Update on the CARICOM
►  Updated Matrix on the Establishment of the CARICOM Single Market and Economy. 2005.03.16
      This matrix is periodically updated. The most recent copies are available at http://www.caricom.org (offsite link)
 

Background on CARICOM

Intraregional trade grew rapidly during the late sixties and early seventies encouraging countries to deepen the level of integration in the Caribbean. In 1973, Barbados, Guyana, Jamaica, and Trinidad and Tobago signed the Treaty of Chaguaramas Establishing The Caribbean Community and Common Market (CARICOM). A year later, Antigua and Barbuda, Belize, Dominica, Grenada, Montserrat, St. Kitts-Nevis-Anguilla1, St. Lucia, and St. Vincent and the Grenadines obtained accession to CARICOM.

The Treaty of Chaguaramas provided for two distinct entities that addressed different aspects of the integration process:  the Caribbean Community and the Caribbean Common Market.  The Community had a large scope mandate that encompasses social, political and economic aspects of the integration process; therefore, it concentrated on the promotion of functional cooperation, especially in relation to human and social development, the pursuit of a coordinated foreign policy, as well as in integrating the economies of Member States.  The Caribbean Common Market, a subordinated entity of the Community, focused on the strengthening, coordination, regulation, and expansion of the economic activity and trade relations among Member States so as to achieve the construction of a viable economic community of Caribbean Territories. Though most member countries participate in both entities, Bahamas only joined the Community and has not participated in either the Caribbean Common Market or its successor the Caribbean Single Market and Economy (CSME).

Another important feature of the Treaty of Chaguaramas was the concession of differential treatment to the less developed countries (LDCs). The CARICOM LDCs include the members of the Organization of Eastern Caribbean States (OECS)[2] as well as Belize (formerly British Honduras).   The MDCs include Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago.  The special regime for LDCs was contained in Chapter VII of the Treaty of Chaguaramas, which stipulated special arrangements in terms of tariff reductions, revenue, and internal taxation; in the consideration of special needs of LDCs in rules of origin, common external tariff and fiscal incentives; as well as in the application of temporary measures to protect domestic industries.

Despite changes in the driving vision of the integration process and the corresponding modifications of the Treaty of Chaguaramas, the division of the integration process into two distinct entities and the differential treatment of LDCs[3]   remain key features in the integration process of the Caribbean.

In its early years, CARICOM sought to promote the industrialization of the Caribbean, in part, through the adoption of high external tariffs that protected the nascent Caribbean industries from international competition. However, the birth of CARICOM also coincided with a period of lower growth and higher economic volatility in the region –mostly due to oil shocks of the 1970s - which prompted countries to revert to protectionist policies. As a result, intraregional trade did not take off – in fact, it contracted sharply during the early 1980s- and the promise of a dynamic regional market could not materialize.

In the late 1980s, efforts to revive the integration process resulted in a reformulation of certain objectives and institutions CARICOM. In 1989, throught the Grande Anse Declaration, members pledged to the establishment of Caribbean  Single Market and Economy (CSME) which included free movement of goods, services, capital and labor; the harmonization of laws affecting commerce; and intensifying the coordination of macro-economic policy and external trade and economic relations. These new objectives were to “provide the framework for competitive production for regional and international markets, thereby departing from inward-looking policies of the past”.

 Preparations for the establishment of the CSME included the negotiation of nine Protocols which effectively amended the Treaty of Chaguaramas. These Protocols are now Chapters within the Revised Treaty of Chaguaramas establishing the Caribbean Community including the CARICOM Single Market and Economy. In July 2001, the Heads of Government of CARICOM signed the Revised Treaty of Chaguaramas.[4] Though all twelve members have ratified the Revised Treaty as of October 2004, only Barbados, Belize, St. Lucia, and Suriname have enacted the Treaty into Domestic Law.

 A.- Trade Liberalization
To date, considerable progress has been made in intra-regional trade liberalization. Tariffs were eliminated and most non-tariff barriers have been removed.  However, The Treaty of Chaguaramas allowed for exceptions that relate to excluded products (Schedule I and Article 13), health and security concerns (Articles 23 and 24), dumping and subsidized exports (Article 19), safeguards (Article 29), balance of payment difficulties (Article 28), revenue and facilitation of development in less developed members (Schedule III and article 56).

Though many of these exceptions are still allowed under the Revised Treaty, the Treaty also made in roads in preventing the abuse of these provisions to disguise restrictions on trade within the Community, adopting a stricter language in the case of general exceptions, subsidies, and safeguards and eliminating a few provisions granting special treatment for LDCs.

Nonetheless, the Council for Trade and Economic Development (COTED) periodically reports the use of unauthorized import duties, discriminatory taxes, import licensing, and quantitative restrictions applied by member countries on goods of community origin. An October 2004 report by the COTED identified that several countries still applied unauthorized import duties or import licenses on a number of goods originated in the region, while nine countries still applied discriminatory taxes - environmental and other levies, inspection fees, consumption tax, consent fee, special import tax - on a large number of goods of community origin.


B- Common External Tariff - CET

After four years of negotiation, in January 1993, member countries adopted a CET for all goods except agriculture that was to be implemented in four phases by 1998. In the first phase, the initial ceiling of 35 percent was lowered to 20 percent. Agricultural goods continue to command a 40 percent tariff. The second phase of liberalization lasted from January 1, 1995 to December 31, 1996, with a ceiling of 30 percent. In the third phase, during the year 1997, the tariff ceiling was reduced to 25 percent, finally implemented, in the fourth phase, at 20 percent on January 1, 1998.  

There have been delays in the implementation of the CET. As of October 2004, St. Kitts and Nevis and Antigua and Barbuda were in early stages of the implementation process. However, the other 10 Member States[5] had completed the implementation of phase four. Another related initiative that also faced implementation problems was the project of revising the structure of the CET based on the 2002 Harmonized System. As of the same date as above, Only Jamaica and Trinidad and Tobago had taken action in this regard.

C. Articulating a common approach in trade disciplines

The Revised Treaty of Chaguaramas includes various provisions and in some instances whole chapters devoted to the regulation of trade-related disciplines. Chapter III and Chapter VI address the regulations regarding the establishment of Services, and transport policy respectively. Part Three of Chapter IV addresses issues such as intellectual property rights, environmental protection, standards and technical regulations, and  investment policy. Chapter VIII deals with competition policy, while Part five of Chapter Five sets up a regional approach to anti-dumping policies. Chapter IX includes provisions concerning dispute settlement.

The establishment of Caribbean Single Market and Economy (CSME) will result in the deepening of the harmonization of laws affecting commerce, as this is an express mandate of the Revised Treaty of Chaguaramas. Currently efforts have been limited to the elaboration of draft models of regional legislation to complementary to the Revised Treaty of Chaguaramas regulating services, customs legislation, competition law, consumer protection, anti-dumping and countervailing duties, and banking and securities legislation.

Institutional Structure
The original institutional structure of CARICOM was laid out in the Treaty of Chaguaramas of 1973.  In the early 1990’s, countries agreed to restructure and redefine the functional relationships between organs and institutions of CARICOM so as to enhance the effectiveness of decision making and implementation processes of the CARICOM in light of the objective of attaining the CSME. The resulting arrangement is stipulated in Protocol I to the Treaty of Chaguaramas (incorporated as Chapter Two of the Revised Treaty of Chaguaramas). The Principal organs of the Community are the Conference of Heads of Government and the Community Council of Ministers.

• The decision-making body is the Conference of Heads of Government, which meets annually. Decisions are generally based upon the principle of unanimity. In 1992, in order to help expedite the integration process, the Bureau of the CARICOM was established, made up of three rotating Heads of Government, and a Chairman post was created.
  

• The Community Council of Ministers consists of ministers responsible for community affairs or any other Minister designated by Member countries in their absolute discretion. The Community Council has primary responsibility for the development of Community strategic planning and co-ordination in the areas of economic integration, functional co-operation and external relations. The Community Council also has the responsibility for promoting and monitoring the implementation of Community decisions in Member States. Decisions by the Community Council – as well as for the other organs that support the principal organs - are based upon the principle of qualified majority.
  
  

The Principal Organs are assisted by four Ministers Councils and three Bodies of the Community, and an Administrative Secretariat

• (i) the Council for Trade and Economic Development (COTED), which is respornible for the promotion of trade and economic development of the Community oversees the operations of the CARICOM Single Market and Economy (CSM&E);
  

• (ii) the Council for Foreign and Community Relations (COFCOR) which is responsible for CARICOM’s external relations with international organizations and Third States.
  

• (iii) the Council for Human and Social Development (COHSOD), which is charged with the promotion of human and social development especially in the areas of health, education, labor and industrial relations, youth, women, and sports.
  

• (iv) and the Council for Finance and Planning (COFAP), which coordinates economic policy and financial and monetary integration of Member States.
  
  

• (i) the Legal Affairs Committee, provides advice on treaties, international legal issues, the harmonization of laws of the Community and other legal matters;
  

• (ii) the Budget Committee, examines the draft budget and work program of the Community and submits recommendations to the Community Council;
  

• (iii) the Committee of Central Bank Governors, makes recommendations to the COFAP on maters relating to monetary co-operation, movement of capital, integration of capital markets and monetary union among other topics.
  
  

•  The CARICOM Secretariat, based in Georgetown, Guyana, has traditionally held an administrative role, although recently this role has evolved to include the role of Chief Executive Office of the Community.

There are also nine institutions and four associate institutions that enjoy important functional relationships which contribute to the achievement of the objectives of the Community. These are:

• Institutions of the Community:
  - Caribbean Disaster Emergency Response Agency (CDERA)
  - Caribbean Meteorological Institute (CMI)
  - Caribbean Meteorological Organization (CMO)
  - Caribbean Environmental Health Institute (CEHI)
  - Caribbean Agricultural Research and Development Institute (CARDI)
  - Caribbean Regional Centre for the Education and Training of Animal Health and Veterinary Public Health Assistants (REPAHA)
  - Assembly of Caribbean Community Parliamentarians (ACCP)
  - Caribbean Centre for Development Administration (CARICAD)
  - Caribbean Food and Nutrition Institute (CFNI)

• Associate Institutions
  - Caribbean Development Bank
  - University of Guyana
  - University of West Indies
  - Caribbean Law Institute / Caribbean Law Institute Centre (CLI/CLIC)
  - The Secretariat of the Organization of Eastern Caribbean States

External Trade Relations

At the global level, CARICOM sought to strengthen its negotiating base.   Thus in 1997, the Regional Negotiating Machinery (CRNM) was established to coordinate the Community's external negotiations.  The priority areas of focus are the FTAA, Post Lome IV, ACP-EU Relations, non-economic initiatives of the Miami Summit including the Second Summit, and the World Trade Organisation. 

Sources of Information:

History of the CARICOM from the CARICOM Website <http://www.caricom.org/archives/caricom-history.htm> 

Jessen, Anneke and Ennio Rodriguez. The Caribbean Community: Facing the Challenges of Regional and Global Integration, Washington DC: IDB, 1999. 

Address to Trade Forum of Jamaica by the Rt. Honourable Owen Arther, Prime Minister of Barbados (off-site link)

CARICOM Report. Taccone, J. and Nogueira, U (ed)

Labour issues:  http://www.ilo.org/public/english/protection/migrant/download/imp/imp61e.pdf  (offsite link)