View Point
January 27, 2006

The CARICOM Single Market and Economy Demystifying the concept

Can you imagine our Caribbean region without national borders and without barriers to trade and the movement of people? This scenario is intended to be similar to what you now experience when travelling from Fancy to Kingstown, passing through communities like Georgetown, Colonarie, Lowmans-Greggs, Marriaqua, Calliaqua without hindrances. Yes, the movement of people and goods, the provision of services, the purchase of property and the settlement of transactions will by and large be taking place across islands without restrictions. This is the ideal which the CARICOM Single market and Economy (CSME) is seeking to accomplish.{{more}}

Discrimination on grounds of nationality will be removed, persons will be able to take up employment without the need for a work permit and they will be able to enjoy the same benefits and rights as those given to nationals of the country to which they migrate. In the first place however, this freedom to travel to and work in another country which is participating in the CSME is being extended to musicians, artistes, sports persons, service providers, media workers and graduates of the University of the West Indies. Complete freedom of movement to embrace other categories including unskilled workers will take place in a subsequent phase. Nevertheless, if there is a shortage of supply in a particular category of unskilled workers in another CARICOM state, the forces of demand and supply will be at work to prise open the gate to let them in.

The establishment of business in another CARICOM state is being made possible through the ‘Rights of Establishment’, that is, nationals of any CARICOM country will have the right to set up business in another country on the same basis as citizens of the country where the business is to be located. Thus, in the same way that an individual can choose to settle in a country where there is need for his skill or service, companies will similarly be free to establish operations in a country where conditions are most favourable to their line of business. Goods imported by business persons from another CARICOM state will not be subject to import duties, tariffs or quotas, and those in the service sector will have access to land, buildings and property in other member states for purposes directly related to the provision of those services. With the removal of all these barriers to trade among CARICOM countries, markets will become open to businesses operating within a combined area of 14 million people. This however includes Haiti, which is currently suspended from the CARICOM arrangements.

It must however be stated that we would not be operating on a very level playing field as some of our more developed partners – Trinidad & Tobago, Barbados, Jamaica for example – would have the distinct advantage of already having structures in place to benefit immediately from the new arrangements. That is why countries like St. Vincent and the Grenadines and other OECS states have insisted on the establishment of a Regional Development Fund to support the growth of industry and agriculture in their territories. The European Community has established special structural funds to support the less developed regions of the community, essentially Portugal, Greece and the Republic of Ireland, so the OECS are justified in making a case for special treatment to help accelerate their development and reduce the disparities between the more developed and the less developed regions. A recent report by the Commonwealth Secretariat confirms that it is more expensive to do business in small economies. As a result the authors argue that small states will always need special treatment to fast track their development. While this may hold true for manufacturing, in the case of services, size is less important. It has been shown that small service firms are successful worldwide. Nevertheless the relatively high costs of inputs (such as finance, telecom and energy) in SVG do affect competitiveness and our ability to export. This is where we would need to address our efforts if we are to make any headway in building a competitive service sector.

SVG has also drawn attention to the loss of revenue which will result from the repeal of the alien’s landholding legislation. In small island economies where land is a scarce resource, concern has been expressed that there needs to be some control over the sale of such assets to expatriates. This argument has been put forward quite vigorously by Anguilla.

The establishment of the CSME is really an outgrowth of the Treaty of Chaquaramas, which has been signed by each member state. The authority for its implementation rests with the Caribbean Court of Justice (CCJ), which will ensure fair and equitable application of CSME laws. In essence therefore, the CSME represents a further deepening of the Caribbean Regional Integration Movement whose major components are free movement of goods, free movement of services, free movement of capital, rights of establishment and limited movement of persons.