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Caricom

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Submitted By rochane
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The Caribbean Community (CARICOM) is an organisation of 15 Caribbean nations (see chart N°1), 12 islands and 3 larger coastal nations in and around the Caribbean sea, bordered by the Atlantic Ocean , The Gulf of Mexico, The United States and South and Central America.
This community was established by the Treaty of Chaguaramas which came into effect on August 1973 and which was signed at first by only 4 countries : Barbados, Jamaica, Guyana and Trinidad and Tobago.

CARICOM was built in order to promote an economic integration and a real cooperation between its members, in order to coordinate foreign policy and in order to ensure that the benefits of integration are equally shared. Its aim was to take part in the international trade scene .

In 1989, 13 of the 15 members of the CARICOM decided to change the strategy and to become a single market economy (CSME) so as to better and deeper integrate the members , to widen the membership and to expand the economic mass of the Caribbean community, and to progressively insert the region in the global trading and economic system.

Almost 40 years after the creation of the CARICOM, we could ask ourselves about the efficiency of this trade bloc, about its successes and failures. It seems that the CARICOM managed to reach some of its objectives but that its expansion was blocked by several important negative factors. Let’s try to understand what happened.

As we said, , the creation of the CARICOM and the CSME planned to integrate the different members in order to gain efficiency and benefits. As we discussed in class, there are huge advantages in creating a trade bloc, as it allows to reduce costs, to reach economies of scale, to diversify economies and to enlarge markets. In the precise case of CARICOM, the objectives were numerous and were supposed to solve local problems. For example, members of the Caribbean Community had small and limited domestic markets. The trade bloc was supposed to provide an opportunity for easier access to the other countries of the Caribbean. It was supposed to bring opportunities for expansion on both demand and supply. Besides, There was no information indicating new opportunities for investment. The CSME was supposed to enhance information dissemination in terms of markets, support networks, and process innovation opportunities.
For a time, The regional market of CARICOM was of vital importance for the domestic private sector. Increasingly, manufacturers and exporters place strategic focus on the regional demand when considering new business ventures or expanding their production capacity. Exports of manufactured products include food and beverages, personal care products, household articles, paper and packaging, building and construction products and transportation and equipment.

Besides, the strengthening of CARICOM’s participation in the global trading arena has been done through a series of bilateral trade agreements – Venezuela, Colombia, Dominican Republic, Cuba and most recently, Costa Rica – as well as by the full and effective participation in multilateral and other major trade negotiations, e.g., the World Trade Organization, the renegotiation of the Lomé and Cotonou arrangements with the European Union and the FTAA.

But over the years, overall exports to the CARICOM region declined and some factors blocked the expansion of this unique market.

Indeed, although CARICOM members share many cultural and historical similarities, their population, land size, economies, per capita income and social indicators (life expectancy for e.g.) vary considerably (see Chart 2). Members are not equal at all, some are developed whereas others are poor, and the result is that there is a real tension between unity and division. As we studied in class, “some win and some loose”.
For example, Trinidad and Tobago clearly is the leader of the group as a major regional supplier of energy, manufactured products and services to other countries. It is also a major market for regionally produced agricultural commodities and food products and continues to maintain its favourable trade position with the rest of the world due primarily to its strong merchandise account (trade in goods) performance. On the contrary, Haiti is one of the poorest country in the world and have other priorities than its neighbours to rebuild the country.

Besides, CARICOM faces a geographic problem : the 12 islands are spread over 60 000 square kilometres which makes the access and the transport of goods very long and complex. As a result, the trade bloc is not efficient because of distance and costs of transport.
There is also an administration problem : countries do not manage to prioritize. There are too many mandates, in every field, and none of them is respected or applied. The global administration is weak and do not manage to integrate this different countries.

The result is that today, there is a longstanding frustration with its slow progress, the trade bloc do not make enough benefits and its existence is put into question. The international scene has doubt about this area and doesn’t consider it as a real element of the global trade.
The real question is to know if it is possible to integrate a diverse area in a manner that will meet individual country and regional development goals, in an equitable and mutually supporting way, without negating national identities and aspirations.

I would say that for me it is essential that the members of CARICOM reach integration, co-operate and act as a single market in order to develop themselves. A trade bloc is crucial for their future, prosperity and welfare.
But the key to success remains in prioritization and organisation. As I said, the 15 members are very different, and it is clearly not possible to match everyone’s goals at the same time. They need to think in a global way, and to aim at developing the whole group. On March 2012, the Secretary-General of the Caribbean Community (CARICOM), Irwin La Rocque, said that the region has been “overly ambitious in its integration targets”. He explained that the different members have a lot of ambition but unrealistic and different targets. The essential now is to globalize their projects and to unify them.…...

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