We have decided that the state has now been reached where specific initiatives must be taken to implement Articles 34, 46 and 47 of the Common Market Annex to the Treaty of Chaguaramas (dealing with external trade policy, Common Market industrial programming and joint development of national resources). These specific initiatives must accompany efforts to formulate a truly Common External Tariff (CET) and Common Protective Policy against Third Countries and a revised Regime for the Harmonisation of Fiscal Incentives to industry – taking into account, in both exercises, the need to produce at competitive prices for both the regional and extraregional markets.
2. A major effort must now be made to promote and establish mechanisms and arrangements that will result in greater complimentary in the structures of production of our respective countries. Such an effort should be geared, wherever feasible, towards the utilisation of both intraregional and extraregional market opportunities. The mechanisms and arrangements themselves must be flexible enough to be tailored to the concrete opportunities that arise.
3. We are convinced that in the present economic situation, the closest possible cooperation should be pursued between governments and the private sectors so that national capacities could be fully mobilised in developing regional production.
4. In order to promote greater regional investment initiatives, particularly in the development of joint ventures, all of our Member States have now indicated their readiness to adopt and introduce a CARICOM Enterprise Regime by 31 December 1986. We have instructed the Secretary-General of CARICOM to convene an early meeting of regional officials for a final review of the draft text of the Regime to see whether any of its provisions require updating in the light of recent developments and to report promptly to Member States on the matter.
5. We recall earlier decisions by our Conference and the Standing Committee of Ministers responsible for Industry (SCMI) on an operational Regime for CARICOM Industrial Programming. We now mandate the Secretary-General of CARICOM to embody these decisions in a Protocol for signature by Member States before the end of this year.
6. We now emphasise the need for the Standing Committee of Ministers responsible for Industry, national Ministries of Industry and agencies responsible for investment promotion and the private sector to direct their efforts to begin implementing the projects which have been identified. Conference looks forward to being advised within the next two years that several such projects are in production.
7. In relation to external trade policy, we agree upon the need to focus more sharply on specific markets in a phased approach towards the widening of our trade and economic relations with the rest of the Caribbean and the mainland countries of Latin America as well as with non-traditional markets in the rest of the world. We recognised in the Nassau Understanding, adopted at our Fifth Conference, that, as a first step, CARICOM should develop trade and economic cooperation agreements with the Dominican Republic, Haiti and Suriname. Increased attention should also be given to expanding trade with the French and Netherlands Antilles. In this regard, we call for a speeding-up of the work of the Joint Technical Groups between CARICOM and the Dominican Republic, Haiti and Suriname.
9. We also mandate the Secretary-General of CARICOM to speed up the work on the negotiation of broadly-based trade and economic cooperation agreements with the Member Countries of the Andean pact and with Brazil and Mexico.
10. We are aware of the importance and urgency of improving and developing transportation and marketing infrastructure within CARICOM as well as between CARICOM and the wider Caribbean/Latin American area.
11. We are acutely conscious of the importance to our trade and economic development of the forthcoming new round of multilateral Trade Negotiations within the GATT and of the work that will shortly begin under the auspices of UNCTAD on the negotiations of a Global System of Trade Preferences (GSTP) among developing countries. We have agreed that the CARICOM Countries should actively participate in both of these negotiations and ask the Common Market Council to take appropriate steps to advance regional preparations for them.
12. We present the rationale underlying this Statement as appended.
4 July, 1986
BACKGROUND TO DECLARATION ON IMPLEMENTING ARTICLES 34, 46 AND 47 OF THE COMMON MARKET ANNEX TO THE TREATY OF CHAGUARAMAS (DEALING WITH THE EXTERNAL TRADE POLICY : COMMON MARKET INDUSTRIAL PROGRAMMING AND JOINT DEVELOPMENT OF NATURAL RESOURCES, RESPECTIVELY)
Production in our economies, especially the production of manufactured goods, is very similar and largely competitive. There is little complementarity. This derives essentially from two factors. Firstly, while some progress has been made in deepening our production processed, our manufacturing is still largely of a finishing character, based on raw materials, intermediate goods and components imported from third countries. Secondly, production is for the most part for our national market or for the market of some particular member of the Community. There is little specialisation at either the national or regional level, based on raw materials in the national economies, and there is no interlocking of enterprises based on the marriage of raw materials from different national economies. The result is that neither economies of large-scale production nor inter-country linkages in production are achieved.
Yet the importance of the greater use of the Region’s raw materials, of inter-country production linkages and of specialisation leading to larger scale and more diversified production and exports was recognised and provided for in the Treaty of Chaguaramas. Indeed, Article 46 on Common Market Industrial Programming and Article 47 on Joint Development of Natural Resources, both contained in the Common Market Annex to the Treaty of Chaguaramas, explicitly call for these approaches to be used alongside Internal Free Trade and a Common External Tariff and a Common Protective Policy against third countries. It has been underscored by the difficulties we have experienced in our trading among ourselves over the last 10 years. The pressures for protection against imports from other regional countries all point to the lack of inter-connectedness either at the level of the national economy or the enterprise.
One of the major constraints to the development of a firmly based manufacturing sector producing for both regional and extra-regional markets is the perceived lack of regional raw materials and other inputs.
Scope for Production Integration
A careful analysis of the raw material has shown across our Common Market reduced significant deposits of petroleum and natural gas, ceramic and bauxite clays, limestone and high-grade silica sands. We now produce steel and have significant foundry capacity. We have large forests, with a variety of hard and soft woods. We produce or used to produce large quantities of cotton. The fisheries resources are especially rich in certain parts of our seas, and with the international acceptance of the 200-mile Exclusive Economic Zone (EEZ), our fisheries resources might even be considered extensive. The land resources to produce large quantities of livestock, of grand and of fruits and vegetables for processing exist. We produce large quantities of sugarcane and are capable of producing significant quantities of agricultural materials such as cassava.
There is thus scope for a range of wood-based industries (plywood and veneer, pre-fabricated houses, wooden furniture, sashes, and doors, wooden boats, pulp and paper); of clay-based industries (ceramic ware – tiles, sanitary ware, table ware, craft ware fibre optics) for limestone and sand-based products (glass aggregates, silica, bricks, foundry moulds); for petroleum-based products (hydro-carbon based plastics, detergents and fertilisers); for sugar-based products (ethanol, animal feed, alcohol, pharmaceuticals, vinegar, yeast, building materials); for cotton and leather-based products; for processed foods and animal feedstuffs; for chemical lime and chemical pulp; and for steel-based products.
Technical, managerial, and to some extent entrepreneurial expertise exists in the Region to develop or undertake production based on all the resources identified. Furthermore, there is a reservoir of West Indian expertise and enterpreneurs abroad. The West Indian expertise at home and abroad can be combined and complemented by foreign expertise and enterprises willing to do business in the Region.
Limitations to Development of Integrated Industries
A major limitation to the development of integrated industries in the Common Market to date has been our perception, stated or unstated, that resources in one Member State are to be developed by that Member State either to provide inputs locally or exported outside the Common Market.
We have created only limited opportunities and mechanisms for the secure movement of capital and entrepreneurial and management skills to develop production based on our resources. The framers of the Treaty did not venture far in this are and we have made little progress since. While we have established some joint ventures among ourselves – the Caribbean Food Corporation, the Barbados/Trinidad and Tobago (Arawak) Cement Plant, the Caribbean Agricultural Trading Corporation, for example – these have been based either on special arrangements or on the legislation of the particular host country. Our national legislation pertaining to issues such as “Alien Landholding” gives no specific consideration to investors from other parts of the Common Market. Furthermore, our products, even of joint venture operations, have no real assurance of entry into our various markets.
The Way Forward
Member States of the Common Market should declare that nationals of other Member States are welcome to participate in the development of their natural resources. They agree to encourage the integrated development of the resources of the various Member States. In this regard, they should place priority on the implementation of projects in the food-processing, ceramics, and wood-processing sectors.