The Integration Movement is not a total failure – Former T&T PM tells GMSA Dinner

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Speech delivered by Former Prime Minister of Trinidad and Tobago, Basdeo Panday

Guyana Annual Awards Dinner of the GUYANA NATIONAL INDUSTRIAL CO. INC.,  March 6, 2014

Mr. Chairman/Master of Ceremonies,

Your Excellency, the PRIME MINISTER of the Co-operative Republic of Guyana,

Honourable Ministers of Government,

Chairman of the Elections commission

Honorees,

 Distinguished Ladies and Gentlemen,

President of the Guyana Manufacturing and Services Association,

Chairman of the CAIC, Mr Ramesh Dhookoo,

Honourees,

All Protocol observed,

Distinguished Ladies and Gentlemen.

I thank you for the invitation to this your Annual Dinner and Award Ceremony and for the honour and privilege to address you on this challenging subject “Perspectives for Future of the Caribbean Economic Integration! Challenges and Opportunities.

The subject begs the question: What is meant by Caribbean Integration? When the idea was first mooted the then leaders themselves did not seem to be ad idem on the definition as well as the intention. Even today, many of our present leaders have expressed the view that Caribbean unity is a myth. It is an attempt to unite the ‘un-un-iteable’.

Former PM of T&T, Basdeo Panday.
Former PM of T&T, Basdeo Panday.

The original effort seems to have been a desire for the political integration of former British West Indian colonies in the Caribbean with the establishment of the British West Indian  Federation in 1958;  but that failed when Jamaica pulled out and Dr Eric Williams of Trinidad and Tobago introduced the unique mathematical formula of one from ten leaves nought. It would seem that having a common colonizer was not a sufficient foundation upon which to found a new nation.

Following upon that aborted attempt to politically unite the un-uniteable with the breakup of the British West Indies Federation in 1962, and the subsequent attainment of Independence from the British colonizers by some countries in the years that followed, the idea of political integration faded but the dream of unity did not.

 

Political integration having failed an attempt was made at economic integration with the formation of CARIFTA, the Caribbean Free Trade Association, in 1968, with the original members consisting of Antigua, Barbados, Guyana, to be joined later by Trinidad and Tobago, Anguilla, Belize, Dominica, Grenada, Jamaica, Montserrat, St. Kitts and Nevis, St, Lucia, and St. Vincent.

 

In an attempt to further deepen the integration process CARIFTA became CARICOM in 1973 with the signing of the Caribbean Community Treaty of Chaguaramas on July 4, 1973. The name change is significant in that the participants sought to go beyond the aspiration for a Caribbean Common Market to old dream of Caribbean Community.

 

The Original Treaty stated that the Community shall have as its objectives:-

(a) the economic integration of the Member States by the establishment of a common market regime to be called “the Common Market” with the following aims:–

 

(i) the strengthening, coordination and regulation of the economic and trade relations among Member States in order to promote their accelerated harmonious and balanced development;

 

(ii) the sustained expansion and continuing integration of economic activities, the benefits of which shall be equitably shared taking into account the need to provide special opportunities for the Less Developed Countries;

 

(iii) the achievement of a greater measure of economic independence and effectiveness of its Member States in dealing with States, groups of States and entities of whatever description;

 

(b) the coordination of the foreign policies of Member States; and

 

(c) functional cooperation, including–

 

(i) the efficient operation of certain common services and activities for the benefit of its peoples;

 

(ii) the promotion of greater understanding among its peoples and the advancement of their social, cultural and technological development.

 

The Treaty was later revised in 2001 clearing the way for the transformation of the idea for a Common Market aspect of CARICOM into a CSME, the Caribbean (CARICOM) Single Market and Economy.

 

The stated objectives of the Revised Treaty were:-

(a)    improved standards of living and work;

(b) full employment of labour and other factors of production;

(c) accelerated, co-ordinated and sustained economic development and convergence;

(d) expansion of trade and economic relations with third States;

(e) enhanced levels of international competitiveness;

(f) organisation for increased production and productivity;

(g) the achievement of a greater measure of economic leverage and

effectiveness of Member States in dealing with third States, groups of States and entities of any description;

(h) enhanced co-ordination of Member States’ foreign economic policies; and

(i) enhanced functional co-operation, including –

     (a) more efficient operation of common services and activities for the benefit of its peoples;

    (b) accelerated promotion of greater understanding among its        peoples and the advancement of their social, cultural and technological development;

(c) intensified activities in areas such as health, education,

transportation, telecommunications.

 

Together, CARICOM and the CSME share the attainment of three fundamental goals:

1) economic integration;

2) coordination of foreign policies; and

 3) functional cooperation (banding together to share resources in health, education, environment, science, technology, transportation, and other disciplines). In each case, the driving concern seems to have been to overcome the disadvantages of small scale by seeking economies of scale from an enlarged domestic market, greater intra-regional trade, shared costs in the provision of public sector goods, or integration of policy responses to negotiate from a stronger unified position in the international arena.

 

There can be no doubt that these are very laudable objectives and aspirations. The question, however, is: To what extent have these objectives been achieved?

 

It would be unfair to say that the integration movement has been a total failure. However, some of these goals have been more successful than others, and some have benefitted more than others.

 

 CARICOM imports and exports rose from nearly US $9.4 million in 1990 to US $23.2 billion in 2004. This performance comprised 10.4 per cent of total CARICOM imports and exports in 1990 and 12.7 per cent in 2004.

 

 However, the statistics for trade by individual countries indicate the extent to which some countries benefitted more than others.

 

2007

 

In 2007, total CARICOM intra-regional imports amounted to two billion, five hundred and eighty seven million, six hundred and one thousand US dollars ($2,587,601,000)   while total exports amounted to two billion, three hundred and sixty nine million, six hundred and seventeen thousand dollars ($2,369,617,000). Of those amounts, Trinidad and Tobago imported one hundred and seventeen million, seven hundred and fifteen thousand dollars ($117,715,000) i.e.  4.56%, while it exported one billion, seven hundred and sixty two million, eight hundred and thirty six thousand dollars ($1,762,836,000) i.e.74.39 %.

 

Jamaica, on the other hand, in 2007 imported one billion, one hundred and ninety million, seven hundred and sixty six thousand dollars ($1,190,766,000), i.e. 46.02%, and exported fifty six million, three hundred and ninety thousand dollars ($56,390,000), i.e. 2.38%.

Guyana imported $$292,211,000, i.e. 11.30% while it exported $132,556,00, i.e. 6.57%.

 

All the countries of the LSD’s together imported six hundred million, four hundred and three thousand dollars ($600,403,000), i.e.23.20% , and exported two hundred and thirty four million, nine hundred and eighty seven thousand dollars ($234,987,000) , i.e.9.92 %.

 

In 2007 the MDC’s together imported 76.8% of total imports, while they exported 90% of total exports.

In summary this means that in 2007 Trinidad and Tobago imports from other Caricom countries amounted to 4.6% of the total trade while it exported 74.39% of total exports to them. In 2011 it imported 4% while it exported 77%.

Jamaica, imported  46.02%, and exported  2.38%.

Guyana imported 11.38% and exported 6.59%

 Taking the LDC’s as a whole in 2007 they imported 23.20 % of total Caricom trade while  they exported a mere 9.92 % .

 

2011

Four years later the corresponding figures for 2011 were total imports amounted to three billion, three hundred and sixty three million, five hundred fifteen thousand dollars ($3,363,515,000) while the total exports were two billion, six hundred and twenty million, and four thousand dollars ($2,620,004,000). Of that amount Trinidad and Tobago imported one hundred and forty million, four hundred and seventy-seven thousand dollars (140,477,000),  i.e. 4.18%?,  but exported two billion, twenty five million, one hundred and sixty-one thousand dollars ($ 2,025,161,000) i.e. 77.30% .

 

In that same year, 2011, Jamaica imported one billion, twenty-two million, seven hundred and sixty six thousand  dollars ($1,022,766,000), i.e. 30.41 %, but exported sixty seven million, eight hundred and sixty five thousand dollars ($67,865,000), i.e.  2.59%.

Guyana imported $543,320,000, i.e. 16.15% and exported $138,112,000, i.e. 5.27%.

All the LSD’s countries put together exported one hundred and ninety four million, five hundred and ninety one thousand  dollars ($194,591,000), i.e. 7.43%., while it imported five hundred and ninety million, two hundred and thirteen thousand dollars ($590,213,000), i.e. 17.55 %.

 

To summarise, in 2011 Trinidad and Tobago’s   imports were 4.18% while its exports were 77%. Jamaica’s imports were 30.41% while its exports were 2.59%. Guyana imported 16.15% and exported 5.27%. The LSD’s imports were 17.55% while its exports were 7.43%.

What these figures reveal is the  benefits of integration have been very one-sided. But it was worse for the LDC’s.

 

This unequal development has been one of the constraints to deeper integration of Caricom. Other factors that militate against deeper integration include the fact that the area is not contiguous; it is only united by what divides it; the Caribbean Sea. Therefore, Transport is a major problem. The several attempts to deal with the problem of Transport have, by and large, failed.

 

The absence of contiguity and the problem of transport contribute  to that of decision-making. Decision making has been made difficult not merely by the absence contiguity but because of the structure of Caricom and the lack of harmonization of statistics. Harmonisation of statistics demands, or necessitates, that there is common data with harmonised or equivalent definitions that can be reliably compared across all Member States.  With the creation of the CARICOM Single Market and Economy (CSME), the achievement of harmonisation of statistics is a crucial concern at the Regional and National levels.

 

 The monitoring of the performance of the CSME, which is sadly lacking,  is only possible if there is a core set of statistics that are accurate, comparable, reliable and timely.

 

Another constraint to the development of Caricom is the failure to implement decisions taken. There is need for the establishment of serious mechanisms and procedures for the enforcement of decisions taken. The view has been expressed that the misunderstood concept of sovereignty and the ambition of some leaders contribute to the problem of implementation.

 

Caricom has failed to deal with the issue of unequal development in  the region, but particularly the disadvantage of LDC’s.  There has been an almost total failure to help one another to develop their economies.

 

Some commentators have argued that there is, and has been, a failure of effective leadership in the region. As a former Chairman of Caricom in my previous incarnation I prefer to comment no further on that observation.

 

Questions have been raised on whether CARICOM is a viable entity in the global economy. Can it survive?

 

In its quest for economic integration through the CSME, CARICOM faces two difficulties. It must first complete the intra-regional integration scheme, including tightening a loose common external tariff and intra-regional trade policy, the integration of labour and capital markets. There is need for systems to deepen functional co-operation to improve efficiency in the delivery of public services.

 

Having regard to In the expired preferential trade arrangements with its two largest trading partners, the United States and the European Union, the leaders have failed to devise and/or implement strategies for “inserting”  and embedding the CARICOM economies into a dynamic and competitive global economy .

 

Is the CSME achievable?

Many think that its strength is its weakness. Its cultural diversity of European, African, East Indian, and native influences is united only by the very sea that divides them. The CARICOM challenge is how 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.

 

The task seems so daunting that distinguished leaders in the region have expressed concern about the future of CARICOM.

 

Monday, December 27, 2004, Opposition spokesman on foreign affairs and foreign trade,  Bruce Golding of Jamaica, said Caricom has been a failure, especially for Jamaica.

 He said, his assessment had been based on the fact that “after 30 years of Caricom, inter-regional trade amounts to only 18 per cent of the total trade of the region”. He complains that the performance was not spread evenly throughout the region.”Some countries have done better than others. Giving examples, Golding said that while 7.4 per cent of Trinidad’s economic activity was dependent on Caricom trade and 9.1 per cent in the case of Barbados, in Jamaica’s case it was only 1.8 per cent.

“All that Caricom has meant to us after 30 years, in terms of economic activity, is 1.8 per cent. And you see it in our merchandise figures, in our trade figures,” he said. “In the case of Trinidad, 12 per cent of its exports go to Caricom countries, one per cent of its imports come from Caricom countries. In the case of Jamaica, 3.6 per cent of our exports go to Caricom, but twelve and a half per cent (12.5%) of our imports come from Caricom countries. So some people have benefited, some have benefited marginally, some have benefited not at all.

“You only need to talk to some Jamaican manufacturers and you will get a sense of the impact that this has had, or look at the supermarket shelves,” Golding went on.

Turning to the CSME, Golding said that Trinidad and Tobago would be the greatest beneficiary under that system.

He quoted former Barbadian Trade Commissioner, Frank DaSilva, as predicting that, “as Trinidad and Tobago assumes a more dominant role in the region’s economy, it will also increase its presence in the business sector here (Barbados), resulting in a large number of job losses within the first three years of the CSME.”

Jamaica, he warned, must be careful not to assume that the CSME is going to have a fundamentally different impact.

He concluded, however, that “…Any assessment of Caricom as to whether it was a success, whether it was a failure, whether it was a part success or part failure, has to be benchmarked against the specifically stated four critical objectives of Caricom which were expansion of trade; increased production and productivity; full employment of labour; and improved standard of living for the people of the region.

By February 25, 2011 Prime Minister Golding  had not substantially changed his views when he said:

 “Above all, we will have to address the persistent concern that CARICOM is not working…not working out. It was almost a generation ago that the West India Commission provided a clinical assessment of our deficiencies. Ten years later, Professor Norman Girvan highlighted what he called our implementation deficit. The people of the Caribbean – our constituents, the people who ultimately matter – continuously lament the “benefit-deficit”.

‘’We cannot escape addressing the issue of governance” he said  “ for it is a major cause of our implementation deficit – the Caribbean people’s benefit deficit”. Various mechanisms have been proposed, he said but none has found unanimous acceptance. If we are hoping to find the perfect solution, we are setting up our own disappointment for there is no perfect solution. He called for “scaling up the governance mechanism to better meet the mandate of Grand Anse. He warned that “if the people of the Caribbean do not see in CARICOM the fulfillment of their hopes and aspirations, the solution of some of their most persistent problems, they will look beyond CARICOM for their salvation.

The Jamaican Gleaner has observed that:  

“Trinidad sees Jamaica as a dumping ground for its inferior goods and services and for the duty-free concessions that this farce called Caricom affords it.”

Only last year Dr Ralph Gonsalves, Prime Minister of St Vincent and the Grenadines observed, it has been primarily a failure of leadership. “We have not been having serious leadership in CARICOM,” he said. “The organisation has no effective implementation mechanism, nor are there penalties for reneging on undertakings. So, leaders come to summits like the one being convened today, talk a lot, arrive at decisions and give undertakings which, for the most part, are never fulfilled”. He regarded as critical the establishment of a genuine undertaking to play by the rules, with regard to intraregional trade.

 He noted that CARICOM is supposedly a seamless market. Yet, while Jamaica maintains an open market for goods and services from its partners, several members, including Trinidad and Tobago, Barbados and Belize, maintain non-tariff barriers to our exports as well as an opaque value-added arrangements that allow them to circumvent origin rules. Port-of-Spain, too, unfairly, in our view, denies national treatment to its partners with regard to energy supplies, thus giving its own manufacturers an unfair advantage in this seamless market.

The T&T Chamber of Commerce has expressed the view that Caricom will soon be Carrigone! It noted that:  “Twenty two years after the Declaration of Grand Anse, and 6 years after the region committed to the full implementation of the CARICOM Single Market and Economy there grows an array of stalled regional integration initiatives. The CARICOM experiment seems to be on the brink of failure.

They did not think that the setting of ambitious deadlines was the issue, as the new Secretary General claimed.  “The problem is, and has always been, the mechanism for implementation of decisions… Our country leaders cannot continue to only pay lip service to integration. If CARICOM hopes to be more results-oriented, it needs to address what former CARICOM Chairman, Tillman Thomas called: the “Implementation Deficit”.

They referred to the fact that some Member States who still have an environmental levy,  and have committed to removing this levy as it goes against the Revised Treaty of Chaguaramas (RTC),  and who for the past 10 years of being  “strongly urged” by the CARICOM Secretariat to remove the levy, to date, the levy remains, threatening development of intra-regional trade and undermining the significant promise of the Treaty”.

Implementation, they claimed, is also stymied by “an apparent lack of transparency, citizen participation and stakeholder engagement in decision-making”. They cite as an example, the fact that in recent times, the region has attempted to alter the Treaty provisions relating to the suspension of the Common External Tariff – but at no point was there an attempt to consult the regional private sector on this decision”.

They criticized the top-down construct of CARICOM which leads to technocrats and officials taking too long to make decisions, while many region-changing discussions take place behind closed doors. They recommend that “The “CARICOM Secretariat must ensure that all stakeholders are part of the decision-making process, as this is vital to the integration process.

They accuse Caricom of being “meeting-centric”, with no systematic approach to organising. However, these meetings often conclude without decisions, since national officials are given little time beforehand to consult with stakeholders and prepare proper national policies.

Clearly, there is growing frustration within the Caribbean Community.

The Chamber agreed with former Caricom Chairman , Tilman Thomas that there is a “loss of momentum with regard to the regional implementation agenda”.

The Chamber called on its current Secretariat “to take more decisive action to push forward the CARICOM regional agenda.  We need a Secretariat with a new ethos that is decision-oriented.  If we continue down our current path, CARICOM and all its promised ambition is doomed to remain unfilled, and wither away. This is why Caricom remains an elusive dream”.

On January 22, 2010, in a scathing Editorial of the Observer observed :

 “At the root of the Caricom mission statement in the formation of Caricom was the need for regional integration of member states and the respective economies, and the creation of a common market.

In addition to a single market, it was envisaged that members would co-operate in the areas of sports, health, education, culture, technology and transportation.

Except for a few pieces of harmonised legislation and proposals for more, Caricom has remained, through the signing of the Treaty of Chaguaramas in 1973 and the revised Treaty of Chaguaramas in 2001, a mere talking point. Elsewhere, people would call that a failure”.

“While many will have their reasons for the lethargy and their predictions for the future”, they contend that “Caricom has failed to be more than a series of talk shops and fraternal moments because policies aside, the movement is and must be about people.

They accused the leaders of having failed to inspire trust in their stewardship.   “The point is”, they said “if we can’t trust them to steer their respective ship as of state competently, how can we expect them to undertake regional integration?”

Owen Arthur, former Prime Minister of Barbados, observed that at the political level, the creation of the CSME is taking place in the shadow of the failure of the previous attempt at political federation.

One of the lingering consequences of that failure is the strongly held

conviction that any venture to forge deep political integration in the region is both inappropriate and impractical.

 

Asking why has CARICOM stagnated? He said…” the answer lies in small minds that rule CARICOM territories. While large Poland and big Hungary want to integrate, tiny islands are ruled by men that want to be a country’s leader. They want to be known as the Prime Minister. While the world moves on and countries search for modernization, small leaders in the Caribbean are happy to be the Prime Minister of a fowl pen”.

 

 Professor Norman Girvan is of the view that Caribbean economic integration is a myth. The islands are too dispersed physically to be economically viable – hence the problems of transport.

He notes “Other challenges include the proximity and hegemony of the United States in the hemisphere, the small geographic and market

size of most Caribbean states; the mono-agricultural production of

some of the smaller islands, and the diminished demand for

Caribbean agricultural products.

 

 Caribbean nations must also contend with geographic dispersal, namely the consequent challenge of building inter-island ties and the development of regional distribution and transportation systems.

 

He is of the view that: “Psychological dispersal presents an additional challenge with its sense of separateness arising from the lingering effects of historical economic, legal, cultural and other dependence on colonial era.”.

 

The Professor argues that the “comparative advantage justification for free trade assumes that each trading partner will provide different goods for which its partners will be willing to pay. Given the similarity of the goods and services produced in the islands, the fundamental question arises whether the Caribbean nation states create a natural market for each others’ goods and services. It may be argued that this

reality is a flaw at the center of the economic integration endeavor

of the English-speaking islands.

 

And he asks: “ Does the comparatively small size of the CARICOM market create an insurmountable obstacle to integration and effective economic development?”

 

He observed that the European integration project contained seven

minimum requirements of the achievement of economic

integration among sovereign states:

(1) limited opt-out opportunities on the part of Member States;

(2) the direct effect and supremacy of measures intended to cause economic integration, as well as limited time and enforcement periods for implementation;

(3) an independent supranational body that drives, polices and enforces economic integration;

(4) removal of barriers to the mobile factors of production, such as capital and labor;

(5) a legitimate dispute settlement mechanism with enforcement powers;

(6) a strategic planning/decision making mechanism that defies deadlock; and

(7) private rights of action against the Member States.

 

He recognized that such regional integration arrangements among states, implicate and threaten the sovereign power of Member States. This threat arises from the need to create a central body with supranational powers to design, build, and monitor the common economic space, in particular, the enforcement of Member State implementation and coordination.

 

Sir Ronald Sanders, a former Caribbean diplomat, has posed the question:

 Is Caricom – Irrelevant Or Essential?  

He says that:“The curtain rolls down on 2012 with the Caribbean Community and Common Market (CARICOM) institutionally weak and its 15 member governments doing little more than paying lip service to the process of economic integration.

It seems that the only reason that several governments do not declare CARICOM irrelevant and walk away from it is that they dare not. To do so, they would have to explain their action to their people. It is a discussion few government leaders would relish.

He noted that the economic conditions in the majority of CARICOM countries are not good. Barbados and the six independent countries of the Organisation of Eastern Caribbean States (OECS) have dangerously high debt to GDP ratios of over 65 per cent and some are well over 100 per cent. Jamaica’s economy has been in dire straits for years and there appears little hope of a dramatic improvement anytime soon.

“Indeed, many of these countries are already failed states, surviving only by grants and assistance given to them by external agencies.

As 2013 dawns, apart from Trinidad and Tobago, Guyana and Suriname, the prospects for the national economies of CARICOM states are bleak. None of the 12 other CARICOM members has the means to provide the financial stimulus to grow their economies and stem the rate of unemployment which is expanding and will get worse in 2013.

He noted that the EU which has been a generous aid donor to CARICOM countries for over three decades are now faced with its own debt problems among some of its member states, and such aid may no longer be available.

He poses a very intriguing question when he asks:

“… why should a region of 6 million people with vast natural resources such as oil, gas, diamonds, gold, bauxite, uranium, tourism, financial services, fisheries, agriculture (including sugar and rice), forestry and huge potential for renewable energy, be poor and suffering? The answer lies in the failure of our governments to perfect a single market and to work steadfastly toward a single economy.”

“If this backward march continues, many CARICOM countries will go over the cliff, and eventually CARICOM will be abandoned by those member countries that can do better by economic and political arrangements with others”.

Given his observation that 2013 can be the year of CARICOM’s final slide to oblivion with disastrous consequences for the majority of its member states, my advice would  be to consider seriously his suggestion that Trinidad and Tobago, Guyana and Suriname may well find it beneficial to integrate their own economies more deeply and to jointly pursue arrangements with Brazil, Venezuela and other Latin American nations. That is a very interesting suggestion. It should be seriously pursued. I like it .I have always maintained that the destiny of Trinidad and Tobago, is continental and not Caribbean. Now is the time.

Thank you.

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