Our Barbados and other Caribbean leaders have for some time now acknowledged that economic integration offers the best mode for the survival and prosperity of our small sovereign states in a liberalised global economy. The acceptance of this reality was the genesis for the signing of The Revised Treaty of Chaguaramas by 13 of the 15 members of the Caribbean Community (CARICOM). This treaty provided the legal basis for the functioning of the CARICOM Single Market and Economy (CSME).
The objective of the CSME is the creation of a single economic space for the free movement of people, goods, capital and services. While earlier treaties had already removed the main barriers to trade of goods in the region, Chapter 3 of the Revised Treaty of Chaguaramas, most significantly, provided the framework for the establishment of a regime for trade in services. Concomitant with this is:
- The right of regionally controlled companies to establish and operate businesses in any CARICOM member state under the same terms and conditions as local companies;
- The allowances for the managerial and technical staff of these companies to work in the state without permits; and,
- Provision for regional service providers to deliver services throughout the region without the hindrance of work permits.
This is a critical development, not least because there is an emerging consensus that the route to advancement of small developing states is through the expansion of trade in services. Barbados and 12 other member states of CARICOM have committed to the implementation of the CSME - to be demonstrated by their adherence to a timetable for the phased dismantling of the more than 300 restrictions on capital mobility, the rights of establishment of enterprises, the movement of skills and the provision of services by 2006.
However with critical deadlines looming there are increasingly clear signs that some of the CARICOM member states are developing integration anxieties. Most recently Heads of Government of the Organisation of Eastern Caribbean States (OECS) have decided to convene a high level policy forum to identify and amend specific provisions of Chapter 7 of the Revised Treaty in order to address concerns of the OECS Member States that the balance of trade between the OECS territories and their more developed CARICOM partners in CSME (deemed to be Barbados, Trinidad and Tobago, Jamaica and Guyana) would become increasingly unfavourable under the CSME. These concerns have been further fuelled by an OECS commissioned study undertaken by the United Nations Commission for Latin America and the Caribbean that focused on the benefits and challenges for the OECS in CSME.
Safeguard Mechanisms
The misgivings of these CARICOM Member States may, in substance, not be warranted. Embodied in the Revised Treaty of Chaguaramas are a comprehensive set of provisions which are directed at allaying the very fears that are now occupying the consciousness of many CARICOM states. Notably Article 47, Restrictions to Resolve the Difficulties or Hardships Arising from the Exercise of Rights, represents a safeguard mechanism clause that rivals, in its thoroughness, any services-related agreements in the hemisphere. Clause 1 of the Article states:
Where the exercise of rights under this Chapter creates serious difficulties in any sector of the economy of a Member State or occasions economic hardships in a region of the Community, a Member State adversely affected thereby may, subject to the provisions of this Article, apply such restrictions on the exercise of the rights as it considers appropriate in order to resolve the difficulties or alleviate the hardships.
Further, Chapter 7 of the Treaty is dedicated to the establishment of a regime for "disadvantaged" countries, regions or sectors "in order to enhance their prospects for successful competition within the Community and redress, to the extent possible, any negative impact of the establishment of the CSME". Provision has been codified in the Treaty for:
- Technical and financial assistance to address economic dislocation;
- Special measures to attract investment and industries;
- Measures to assist existing industries to become efficient and competitive;
- Assistance intended to achieve structural diversification and infrastructural development; and,
- Assistance to economic enterprises disadvantaged by the removal of intraregional barriers.
Disadvantaged countries can also seek further protection from unfair or harmful practices by more dominant member states through the Caribbean Court of Justice (CCJ). The CCJ, in addition to being an appellate court, will function as a court of original jurisdiction. In the exercise of its original and exclusive jurisdiction, the CCJ will perform the role of an international court, being guided by rules of international law in interpreting and applying the Revised Treaty of Chaguaramas.
Barbados - leading the way
Notwithstanding the foregoing prenuptials, getting the jitters before the big wedding is something that many of us can relate to. But why is Barbados forging ahead with such confidence towards economic integration, even as its partners in the integration movement express their reservations?
This country's history, culture, educated workforce, developed physical infrastructure and, quite possibly, our lack of mineral resources has a lot to do with the confidence that Barbados will thrive in a more liberalized market. The foregoing elements have dictated an early acceptance that competitiveness in trade in services is the pathway for this island's completion of its journey to developed country status. The CSME, therefore, is seen as a vital organ for the realization of this goal.
While the same cannot be readily said for some other Caribbean territories, philosophically, there is no significant divide between Barbados' political parties over the virtues of CSME as a vehicle for the island's long-term economic development. The Government Information Service, various private sector organizations and the Barbados based CSME Unit have sustained and intensified a CSME public awareness drive. There have also been Government and/or private sector led initiatives which reflect an acceptance that trade liberalization and full (and fair) participation in the global economy will be the new paradigm and that this island, once prepared, can receive a positive boost to its development. Three noteworthy initiatives are identified below.
Fair Competition Legislation
The Fair Trading Commission, which was established in January 2001 by the Fair Trading Commission Act is responsible for the enforcement of the provisions of the Utilities Regulation Act, the Telecommunications Act, the Fair Competition Act and the Consumer Protection Act. The Commission describes its mission as aimed at "promoting competitive markets, safeguarding the interests of consumers [and] promoting and encouraging fair competition". The above Acts, all of which have been introduced in recent years have laid the platform on which fair competition can flourish. The Commission's role with respect to the liberalization of the telecommunications industry will continue to be critical in making Barbados an even more attractive jurisdiction to do business.
The Barbados Coalition of Service Industries
Pursuant to a CARICOM initiative, the Barbados Government and services representative organisations and entities gave support to the establishment of The Barbados Coalition of Service Industries Inc. (BCSI). BCSI's main goals are "to develop and diversify the local services sector and to prepare local service providers to manage the challenges and opportunities which will be presented in an era of expanding global markets". In pursuit of these goals, BCSI has, among other things, promoted and supported the education of Barbadian service providers on trade related matters. The Coalition has also been a driving force for improvement in performance standards. The BCSI model has become a best practice guide for other regional territories in their construction of their national coalitions.
NISE
The National Initiative for Service Excellence (NISE) is a public awareness programme designed to effect a national drive towards excellence in the delivery of products and services. Government and the private sector have committed funding towards the launch of this national education campaign and to the training and support for the improvement of production systems and processes in the pursuit of excellence. What is most significant about NISE, however, is that it has the full endorsement and sponsorship of the Social Partnership of Barbados (Government, the unions and the private sector) and seeks the input and involvement of all stakeholders.
Barbados' affirmative and proactive stance towards CSME and the regional integration thrust will serve to ensure that we are competitively poised to reap the benefits of greater access to labour, markets and capital within and beyond CARICOM. The prize for being first out of the blocks will be the consolidation of this country's position as the preferred port-of-call for access by international business and capital to the Caribbean marketplace.
Written by Irving Burrowes, Partner, KPMG
Reproduced from Business Barbados 2006 with the permission of Caribbean Business Publications.
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