for our own citizens and for our neighbors to the South, including, of 
course, the English-speaking Caribbean.
  As the economies of the region find themselves under increasing 
stress, and as diplomatic negotiations for the proposed Free Trade Area 
of the Americas marches onward, it seems clearer than ever that careful 
attention must be paid to the delicate economic relationships presently 
maintained by each of the hemispheric nations, both small and large. If 
the world's economy is to recover from its present downturn, and if 
future economic slumps are to be averted, planners must recognize that 
support for total economic integration is far from universal. They must 
strive to understand the reasons behind dissent, where it exists, and 
the reasons for support, where it thrives. It may very well be that 
principles of free trade can be implemented more effectively in some 
places rather than in others, where local economic fundamentals do not 
entirely coincide with those of the main players, like the U.S.
  The following research memorandum was authored by Justin Vance, a 
research associate with the Washington-based Council on Hemispheric 
Affairs (COHA), a nonpartisan, tax-exempt organization that has long 
been committed to addressing issues associated with human rights, 
democracy and economic justice throughout the western hemisphere.

       Fueled by a greater sense of urgency regarding the forging 
     of a single market economy than some of their neighbors and 
     fellow members in the Caribbean Community (CARICOM), the 
     prime ministers of the Organization of the Eastern Caribbean 
     States (OECS) met in mid-April 2003 to discuss the future of 
     their economic relations. The seven permanent members of the 
     OECS are Antigua and Barbuda, Dominica, Grenada, Montserrat, 
     St. Kitts and Nevis, St. Lucia, and St. Vincent and the 
     Grenadines. Their governments have already passed EU-style 
     measures that allow people to move freely across each other's 
     borders. New passports for the Eastern Caribbean States are 
     expected to be issued by 2004, while Antigua, St. Kitts, 
     Montserrat, and St. Vincent have further accelerated their 
     economic integration by also allowing the free movement of 
     labor within the island group. The necessary planning to 
     implement a single market economy would obviously take 
     longer, but the group hopes to implement its integration 
     by 2005. ``This is only advancing by two years what is 
     really going to take place,'' said St. Vincent Prime 
     Minister Ralph Gonsalves, possibly alluding to the fact 
     that CARICOM is aiming for its own single market economy 
     by 2007, only two years after its original date.
       Most people tend to associate the Caribbean with stunning 
     beaches and refreshing oceans. Some insist it is as close to 
     paradise as one can find. Indeed, the Caribbean islands have 
     plentiful resources and boast a soil structure that is 
     perfect for growing a wide array of crops. Despite these 
     riches,

[[Page E1563]]

     many Caribbean residents equate their alleged Eden more 
     closely with Hades, as they struggle to feed their families. 
     Some EC islands are among the most underprivileged in the 
     world, with an increasing disparity between the rich and 
     poor. Though the per capita GDP of most of the islands is 
     increasing, they are still far behind that of the developed 
     nations.
       The Caribbean islands have long faced an array of dilemmas. 
     To cope with some of these, the Treaty of Chaguaramas, signed 
     in Trinidad on the 4th of July 1973, established the 
     Caribbean Community known as CARICOM. The organization has 
     taken on evolving objectives including improving standards of 
     living, safer working conditions, full employment, and 
     enhanced levels of competitiveness and productivity. During 
     the twenty-third meeting of the Conference of Heads of 
     Government of the Caribbean Community in July 2002, Mr. Edwin 
     W. Carrington, CARICOM's secretary-general, called upon those 
     in attendance to celebrate the organization's 30th 
     anniversary by implementing the Caribbean Single Market 
     Economy (CSME). In what may be an understatement, Jamaican 
     Prime Minister, Percival J. Patterson, observed, ``Our 
     situation no longer permits time just for talking. It is high 
     time for action here and now. In today's world there is no 
     question of simply standing still. Just to mark the time is 
     to be left behind.''
       Some island governments argue that the creation of a single 
     market economy that would allow goods, services, people and 
     capital to move freely throughout the Caribbean would be a 
     bonanza for their citizens. They insist that the CSME will 
     increase production and trade among member countries while it 
     also improves the quality of goods and the competitiveness of 
     their prices, creates jobs and improves living standards. 
     Others, such as The Bahamas, contend that such an agreement 
     would infringe on their sovereignty. It may sometimes appear 
     easier and seemingly more beneficial for an island nation to 
     enter into a bilateral agreement with a single country rather 
     than with a multiplicity of its neighbors and fellow CARICOM 
     members.
       The Bahamas is content to be a part of CARICOM, but 
     hesitant to integrate into a single market economy. According 
     to Bahamian Prime Minister Hubert A. Ingraham, ``the `free 
     movement of people' aspect of the SME would have serious 
     social and political implications for The Bahamas, given its 
     unique position as the target for massive unregulated 
     migration from many countries.'' This realistic fear of a 
     domestic job market that becomes inundated by floods of 
     migrants from nearby islands appears justified when one looks 
     at the statistics. The Bahamas currently enjoys a GDP per 
     capita of $16,800, while the average for other CARICOM 
     members is only $5,500. The unemployment rate in The 
     Bahamas is a low 6.9% compared to the average rate of 
     16.6% in other CARICOM nations, (If Haiti is excluded, the 
     average drops to 13%). CARICOM members believe that their 
     economic problems will be ameliorated once they become a 
     part of the proposed Free Trade Area of the Americas 
     (FTAA), making them even more competitive on the 
     international level. Although Bahamian officials plan on 
     negotiating in collaboration with CARICOM, they have 
     confirmed that they are prepared to voice opinions that 
     are at variance with the latter's initiatives in order to 
     protect their interests as well as ensure the proper 
     treatment of some of the other smaller, developing 
     economies.
       Jamaica also on occasion has exhibited what could be called 
     anti-CARICOM tendencies by negotiating a unilateral air 
     services agreement with the Federal Aviation Administration 
     (FAA) in Washington. CARICOM members supposedly were working 
     collectively towards a deal with the FAA, but Jamaica skirted 
     what it saw as a slowmoving CARICOM out of fear of further 
     jeopardizing its already hemorrhaging tourist industry. The 
     Bahamas and Belize have also shown themselves to be willing 
     to strike separate deals with the U.S. As tourism generates a 
     large part of the foreign currencies for these nations, it 
     was a matter of utmost importance to them to reach an 
     agreement.
       In view of their individual interests, CARICOM's 
     characteristic grindingly slow approach was producing 
     paralysis. In response to the organization's long term 
     aspirations to also form a political alliance as well, Prime 
     Minister P.J. Patterson confirmed that Jamaica considers 
     CARICOM a ``community of sovereign states'' and that his 
     country would have no part of it, though they respect and 
     support the rights of other CARICOM nations to negotiate 
     accordingly, if they so desire. These types of divergences 
     are what have kept CARICOM from implementing the single 
     market economy about which they have been talking for the 
     last fifteen years.
       Another deterrent to CARICOM's quest for economic 
     unification is the fact that the Caribbean Islands all have 
     fairly similar economies. Chicago School neoliberal economic 
     scholars advocate strict adherence to the law of comparative 
     advantage, specialization, and unfettered access to markets. 
     They insist that if the above criteria are present, an 
     economy will maximize production and benefit from the gains 
     of trade. In the Caribbean, however, specialization has 
     proven difficult due to the similarity of its economic 
     profiles.
       Antigua, The Bahamas, Barbados, and Jamaica all depend 
     heavily on tourism. For example, over 60% of the Bahamas' GDP 
     comes from tourism. Over 50% of Belize's exports are from 
     cane sugar, while St. Kitts also relies heavily on sugar, 
     despite the commodity's falling price. St. Lucia and St. 
     Vincent's primary income comes from the production of 
     bananas, but competition involving this fruit is fierce as 
     Central American countries are able to produce at a 
     considerably cheaper price. Dominica also relies on bananas, 
     but since Hurricane Luis in 1995 devastated the crop, the 
     country has relied upon construction and such non-traditional 
     commercial activities as soap production to fuel its 
     recovery.
       Guyana has a large mining industry based on numerous gold 
     deposits, but lacks the required skilled labor to fully 
     exploit that commodity. Other resources found on the islands 
     include bauxite, petroleum, and natural gas. This dependence 
     on tourism and limited amounts of economic diversity among 
     the islands has pressured CARICOM members and increased 
     inter-island competition, as they at the same time seek out 
     various bilateral agreements with other countries that best 
     meet their needs. Perhaps for this reason, members of the 
     Organization of Eastern Caribbean States (OECS) have sought a 
     single market economy sooner than CARICOM, hoping to do what 
     the larger body has failed to accomplish thus far.
       Some observers claim the OECS is pushing to form a free 
     trade agreement apart from CARICOM in an attempt to increase 
     their collective bargaining power. Such an alliance would 
     allow CARICOM's smaller member states to contract services 
     collectively--including telecommunications services, which 
     are currently over-priced due to their micro markets--as well 
     as to import goods at lower prices through unified buying 
     power. The island nations aspire to eventually be seen as a 
     larger market and to profit from economies of scale that will 
     also strengthen their voice in an already complex global 
     economy, and, of course, in upcoming FTAA negotiations.
       Though not a single market economy, The North American Free 
     Trade Agreement (NAFTA) between Mexico, the U.S., and Canada 
     was met with considerable opposition when first proposed. It 
     is the world's most extensive free trade agreement short of a 
     common market. Since the beginning of its implementation in 
     1994, some tariffs have been completely eliminated while 
     others will drop until they too disappear in five, ten, or 
     fifteen years. From 1993 to 2001, bilateral trade between the 
     U.S. and Mexico increased 188 percent. But despite these 
     seemingly beneficial statistics, opponents still point out 
     that hundreds of thousands of Mexicans have been negatively 
     affected due to rising unemployment rates brought about by a 
     contracting economy. In the first three years of NAFTA, over 
     2 million Mexicans lost their jobs. Many American and 
     Canadian workers also lost out as companies moved south of 
     the border in search of cheap labor. One convincing argument 
     now being made is that those who benefit from NAFTA tend not 
     to need it, while those who suffered before, continue to 
     suffer, but even more dramatically.
       At the beginning of the year, U.S. officials announced the 
     commencement of discussions concerning the Central American 
     Free Trade Agreement (CAFTA). The hope of negotiators is to 
     eliminate tariffs and other economic barriers to the 
     expansion of manufactured goods, agriculture, and services, 
     as well as increasing FDI and portfolio investment between 
     the United States and Central America. Over 50 programs will 
     be initiated to help Central American countries compete on an 
     international level. It remains to be seen, however, whether 
     CAFTA will truly help stabilize the area's economies and 
     bring relief to all strata of Central American societies.
       Some Caribbean authorities feel that a NAFTA-like 
     prescription for the Caribbean would have a monumental effect 
     on the area as the islands' individual economies are becoming 
     more and more obsolete in the international market, based as 
     they are on high cost sugar and banana cultivation as well as 
     an increasingly fickle tourist industry. According to the 
     CARIBNews, the OECS hopes to implement a single market 
     economy by 2005 because ``the region is likely to be exposed 
     to tough competition as it joins Latin American and North 
     American countries in signing onto the Free Trade Area of the 
     Americas.''
       Dr. Richard Bernal, director-general of the Caribbean 
     Regional Negotiating Machinery (CRNM), has said that the 
     Caribbean will inevitably have to increase its participation 
     in the global economy. Its advocates say that each of the 
     nations in the Caribbean region would benefit greatly from 
     being a part of the FTAA, as their worldwide markets would 
     almost certainly expand. But some of the smaller and lesser-
     developed countries' fate could be far more problematic. If 
     the U.S. and other large economies are interested in what the 
     smaller countries have to offer--such as Guyana's gold and 
     bauxite--they will need to include provisions that help those 
     countries develop instead of marginalizing their exports and 
     forcing down their prices, which will only add to the poverty 
     that already is widely found. The OECS members who are 
     seeking a single market economy and integration within the 
     FTAA will soon know whether their economic prospects under 
     the pending trade pact will fulfill the abundance of sales 
     talk they have heard over the past few years.




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