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US AND CARIBBEAN TRADE LINKAGES : FOSTERING PARTNERSHIPS FOR THE 21ST CENTURY : SPEECH BY EDWIN W. CARRINGTON, SECRETARY-GENERAL, CARIBBEAN COMMUNITY, AT THE FOURTEENTH ANNUAL ENTREPRENEURS OF THE YEAR GALA ORGANISED BY THE CARIBBEAN AMERICAN CHAMBER OF COMMERCE AND INDUSTRY, 22 APRIL 1999

I would like to begin by expressing my appreciation to the Caribbean American Chamber of Commerce and Industry (CACCI) for the honour of having selected me as its 1999 “Caribbean Roving Ambassador”. This has confirmed what my wife has long thought of my perpetual travelling.

On a more serious note, I take this opportunity to acknowledge her presence here with me this evening as I accept formal recognition of this status. I thank her for her steadfast and loyal support and sacrifice, and my children for their forbearance as I have gone about the world in the service of the Caribbean people.

I am also pleased to witness the tributes being paid to the entrepreneurs and leaders who have contributed to the business and community development of the United States and the Caribbean. Their vision, their diligence and ultimately their success are examples which should be emulated.

I note with humility that this award places me among an esteemed group including the Hon. Ray Kelly, then Under Secretary of the Treasury responsible for Enforcement, and former NYC Police Commissioner, now the Commissioner of United States Customs, the Hon. Shirley Chisholm, former United States Congresswoman and former Presidential candidate, the Hon. Donna Christian Green, Congresswoman from the US Virgin Islands, the Hon. Hubert Hughes, Chief Minister of Anguilla, and Congressman “Ed” Towns.

In accepting this award, I recognise that I will be expected to advance the goal of the Chamber which is to promote economic and social development among Caribbean-American, African-American and other minority communities. There is a natural symbiosis between this goal and that which I am required to pursue in my role as Secretary General of the Caribbean Community, that is, to foster the economic, cultural and social development and well-being of the Caribbean people.

In keeping with the theme of my address this evening which is “US & Caribbean Trade Linkages : Fostering Partnerships for the 21st Century”, it is my duty as Secretary General and therefore Ambassador of the Caribbean Community, and now as your Caribbean Roving Ambassador as well, to encourage and facilitate the involvement of the Caribbean-American and African-American diaspora in the development of the Region.

What really is the role of an Ambassador? Is it, as it was once defined, as one sent abroad to lie on behalf of his country! Seriously, an ambassador is expected to learn from, as well as to educate and inform, those with whom he or she interacts, about the country, region or organisation which he or she represents. Since I am in the fortunate position of being an ambassador twice over, you will understand if I give a brief description of the Caribbean region and the changes which we have been making in CARICOM to prepare for developments in this hemisphere and in the international environment in the early years of the new millennium.

The Caribbean Community

Charles Wagley described the Caribbean as a “cultural sphere” covering plantation America, that is, as stretching from the Southern States of the United States to the Brazilian North. Others, like former US President Ronald Reagan, have adopted a concept of a Caribbean Basin as a distinctive political area comprising a unique geographical constellation of continental states, including Guyana and Suriname on the northernmost part of the South American continent, the Island States and territories located in the Caribbean Sea proper, and the Central American countries which form the land bridge, as it were, between North and South America.

The Caribbean Community (CARICOM) of which I speak tonight is a central part of that “cultural sphere” described by Wagley, as it is of the political region of the Caribbean Basin used by former President Reagan. Inhabited mainly by peoples of African and Asian origin, and renowned for its natural beauty and cultural diversity, CARICOM comprises Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, Saint Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago – a community of fourteen sovereign states and one British dependency (Montserrat). Three other dependencies, the British Virgin Islands, the Turks and Caicos Islands and Anguilla, are Associate Members of CARICOM.

Though large in number of Member States, CARICOM has a relatively small population of six (6) million. With the finalisation of Haiti’s accession, that population will be closer to fourteen (14) million – a not insignificant market.

As many of you would know, a significant portion of the Region’s production of goods and service (GDP), has historically been derived from agriculture, mainly sugar, bananas, cocoa, rice and citrus. Mining industries, primarily bauxite, petroleum and gold, and to a lesser extent manufacturing, also make vital contributions to some CARICOM economies. Without doubt, its natural beauty and cultural diversity makes it one of the world’s premier destinations.

Its population is recognised for its high degree of literacy, and the education system produces skilled, easily trainable persons. Many of you present here tonight are testimony to that fact, and a number of American firms both in the US and the Caribbean have benefitted from the services of those highly skilled Caribbean nationals.

It is from this geographical, cultural and economic setting that CARICOM has evolved, starting with the earliest efforts at regional cooperation and integration in the late 1940s, while still colonies of the United Kingdom. Some of you may even recall the 1947 Montego Bay Conference on the Closer Association of the British West Indian Colonies which started the process that led to the failed Federal experiment of 1958-62, to the Caribbean Free Trade Area (CARIFTA) 1968-73, and then to the Caribbean Community and Common Market (CARICOM) 1973 to the present.

History will recall the contribution to this process of the many outstanding Caribbean men like T.M. Marryshow, Norman and Michael Manley, V.C. Bird, Errol Barrow, Forbes Burnham, Eric Williams and William Demas, among others.

The CARICOM we know today has grown from being a purely English-speaking grouping of states to embrace the Dutch-speaking state of Suriname (1995) and the French-speaking state of Haiti, currently under way, essentially changing the orientation from one of the West Indies to one of the Caribbean; at last getting away from the mistake of Columbus! This is in keeping with a decision of the leaders of CARICOM to adopt a more Caribbean Basin approach in CARICOM’s development strategy.

This decision has seen CARICOM spearhead the establishment of the Association of Caribbean States in 1994, a grouping comprising all the countries of Central America, including Mexico, the countries of CARICOM, Venezuela, Colombia, Dominican Republic, Cuba, and the Dutch and French Territories. This grouping of over 200 million people comprised of 25 sovereign states and a number of dependencies, with a Gross Domestic Product of over US$500 billion, is just beginning to assume a place of significance in the hemispheric and international environment, its major objective being to promote cooperation among its Members, especially in the fields of trade, transportation, tourism and disaster management. Much is expected of this body as the new century advances.

The Common Market

The Treaty of Chaguaramas which established CARICOM provides for a Caribbean Community dealing essentially with the coordination of the foreign policies of the sovereign states of the Region, and with cooperation in common services – functional cooperation – and for a Caribbean Common Market dealing essentially with trade and economic integration. This distinction between the Community and Common Market is important as it provides a flexible approach to regional integration, allowing thereby, for example, The Bahamas to be a member of the Community but not of the Common Market.

My comments this evening will focus on the Common Market aspect of CARICOM, although some of its most important contributions have been in the area of social development such as education (CXC), health (Regional Nursing Body), and cooperation in gender development – that is, in the activities of the Community.

The Common Market provides for the liberalisation of trade among CARICOM States, for a common policy in dealing with external trade, including a Common External Tariff, for the regulated movement of capital among Member States, for the coordination of economic policies and development planning, and for a special regime for the Less Developed Countries – which are all the Member States save Barbados, Guyana, Jamaica, Suriname and Trinidad and Tobago. In keeping with these provisions, trade among Member States is now free of duty and of any other restrictions. All Member States are required to apply the same customs duties on goods emanating from outside the Region by virtue of the Common External Tariff (CET). Member States are now in the final stages of reducing the CET to a maximum level of 20 percent, except in the case of agricultural products, which continues to be, for the time being, 40 percent. In fact, a substantial number of items entering the Common Market face tariffs of only 3 to 5 percent.

The rapidly changing global political and economic environment of the coming millennium, as well as internal social and economic pressures led to reappraisal of the status and future of CARICOM. As Prime Minister Arthur of Barbados stated in his address to the American Chamber of Commerce of Trinidad and Tobago a few years ago “the emphasis of regional economic integration must shift away from merely facilitating trade, and must allow for the fusion of Caribbean economic policy, the movement of capital and skills within the region, the building of our financial and capital markets, the development of Caribbean enterprises with the critical mass to function at the centre of an intensely competitive international business arena, a new accent on human resource development and export service activity, and the harmonisation of our taxation and our company legislation”.

It was a vision of this nature that led the Heads of Government at their 10th Meeting in Grand Anse, Grenada, in 1989, to decide that CARICOM would have to enhance its level of integration – in the jargon of the economists “deepen the integration process” by the creation of a Single Market and Economy. This meant revisiting the Treaty of Chaguaramas to permit integration beyond trade in goods to include free trade in services, movement of skilled labour and of investment capital, and deeper coordination and harmonisation of economic policies.

That process is already significantly advanced with seven of nine amending Protocols already completed. Also, decisions have already been taken to permit nationals of any Member State of the Community to establish businesses in any other Member State, and to be treated as a national of that Member State. Similarly, arrangements are in place for university graduates to enjoy the right to travel and work in any Member State without requiring a work permit. This process towards Free Movement of Skills throughout the Community is buttressed by arrangements which are already in force to allow for the transfer of pensions and other social security benefits.

As regards the question of attracting and stimulating investment, a matter in which you will no doubt have a keen interest, most Member States are implementing the Double Taxation Agreement relating to earnings from intra-regional investment. Progress is also being made in the area of capital market development. From 1993, for example, a scheme for the movement of capital was started with cross-listing and cross-trading of securities on existing stock exchanges. The three operational stock exchanges in the Region – Barbados, Jamaica and Trinidad and Tobago – were linked to facilitate this process.

This facility was not restricted to companies in those jurisdictions, but was extended to companies in any CARICOM Member State which satisfied the conditions of any one of the exchanges for listing as a public company. By the dawn of the new century these stock exchanges should be fully automated and linked for real time trading, and equipped with a central depository. The Bahamas, Belize, Guyana and the East Caribbean Currency Area are now moving to create national or sub-regional links into the regional system. The stock exchange of the Dominican Republic is also participating in the Caribbean market.

Finally, a Caribbean Investment Fund of US$150 million is currently being mobilised on behalf of the Community by ICWI of Jamaica, the Fund Manager selected by the Heads of Government, for private sector investment. Some US$30 million of that Fund has already been realised.

While the enlargement of CARICOM to include Suriname and Haiti will add significantly to CARICOM’s internal market as well as the enhancement of CARICOM into a Single Market and Economy, it will also improve the quality of that enlarged market. The market available to CARICOM producers is, however, much wider than that defined by the membership of CARICOM itself. CARICOM enjoys preferential access to markets of the Member States of the European Union through the Lome Convention. Under the Caribbean Basin Initiative, it enjoys preferential access to the United States market, which it is seeking to further improve to include some vital exports such as petroleum, petroleum products and garments, which are now excluded. It enjoys even more comprehensive preferential access to the Canadian market through the CARIBCAN Arrangement.

CARICOM has also expanded its market access for its producers by negotiating special trade and investment agreements with Venezuela and Colombia, and is currently finalising a free trade agreement with the Dominican Republic. The Heads of Government have also decided to negotiate free trade agreements with Central America and the Andean Community in the near future, and CARICOM is, of course, also participating in the negotiations to create the Free Trade Area of the Americas. Finally, CARICOM Member States are also members of the World Trade Organisation (WTO), and coordinate their position in this body.

The sum total of these initiatives is the creation of much greater market access for goods and services produced in CARICOM, including those produced in joint ventures with CARICOM entrepreneurs. The enhanced market access, internal and external, along with the existence of bilateral investment treaties which exist between some CARICOM Member States and the United States, constitute a significant incentive for US and other foreign investment into CARICOM.

US and Caribbean Partnership and Trade Linkages

The CARICOM Member States pursue a development strategy based primarily on partnership rather than on foreign control and domination. This concept of partnership is the one embraced by the President of the United States and the Caribbean Leaders and the one to which they committed themselves when they met in Barbados in May 1997. There, they adopted the Caribbean /United States Partnership for Prosperity and Security in the Caribbean.

That Agreement, which comprises a Declaration of Principles and a Plan of Action (the latter of which is made up of two parts – one on Trade, Development, Finance and the Environment, and the other on Justice and Security), commits the United States and the Caribbean to cooperate on a wide front of mutual interests and concerns. These include programmes for improving the flows of trade and investment, fostering economic development including through special assistance in key sectors such as from telecommunications, environmental protection and energy development as well as for combating narcotics and arms smuggling, of halting money laundering, for dealing with the sensitive issue of deportation of criminals, and for assisting Caribbean scholars to attend US universities.

It is vital to note that the Plan of Action affirmed among other things that: “Strengthened trade and investment ties (our emphasis) between the United States and the Caribbean are essential to promote the economic development and diversification of the region and to improve the well-being of all our citizens. We recognise the special challenges and opportunities we will face in the highly globalised economy of the Twenty First Century. We are committed to work together to advance the prosperity and economic security of the people of the Caribbean, by facilitating expanded trade with United States through improved market access, increased investment in the Caribbean, and availability of technology throughout the region”.

This affirmation was made against the background of a long history of the US being CARICOM’s largest trading partner. It supplies CARICOM with about 45 percent of its imports and takes just under 40 percent of its exports. The sustainability of the trade relationship which CARICOM has enjoyed with the USA is however threatened by sharp changes in the balance of trade. For example, in 1980 CARICOM enjoyed a trade surplus of an estimated US$1.246 billion with the US, by 1997 this position has been completely reversed, showing a US$2.377 billion trade surplus in favour of the US. Indeed, over the period (1980-1997) the accumulated surplus in favour of the United States approximated US$10 billion. This is particularly revealing as in 1984 the Reagan Administration included all Caribbean States except Cuba as beneficiaries of the Caribbean Basin Initiative which confers preferential access to the US market.

This trend does not augur well for the long term capacity of CARICOM to finance its imports of goods and services, be they from the US or any other source. It is one which the Partnership and our efforts at cooperation and strengthening of trade and investment linkages would need to redress.

It is for that reason that the United States and the Caribbean agreed in the Barbados Plan of Action, for example, to seek to improve the CBI arrangements and to secure satisfactory market access for Caribbean bananas in their traditional European markets. With the CBI having not been improved, and with the Banana situation having been made decidedly worse by direct US action you can imagine the disappointment and anger of the Caribbean! Moreover, oddly enough with respect to the CBI such proposals as the Administration has made for its improvement have been more restrictive and ringed with greater conditionalities than those advanced by Senate and House leaders.

Caribbean leaders have therefore found it difficult to support those proposals. Herein lies one area in which there is scope for the diaspora to use its influence to further the interests of the Region.

As we look to the future, the CARICOM Single Market will offer ample scope for the further development of trade and investment. Some significant growth areas are to be found in telecommunications, informatics, financial services, cultural industries and selected professional services, particularly medical services.

US companies have a long history of involvement and partnership in CARICOM countries. The CARICOM countries have welcomed myriad companies such as Reynolds in the bauxite sector, Amoco and Texaco in petroleum, IBM and Intel in the computer industry, Colgate-Palmolive in the toiletry sector, Coca Cola, Pepsi, Kentucky Fried Chicken, and more recently MacDonalds and Pizza Hut in the food and beverage sector, and Chase Manhattan and Citibank in the banking sector. While these are mainly large multinational enterprises, there are many other smaller US firms seeking to establish such relationships.

The modes of investment have been many and varied, including direct foreign investment, licensing and franchising arrangements with domestic CARICOM companies. Also, arising from the Partnership Agreement, a number of cooperation mechanisms have been put in place to complement pre-existing ones. These include the annual US Secretary of State/Caribbean Foreign Ministers supervisory meeting, the US/Caribbean Joint Council, the Quick Consult Mechanism, the Trade and Investment Forum. These are all reinforced by mechanisms such as the annual Caribbean Latin American (CLAA) Miami Conference, the Caribbean Export Development Agency with offices in Barbados and the Dominican Republic, as well as specific trade and investment missions. In other words, there is a plethora of mechanisms constituting a structure which, if used prudently, should be equal to the task.

Forging Ahead with more Innovative Arrangements : Proposals from the Caribbean

To conclude, Mr. Chairman, Ladies and Gentlemen, as the 21st Century approaches, the Internet and electronic commerce have created excellent means for fast, efficient and economical commercial transactions, and for ferreting out new business opportunities for trade and investment. We must work quickly to electronically link up the information data centres through the Caribbean with America.

CARICOM is becoming increasingly prepared for strategic alliances with foreign companies, especially US ones. The critical factor that will sustain our economic expansion to permit sustained imports is the acquisition of technological capability and skilled people, through the combination of which we can develop efficient business processes and practices and deliver results. Strategies alone will only give us promises. We need to work together if we are to successfully exploit the newest frontiers of international investment strategies through sub-contracting, joint ventures, out-sourcing, research and development projects, and through mergers and acquisitions, which will be critical in helping companies on both sides to remain competitive.

In this context, there are many ways in which the diaspora can help the small- and medium-sized firms in the Caribbean Region to enter the international market. One such way is by facilitating the entry of their products into the distribution chains over which they may have influence or control. Government to Government agreements alone cannot work. The Governments only set the framework, but it is the business sector which must exploit it.

You will recall that earlier I pointed to a drastic change in the trade flows between our two markets, with US exports to the Region outstripping by a considerable degree its imports from the Region. The sustainbability of two-way trade will depend on how well we can maintain the balance between trade and investment, the two sides of the commercial equation between the two regions. I put it to you that the opportunities which I have outlined for increased trade, and the suggestions towards investment strategies which I have proposed can have an important countervailing influence on the trend of the trade balance problem, and indeed on development prospects of the Caribbean.

I hope that I have been able to achieve the twin objectives of making you aware of the recent developments in CARICOM as well as contributing to your consideration of business in the Region. When President Clinton and the Caribbean Heads of State met in Barbados, tribute was paid to the diaspora on both sides in the following words: “We recognised the heterogeneity and diversity, yet shared identity of our family of nations and people bonded by historic and ethnic origins, cultural ties and affinity and closer social and economic links. We remain appreciative of the significant contribution of our respective nationals as immigrant communities to the development of each other’s societies”.

As your Roving Ambassador, I would to report at the end of my tenure that as you have contributed to the enrichment and strengthening of the United States, so also would you have contributed to the enrichment and strengthening of the Caribbean Community.

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