Ladies and Gentlemen, permit me to join in welcoming you to Trinidad and Tobago on the occasion of the Commonwealth Business Forum. As one hailing from this land, I can assure you that there is much to see and enjoy in this country and I hope that those of you visiting from abroad will take advantage of the opportunity to do so while you are here.
As Secretary-General of the Caribbean Community, an Organisation comprising primarily of member countries of the Commonwealth, I consider it an honour to be afforded the opportunity to address you on the subject of “Doing Business in CARICOM”.
The Caribbean’s association with the Commonwealth started over 47 years ago when quite interestingly, the host country for this Business Forum, Trinidad and Tobago, became the second CARICOM Member State to join the Commonwealth in 1962. Thereafter, 11 other CARICOM Member States have joined the Commonwealth Family.
As most of you may be aware, the Caribbean Community (CARICOM) with its 15 Member States and five (5) Associate Members is a relatively small region with a population of just about 15 million. Twelve of the Member States belong to the Commonwealth while a thirteenth – Montserrat – the only non-independent member of CARICOM – and the five Associate Members (Anguilla, Bermuda, British Virgin Islands, Cayman Islands and the Turks and Caicos Islands) are all part of the Commonwealth. Two of our Member States, Suriname and Haiti are not members of the Commonwealth.
We, in CARICOM, adhere to The Commonwealth’s fundamental values as set out in the Harare Declaration of 1991, which states in part that, “We believe that international peace and order, global economic development and the rule of international law are essential to the security and prosperity of mankind. We believe in the liberty of the individual under the law, in equal rights for all our citizens regardless of gender, race, colour, creed or political belief.” And the acceptance of these values is extremely important in the creation and maintenance of a welcoming environment for the conduct of business.
It is against that background, that CARICOM countries have benefited, for example, from investment coming from our Commonwealth partners, in particular the United Kingdom, Canada and latterly, Australia and India.
Ladies and Gentlemen, you would undoubtedly agree that foreign trade and foreign direct investments play a vital role in the economic development of most regions. In today’s Forum, I will seek inter alia, to promote the advantages of channeling investment into CARICOM Member States.
CARICOM Member States are primarily small states – even when they have large land areas, like Guyana, Suriname and Belize. Our States have long recognized the value of a unified approach in trade and investment arrangements with third parties. As early as 1965 with the signing of the Caribbean Free Trade Area Agreement – CARIFTA – (which finally became operational in 1968) this reality was given statutory recognition. Since then, to use the language of information technology, we have given the arrangements an upgrade, first in 1973 through the Treaty of Chaguaramas – named after a seaport a few miles from here – establishing the Caribbean Community and Common Market and then, in 2001, through the Revised Treaty of Chaguaramas creating a Community including the CARICOM Single Market and Economy – popularly known as the CSME.
The broad objectives of that Treaty are set out in Article 6 and would be found attached to my paper.
The CARICOM States are broadly divided into two groups, the More Developed Countries (MDCs) comprising, The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago and the Less Developed Countries (LDCs), comprising Antigua and Barbuda, Belize, Dominica, Grenada, Haiti, Montserrat, St. Kitts and Nevis, Saint Lucia and St. Vincent and the Grenadines. The LDCs (except Belize and Haiti) are developing among themselves, a form of integration – an economic union – more advanced than the CARICOM arrangements.
The CSME is the Community’s flagship mechanism to facilitate the creation of an environment conducive to competitive production, development and investment. Today there is a functioning, if not flourishing Single Market which came into being in January 2006. The Single Economy is on the horizon with 2015 as the date of achievement. We are therefore now able to provide the International Community only with the single market. This currently comprises twelve of the fifteen CARICOM Member States – soon to be thirteen with Haiti coming on board as a Member of the Single Market next year (2010). (The Bahamas has not yet decided to become a Member of the Single Market and Economy and Montserrat is awaiting certain constitutional clearances from the United Kingdom.)
About the Single Market
It is important to recognize up front that the distinction being drawn between the Single Market and the Single Economy is essentially a heuristic device mainly for analytical purposes, for after all the market is part of the economy. It would help our analysis, however, to separate these two elements.
Important as the CARICOM Single Market is, it is not yet perfect. (It took the Region from 1973 (or 1968, if you wish) to 2006 – 33 years – to bring it into being. By comparison, the European Community (EC) did take some 35 years from 1957 to 1992 to arrive at their Single Market, which is however, a much more complete mechanism). Should you so wish to undertake a review of the relevant provisions of the Revised Treaty, the most relevant sections would be Chapters 3, 4 and 5.
Underpinning the single market are a number of legal instruments and institutional structures. Apart from the Treaty which has been brought into force by Member States as Domestic Law via the Caribbean Community Act, there is also the Caribbean Court of Justice (CCJ) Act providing for the original jurisdiction of the CCJ. Other key kindred instruments include the Agreement on Social Security, the Agreement on Avoidance of Double Taxation and the Agreement Establishing the Caribbean Regional Organisation for Standards and Quality (CROSQ). In addition, central to the CSME are the Movement of Factors Act, the Caribbean Community Skills Nationals Act and the Accreditation Act. These various legal instruments indicate the significant parliamentary programme faced by Member States in bringing the Single Market into being and those are not all.
What are some of the relevant features of this integrated economic environment of the CARICOM Single Market?
Generally what you will experience is an internal market space with few border restrictions, whether the object of the transaction involves goods, skills, services, capital or the operation of a business organization.
The national Parliaments have succeeded in removing from the laws a host of the specific border restrictions which existed prior to July 2006 and this is evident in each of the five core regimes.
A business established in any CSME Member State can benefit from the following key elements of the Single Market:
Firstly, there is THE long standing FREE MOVEMENT OF GOODS among all CARICOM Member States. Within this free trade area, there are no import duties on goods of CARICOM origin – As against the import duty regime for third country goods entering the regional market which ranges from 40% for agricultural products to 25% for finished goods and 0-5% for inputs. This would of course change significantly when the EPA is fully implemented. Further, tariffs and quantitative restrictions on CARICOM goods have been removed in all Member States and there are initiatives by the Community to create a regime for the free circulation of goods imported into the Single Market, common safeguards and for the harmonization of rules on Non-Tariff Barriers.
In light of a number of trade agreements entered into by CARICOM, goods substantially produced in CARICOM – that is meeting CARICOM origin requirements – have preferential/free access into many markets across the world. As regards this latter phenomenon, access to the European Union market through first the Lomé and Contonou conventions and now the Economic Partnership Agreement which the European Commission has entered into with CARIFORUM countries (that is CARICOM and the Dominican Republic) represents an important benefit for producers in CARICOM. There is also preferential access for certain specified CARICOM products in markets such as USA, Canada, Columbia and Costa Rica, among others.
In the area of intra-Community trade, the issue of competition is a delicate one, in the face of the smallness of the economies of the CARICOM Member States. In this context, the Caribbean Community Competition Commission is a key Community Institution; further the CSME participating Member States have all strengthened their Intellectual Property Protection Laws.
Secondly, there is the FREE MOVEMENT OF SKILLED NATIONALS which gives approved skilled Community nationals the right to seek employment and to work throughout the Community without the need to obtain a work permit. It must be noted here that this Region is home to a skilled and trained workforce, many of whom are sharing their skills and expertise in a number of Commonwealth countries. Eligible catergories of skilled persons include: all University Disciplines and Non-University Graduates such as nurses and teachers, managerial, technical and supervisory personnel and artisans who are certified with Caribbean Vocational Qualifications.
Thirdly, the Single Market provides for the FREE MOVEMENT OF SERVICES among its members. This permits service providers to deliver services across borders or by physical presence or through temporary presence of natural persons who are entitled to freely practise their professions throughout the Single Market. With very few exceptions, the vast majority of service sectors and industries within the CSME have been fully realized. Some of our major and most attractive service sectors include: tourism, financial services, construction, transportation and communications.
Fourthly, the Single Market allows for the FREE MOVEMENT OF CAPITAL which is intended to allow CARICOM Nationals to:
– Freely transfer money from one Member State to another whether to pay for goods or services or for the purpose of investment or for the repatriation of income or profits.
– Have equal rights to buy stocks and shares issued in any Member State;
– Have access to a wider source of capital; and
– Diversify investment portfolios.
While still relatively small by world standards, we have developed an active capital market which is expanding mainly in the areas of corporate bonds and stocks.
Establishing a company under the Companies laws of the Member States is a straightforward and simple affair. The Registrars of Companies will issue a certificate of registration to an enterprise which is incorporating for the first time or which simply seeks to register an entity which was previously incorporated in the country of origin of the principals. In addition, under the Rights of Establishment, investors do have access (not necessarily ownership) to land, building and other property on a non-discriminatory basis for purposes directly related to their investment (with a similar entitlement to service providers);
To summarize, the Single Market:
- Would offer a ready CARICOM market for goods and services across 13 countries with a population of just under 15 million in addition to such markets as CARICOM has “earned” through trade Agreements;
- Businesses would be able to recruit skilled workers from across 13 different countries, thereby improving access to specialized training and technology transfers, which will serve to expand the knowledge base and capacity building skills in various sectors;
- Provides for harmonised standards of production not only for goods but also for services (to this end there already is a CARICOM Standards Body – The CARICOM Regional Organization for Standards and Quality (CROSQ);
- Offers an enhanced framework for small business development, for example, niche marketing, formation of partnerships and joint ventures;
- Offer opportunities for increased economies of scale particularly from natural resource rich locations;
- Generally offer greater opportunities for firms to access a wider market for raising capital at competitive rates, thus allowing the productive sectors to be more competitive at the regional and international levels.
The CARICOM Single Economy Ladies and Gentlemen, further to the Single Market, Member States are in the process of developing the Single Economy. Critical to this is a harmonised macro-economic policy framework that includes the following areas:
– A harmonized regime with respect to cross-border investment that contributes to the Region being one, rather than fifteen different jurisdictions;
– The adoption of a harmonised investment incentives regime. Such a harmonized incentives regime was agreed among Member States in 1973 but WTO rules of the game, have made these arrangements obsolete and a new CARICOM instrument is being developed;
– A continuously improving environment that is conducive for “Doing Business”. In fact, in the World Bank Report of 2008 in its section on Benchmarking Entry Regulations, 5 out of the top 6 countries globally with the fewest procedures to start a business are CARICOM Member States (Dominica – 5 procedures, Grenada – 6; Saint Lucia – 6, Jamaica – 6, and Antigua and Barbuda – 7)
– Monetary cooperation with currency convertibility leading eventually to a single currency in the CARICOM region. Already eight CARICOM countries have a single currency, which has a favourable effect on the minimization of transactions costs; and
– A regional capital market in which firms that move cross-border can already access the banking system for working capital. Concerning equity capital, some but not enough progress has also been made towards integration of the regional stock markets. There is also an emerging corporate bond market.
Helping to complete the CARICOM economic and financial landscape are the Caribbean Development Bank (CDB) and the CARICOM Development Fund (CDF), the latter being established “for the purpose of providing financial or technical assistance to disadvantaged countries, regions and sectors”. This latter financial mechanism reinforces the special regime in the CARICOM relationship for the Less Developed Member States.
Ladies and Gentlemen, the outline which I have just sketched points to the requirements necessary to create the Caribbean Single Market and Economy and through it a fully dynamic, internationally competitive business environment.
In addition to the CSME, the Community offers the investor certain other distinct advantages which include but are not limited to:
- A Stable Political Environment
- An attractive location, which is critical in any business venture (CARICOM Member States are geographically located between two (2) continents and we are a gateway to North and South America as well as to Europe).
- Our Member States are blessed with significant natural resources – oil and gas in Trinidad and Tobago; bauxite in Jamaica and Guyana; and Gold and Diamonds in Guyana and Suriname, and vast forest resources and arable lands in Guyana, Suriname and Belize and a large number of beautiful beaches in more than one Member State.
- Throughout the Community we have an infrastructure – roads, air and sea transport, electricity and telecommunications – reasonably capable of supporting almost all types of businesses.
- Several of our Member States offer various attractive investment incentives to investors although the packages vary from one Member State to another.
- Different levels of Preferential Market Access to the United States, Venezuela, Colombia, Costa Rica, Cuba, Dominican Republic and one of the Commonwealth’s own – Canada which, along with certain provisions of the Economic Partnership Agreement with the European Union, provide access to a potential market significantly larger than that which CARICOM on its own provides.
Ladies and Gentlemen, the Region’s business climate is also as warm and welcoming as the Region’s tropical sunshine and blue sea waters. Our Member States are open, market-driven economies and the encouragement of private enterprise and foreign investment is given high priority. Our Governments are positive to foreign investments, especially those designed to make a contribution to the region’s economic and social development.
It should therefore not be a surprise that several prominent international companies have found a profitable investment climate in the Caribbean Community. These include British Petroleum, British Gas, BHP Billiton, Repsol, Citicorp, Coca-Cola, Fujitsu ICL, Johnson & Johnson, PricewaterhouseCoopers, Royal Bank of Canada, Mittal Steel, 3M Interamerica, Deloitte & Touche, Lever Brothers, and Toyota, to name some.
The current global economic and financial crisis has hit the Region hard as regards commodity exports eg bauxite, tourism, remittances and other activities. This situation however can be turned around into an opportunity to exploit the attractiveness of the CARICOM as a dynamic business location – an ideal region for doing business. This is certainly not beyond the capacity of our governments and our capable regional private sector organisations.
With specific reference to the region’s attractiveness for the Commonwealth, the similarities in language, legal systems and certain institutional arrangements are among the bonds that we share, which would be beneficial in strengthening our business cooperation. Finally neither our tax systems nor our trade unions are excessive in their demands.
I therefore end by saying Ladies and Gentlemen that notwithstanding the global economic and financial crisis – perhaps in light of the crisis – and I recall well the Prime Minister of Jamaica saying ‘let us not waste a good crisis’, “CARICOM IS OPEN FOR BUSINESS.” That is the message I bring you and we in CARICOM are beckoning you to come on board. WE ARE READY AND WAITING TO WELCOME YOU.
I thank you.
EXTRACT FROM THE REVISED TREATY OF CHAGUARAMAS
ARTICLE 6
Objectives of the Community
The community shall have the following objectives:
(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 Stats’ foreign and [foreign] economic policies; and,
(i) enhanced functional co-operation, including –
(i) more efficient operation of common services and activities for the benefit of its peoples;
(ii) accelerated promotion of greater understanding among its peoples and the advancement of their social, cultural and technological development;
(iii) intensified activities in areas such as health, education, transportation, telecommunications.
