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Mr. Chairman,
I wish to thank the Georgetown Chamber of Commerce and Industry for the invitation to join you at this luncheon and to share some perspectives and information on the CARICOM Single Market and Economy (CSME). The CSME has been long in the making, since 1989 – some say too long while others believe we are moving too fast. Whatever the feeling, the fact is that this year 2005 is a real date in the CSME’s calendar. December 2005 has been established by CARICOM Heads of Government as the deadline for CARICOM Member States to effect all the administrative and legal arrangements for he implementation of the Single Market of the Caribbean Community. The implementation of the Single Economy, however, would take longer to complete, in this regard the Heads of Government have agreed that, building on the operationalisation of the Single Market, the key elements of the Single Economy should be in place by 2008. I would return to this point later. However, I believe it would be useful for me to clarify the distinction between the concept of the Single Market and that of the Single Economy. While, encouragingly, there is more public discussion and interest in the CSME, there is still much confusion regarding its implementation and scope of operation. THE CONTINUING CONCERN ABOUT FREE MOVEMENT OF SKILLS It is not possible to speak on any occasion on the subject of the CSME without addressing the matter of free movement of people, since this continues to be a major issue in the integration process. Let me begin therefore by dealing head-on with this issue. The grounds for concern about free movement are several, including: (i) Loss of jobs at home from imported/incoming non-national competitors; (ii) There is no reason why a person should be forced to leave his home country to go to another state having been displaced in his home state by a non-national competitor; (iii) Some states are more populous and can export larger numbers of competitors (Guyana and Jamaica in particular); (iv) Politically: the perception that some states are not attracting investment and generating employment, and therefore why should stats which do better at attracting investment be forced to accept the unemployed from states which do poorly; (v) Politically: that the capacity to train and prepare the local labour force for competition in the CSME labour market is skewed overwhelmingly in favour of the Member States with university facilities which all happen to be MDCs. The position at this stage is that all Member States, including Guyana, have implemented the free movement regime except for one aspect, and that is the regime for managerial, supervisory and technical wage earners and self-employed skilled service providers. We will deliverer this by year end to join the others. There are no easy solutions to the operation of the free movement system There are no easy answers to people’s understandable anxieties on this issue of free movement but we have made considerable progress. The OECS states, with their small professional labour force, have argued that one way to level the playing field is to immediately introduce free movement of unskilled labour. They seem to want unskilled labour to be exported from the OECS without reciprocating. A decision by the 26th Meeting of the Conference to expand the categories of eligible persons who would be free to move has gone some way towards answering the concern of the smaller states. While we sympathise with the concerns of the smaller states, this does not mean that we agree with any asymmetrical implementation of any part of the free movement issue. The Treaty makes no provision for non-reciprocal implementation. This approach by the OECS adopts the general principles of Chapter Seven without any proof that implementing the no work permit free movement regime has led to unacceptable displacement of local skilled labour. The actual numbers show Antigua and Barbuda (21), Barbados (1200 since 1996) are two good examples where the numbers of persons who have been admitted under the free movement regime remain small. Prime Minister Musa of Belize has already proposed expansion of the number of places for Belzians at the UWI law school. This position taken by Prime Minister Musa may well have broader application across other disciplines. More investment, particularly installation or upgrading of infrastructure and facilities and the expansion of training programmes at the tertiary level throughout CARICOM is a matter to which CARICOM needs to give deeper consideration in the immediate future. CARICOM uses far too much of the resources which it accesses from donors on programmes of little consequence. More of these resources could and should be deployed in skills upgrading throughout CARICOM, including the standardisation of qualifications, certification and licensing of all skilled categories. The message to the private sector relating to the issue of free movement Effective utilisation of skilled labour in the Single Market through free movement is the correct integration policy and approach to economic development of CARICOM states. None of us have a ready supply of all of the various categories of skills which a modern economy needs. Implementing and operating free movement of labor is a central, and indeed critical ,regime that is capable of delivering real benefit directly to individual citizens of the Community and to the private sector. The CARICOM Secretariat must respond to president Jagdeo, who, at the Conference in July this year, called for factual data on the movement of people. We cannot, as policy makers in the Community, deploy the right instruments which will reconcile the validity of our States without reliable information. What the secretariat needs to do is to conduct regular evaluations of the actual implementation and operation of the regime on free movement, which focuses on assessment of the positive and negative impact on each Member State and the presentation of proposals on the measures which we might take to enhance the benefits while suppressing the negative effects on those states which have made claims of negative impact on them. If we are provided with the proper labour market analyses then we can take constructive steps to make the system work for all Member States. In the meantime, we in this country must use this system of free movement skills to our economic benefit. We must insist on our legitimate rights as a contracting party to the Treaty in spite of the efforts of some member states immigration officials to frustrate Guyanese. Guyanese skilled workers have been seeking to exercise their legitimate rights under the treaty and we reject without fear of contradiction any suggestion that this is not so. We have done our part on the free movement issue and we expect others to do the same We have already shown some capability to compete in construction services and there is no reason why we cannot use this system of free movement to strengthen our position in services, manufactured and agricultural exports. Services, Capital and Establishment The second issue is what happens at the end of this year on the other key Single Market agenda issues. The single market for services is within reach. Considering the monumental task which we in CARICOM have shouldered to create the single integrated internal market and the timetable we have set ourselves, the progress which we have made since the Heads declared the programme to remove restrictions on free movement of services and capital and the right of establishment in February 2002, can be described as commendable. Of the 371 restrictions which we began to remove in 2002; 164 have been removed and the remainder will be removed by year end. Only three countries continue with exchange control regimes restricting the free movement of current and capital payments in contravention of Article 40. (these are Barbados, Belize and Suriname). We need to keep the pressure on these states to remove the controls so that business is not frustrated. We know from the data available that the export trade in services in CARICOM has reached 7 billion US dollars and that was in 2002. • Total services exports was EC$19.1126 billions = US$7052.60 in 2002 • Total services imports was EC$12.5164 = US$ 4618.6 in 2002. Transportation and travel, tourism and construction services account for the majority of the business. The message regarding services capital and establishment We in Guyana have taken small steps, particularly in tourism and in air transport services. Our efforts to upgrade the Cheddi Jagan and the Ogle airports will increase our capability in providing air transport services. Investment in services infrastructure and plant are the keys to positioning Guyana to benefit from this market. Services was 46 percent of Guyana’s GDP and 21 percent of its exports in 2002. Our share of CARICOM exports was however only 2 percent in 2002. There is therefore much room for expansion and it is up to us to make the right moves. Our construction services workers have made pioneering moves into the CARICOM construction market, particularly in Barbados in recent times. The goods regime The goods regime is one of the areas of the Single Market where much is at stake for us in Guyana, primarily, because, as you know we are predominantly an agricultural goods producing nation. The Single Market is an important market for our major agricultural trade. Consolidating the goods regime under the Single Market is a matter of great strategic commercial interest for Guyana. You must be aware by now that CARICOM’s total imports of goods surpasses 10 billions us dollars and note should be taken of the doubling of intra-regional trade in goods over the past decade. Total imports of food into CARICOM is almost three billion US dollars. You will agree that for small economies this is substantial business. Our interest in this aspect of the Single Market is not only direct but indirect as well, since many persons and businesses are indirectly spinoffs of the major agricultural exports. There is also the potential for non-traditional exports of seafood, fresh vegetables and fruit and processed products. These markets are there. A pineapple in Barbados retails for 14 Barbados dollars or seven US$, that is G$1400. The question, therefore, is why are Guyanese products not on the supermarket shelves all year round? The government has negotiated the rules, has ensured that you have a 40 percent tariff advantage compared to extra-regional suppliers and is prepared to represent your interests in these markets if you have the goods to export and if you have difficulty establishing yourself in the market. But you must make the investment in the supply, storage, transportation and distribution system. It is not enough to produce the things which we can; they must be price and quality competitive. There are no alternatives to these since CARICOM consumers will not pay for expensive, poor quality goods, and neither will you. Our interest and support for the Single Market is therefore neither trivial or accidental, but we can only take advantage of the opportunity if we as a nation do what is necessary. None of what I have said means that the regime will operate without issues. There is without dispute two facts before us relating to the regime for free movement of goods. One is that the agreements under Chapter Five of the Revised Treaty are substantially minor modifications of the trade regime in the Common Market Annex to Chaguaramas. Subject to the minor updating which were done in the Revised Treaty these provisions were in both law and practice implemented and operated by all states before 2001, when the Revised Treaty was opened for signature. Our support for the Single Market in this case does not mean that Guyana does not have its own issues with the operation of the goods regime. There are some residual non-tariff restrictions which several of the Member States have retained inconsistently with the Treaty and which, while not accounting for a significant proportion of intra-regional trade, needs to be eliminated. Their removal is necessary least they provide the justification for affected member states to use their existence to introduce like measures in retaliation and or the prevention of use of these measures as buttress (tenuous or otherwise) charges of acts of bad faith. If there is one regime which deserves to be conclusive and single market compliant in all its dimensions (if only because it is the oldest) it must be the regime on free movement of goods . A second fact is that there is substantial asymmetry in the flow of imports and exports among the member states. This is reflected in the data on balance of trade deficits for the majority of Member States, declining intra-regional exports by the majority and increased sourcing of extra-regional imports by some is at the heart of the dispute. For example, at the level of individual member states Guyana, St. Kitts and Nevis, and St Vincent and the Grenadines were the ones which recorded decreases in their intra regional domestic exports in 2003. All other member states for which data are available recorded increases. Guyana was also one of the member states recording significant increase in its intra-regional imports between 2002 and 2003, when imports moved from approximately EC$283 million to approximately EC$455 million, an increase of 61 per cent or approximately EC$173 million in value terms. Based on the 2001 and 2002 data however, Trinidad and Tobago emerges as the principal intra-regional source from which Guyana purchases goods. In 2001 imports by Guyana from Trinidad and Tobago was recorded at EC$240 million. A 13 per cent increase of EC$32 million was registered in 2003 when imports were recorded at EC$272 million. Moreover, Guyana increased its share of the value of both categories of intra-regional imports. Its share moved from 8 per cent and then up to 10 per cent in 2002. By 2003 it was responsible for absorbing 22 percent of goods from the region. Its share of the value of intra-regional imports of non-petroleum products also increased, moving from 11 in 2000 to 12 percent in 2001 and then to 17 per cent in 2002. Guyana was third as an importer of goods from the region behind Jamaica and Barbados during the period 2000 – 2003. That this situation will accentuate the existing reality of asymmetrical distribution of benefits in the emerging CSME is clearly the case. Blame for the skewness of the distribution to the states which now benefit compared to those who do not, is in abundance for all involved. It is however an exercise in futility to use this fact to convince ourselves that the CSME will only benefit those who are the now the obvious significant exporters, without appreciating what actions their private sector have taken to attract the benefits they enjoy. The messages on the goods regime Since however we have all discharged our individual responsibilities under chapter five the appropriate analysis must now be in light of the outcomes, to determine how to address the concerns of those of states who perceive that we have not gained enough Among the measures which require attention are sanitary and phytosanitary regulations which restrict agricultural exports, and the attendant establishment of the proposed Caribbean Agricultural Health and Food Safety Agency (CAHFSA). Expansion of exports from the Member States require investment in tradable goods in the productive sectors and part of the solution is to be found in the broader area of the single economy and its instruments on capital flows, investment facilitation and sectoral development. This is again the purview of the private sector. We also have difficulties with standards and technical regulations; with the operation of the established trade policy affecting goods trade generally and the operation of the suspension and safeguard regimes in particular; issues which we have raised with the secretariat and which have not been resolved to my satisfaction. The Secretariat has been to slow to develop an effective global safeguard for the CARICOM imports of goods from outside of the Region to counter surges of imports which threaten our industries before we fully adjust to a globalised market. As regards the Single Economy, the Revised Treaty envisions that this will take the form of significant coordination of the development of the sectoral policies, significant levels of integration of the production and financial sectors of Member States, the convergence of macro-economic policies, the building of a regional capital market, the harmonization of monetary and fiscal policies, the establishment of efficient communication services, and the putting in place of arrangements for a common currency. The scope for economic integration as embodied in the CSME is exceeded among economic blocs only by the provision of the European Union, which took 35 years – since the 1957 Treaty of Rome – to reach the same level of integration in 1992. The CSME provisions are based on the core principle expressed at Article 7 of the Revised Treaty of Chaguaramas, that Member States should not pursue discriminatory policies among themselves based on nationality only, subject to provision on special and differential treatment for its lesser developed members. It commits the Caribbean states to confer on each other schemes of deeper, broader and faster liberalization than they are prepared to engage in with other groups of nation. It recognizes that a Single Market and Economy will never appear as a finite entity, and hence at Article 239 makes provision for a built-in-agenda for the elaboration of regional programmes and policies in areas such as electronic commerce, government procurement, the treatment of goods produced in free zones, and the rights to citizens contingent on the establishment provision of services and the movement of capital. Clearly, the intent is that the CSME should evolve and keep evolving in line with changing circumstances. As regards implementation, it has been agreed that the five regimes constituting the Single Market would be implemented first, and – as i noted earlier – by December 2005. The creation of the Single Market would serve as the platform on which the erection of the Single Economy could be pursued. To date Barbados, Jamaica and Trinidad and Tobago have commenced implementation of all the five regimes that comprise the Single Market. The other Member States, including Guyana, have indicated their preparedness to do likewise by December 2005. The legal and institutional framework With a majority of the member states (9) having enacted the Treaty into domestic law, all granting original jurisdiction to the CCJ and all giving effect to CROSQ, we are well on the road to a viable legal framework for the operation of the Single Market. A key forward step in this process of institution building is the establishment of the Community Competition Commission, the legal authority for which is set out under Article 171 of the Revised Treaty. Proposals were presented to the 19th meeting of the COTED in may this year. Their proposals were:
The Member States are required to consult on the proposals, particularly the budget. The plan and schedule set out a programme for national and community level consultations which is designed to bring definitive proposals to our Inter-sessional meeting in January 2006. This leaves CAFSHA and the Regional Accreditation Body, both of which have passed the stage of consultations, and the only issue to be decided is how much we are prepared to spend to launch the two. Message on institutional development The new paradigm of the CSME by definition throws up new sectoral institutions to assist us with the technical and administrative aspects of community governance. We must act decisively in bringing closure to the remaining steps required to ensure that the institutions which are necessary to operate the single market are set up and operate effectively in tandem with the five sectoral regimes of the single market. (f) the broader issue of distribution of the benefits of the csme Notwithstanding the undertakng given and expressed commitment which we have all assumed under the revised treaty there is the appearance of and continuing argument regarding the distribution of benefits of the csme to our individual economies . There are two aspects to the debate. On the one hand a state and its citizens benefit from an integrated market if it can compete in a market economy system by supplying what the market needs. In this case we are talking about 6 million consumers in the csme. On the other hand there is affirmative action designed to benefit those members of the integration grouping who cannot compete now and must receive some of the resources of the community in order that such members can participate in the future as equal partners. Among unequal partners this is neither unusual or unreasonable. The only problem is how to pay for any affirmative action programme especially when several members are not in a position to make direct contributions to an affirmative action programme. The csme programme is defined in terms of disadvantaged countries, regions and sectors. This definition incorporates all the oecs countries and guyana but any member state which finds itself in difficulty could be eligible. The centrepiece of the programme is a development fund. There are two fundamental issues surrounding the fund at this time. One is of course money, and we have not reached the final question on this as yet. The design of the fund is work in progress. Also critical however is the posture of some states. The regional development fund is being used by some in CARICOM as a tool to act in a manner which seem to suggest that without this fund they cannot cooperate fully with their responsibilities under the treaty. This could, but i hope does not become a stumbling block to the cooperation which we expect from all states. The message There are two responsibilities which arise from our peculiar design and approach to integration. One is domestic and the other is regional. The government and the private sector have roles to play to bring home the benefits to the people of Guyana. An association of sovereign states produces a legal design of the community that does not yield sovereignty to the community. The consequence is that the individual nation states bear significant responsibility for both the community policy and rules which we collectively make and for the economic outcomes in their respective geographical territories. The assignment of responsibility regarding managing distribution of benefits within the community is at the present time justifiable in a key area, and that is under Chapter Seven of the Revised Treaty, both generally and under Article 158 in particular regarding the undertaking to establish the Development Fund. Cohesion in CARICOM is a necessity for reasons that go far beyond the CSME itself and includes our interest in this hemisphere, in Europe, and in the WTO. The Fund, as both an instrument for facilitating participation by all states and thereby promoting social cohesion in the CSME, is indespensible. Conclusions The CSME is an irreversible process. We have individually as nation states and collectively as a community invested significant resources and political capital to come this far. The completion is in sight and we must push ahead to the completion. To benefit, we must both complete all measures and calibrate and refine the operation of each regime for goods, services, capital skills and the establishment of business abroad. We must also actively take the investment decisions and build the supporting infrastructure that enables business enterprises and individuals to succeed in a market system and a demanding trading system. The CSME is not without its challenges and difficulties but these can be overcome. Cohesion and cooperation are essential to the strengthening of the CSME and its capacity to deliver investment opportunities, jobs, trade and economic development. Each side, that is the individual member states, their respective private sectors, government and other stakeholders on the one hand and the community on the other hand must play their respective parts. Thank you.
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