Senator, the Honorable Delano Franklin, a KC Old Boy, is currently Minister of State in the Ministry of Foreign Affairs and Foreign Trade. He gave the following address at the Mona Campus of the University of the West Indies ' 8 th Annual Research Day. January 26 th , 2006 .
I have been asked to speak on the CARICOM Single Market and Economy (CSME): The Opportunities and Challenges.
Before doing so, however, I must extend my congratulations to the leadership of the University of the West Indies, Mona and specifically to the Principal, Professor the Honourable Kenneth Hall for once again hosting 'Research Day', an activity which seems to have now become a permanent fixture on the calendar of the University.
The issue of the CSME is now very topical, largely as a result of the publicity being generated by the upcoming signing by the Heads of the region of the documents to affirm the reality of the Common Market which came into being on January 1, 2006. While the signing will be a significant milestone, capping months of discussions, media releases, television and radio broadcasts on the subject, it appears that there are still some persons who know very little about the CSME.
INFORMATION DEFICIT
One should not be too surprised by this as a Survey on Jamaicans Perception of Regional Integration in 2003 revealed that 65 per cent of Jamaicans have never heard of the CSME and only 10 per cent could identify any component of the CSME. I am sure if a survey was carried out today, however, far more Jamaicans would know about the CSME, but we must not lose sight of the current information deficit. This information deficit is nothing new, it has plagued CARICOM since its inception in 1973.
The implementation of the CSME will not be as effective and, go as smoothly as it ought to, without the existence of an efficient regional media network which can bring accurate information to the people of the Caribbean quickly and regularly. It is almost unfathomable that we are able to access news from afar, within minutes, but we are unable to do so as quickly and as regularly between and among Caribbean countries.
The information deficit not withstanding, the creation of the CSME, as argued by Prime Minister Owen Arthur of Barbados, ' is unquestionably the most complex, the most ambitious and the most difficult enterprise ever contemplated in our region' .
WHAT THE CSME IS ABOUT
Let me try and simplify this complexity by outlining what the CSME is intended to be.
The CSME is a project which involves taking nearly all of the Member States of the Caribbean Community, which have hitherto operated as separate and distinct societies and economies and shaping them into a single market and a single economy. This is no different from Jamaica operating as one country rather than 14 distinct parishes.
For the CSME to come about fully, it requires a fundamental shift in the mindset of our people, the literal rearrangement in economic management and a different relationship between and among our respective countries.
In order for anyone to get an idea of the magnitude of the rearrangement required, it is important to understand that in order to bring about the single market alone, it required the amendment or creation of over 1,000 pieces of legislation in the six countries which are single market ready.
DISTINCTION BETWEEN SINGLE MARKET & SINGLE ECONOMY
It is important to make a distinction between the Single Market and the Single Economy. What came into effect on January 1, 2006 was a partial Single Market. The Single Economy is not yet in effect.
The Revised Treaty of Chaguaramas of 2001 states that 'the Caribbean should be reconstituted as a Single Market by the removal of existing barriers, not only to the trade in goods, but also the trade in services, capital flows, technology, that skilled persons should be able to move about freely, and that Caribbean citizens should enjoy rights of establishment of enterprise anywhere in the region' .
Six countries have already joined the single market. Another six should come on board by the middle of the year, while of the three others, The Bahamas has not yet signed onto the CSME; Haiti is currently facing a political and constitutional challenge and Montserrat is a UK Overseas Territory, and will need the requisite legislative authority to effectively participate in the CSME.
A Single Economy in CARICOM would involve the coordination of macro-economic and monetary policies, the harmonisation of fiscal policies, and a common currency. Due to the challenges which these issues pose, a decision has been taken by the Heads of CARICOM to have the Single Economy implemented in 2008.
It is important to note, however, that the region, without yet implementing the single economy, has been able to put in place a Regional Negotiating Machinery which pursues a common external trade policy. This means that rather than having 15 different countries pursuing 15 different trade agendas, the region has been able to marshal its forces into one effective machinery. Outside of the European Union, this has happened in no other trading bloc . It is an achievement of which, as Caribbean people, we should all be proud.
IMPACT OF GLOBALISATION
To compete with and withstand the pressure of larger and more powerful nations, small developing countries such as ours in the Caribbean have to create a larger and more dynamic single market and economy. Jamaica and the other CARICOM countries cannot afford to operate as separate entities.
As an example, in the Organization of American States or the Free Trade Area of the Americas, CARICOM has less than two percent of the population, but forty one percent of the number of votes.
With increased globalisation and the larger and wealthier countries seeking to set the ground rules, it is more advantageous for CARICOM to 'use one voice' and negotiate en bloc in hemispheric and global fora. With one punch we may not be able to create an impact, but with 15 consecutive punches we may be able to create an impact, large enough for others to realise that we cannot be ignored or taken for granted.
BENEFITS TO GRADUATES OF THE UNIVERSITY
The people of the Caribbean will better understand the CSME when they begin to experience the benefits. Graduates of the University are now experiencing some of those benefits.
Article 45 of the Revised Treaty declares that Member States of CARICOM must commit themselves to the goal of free movement of nationals within the Community.
The free movement of skilled labour entails the right of a national of CARICOM to seek work or engage in gainful employment in all CARICOM Member States, as either a wage earner or non-wage earner, without the need to obtain a work permit in the Member State in which the person desires to work.
As a first step towards achieving full free movement of skilled labour - graduates from all recognised universities, artistes, musicians, sports persons, media workers and managers, technical and supervisory staff attached to a company or self-employed persons are entitled to move and work freely in the Community. The Heads of the Community are committed to broaden these categories once all the necessary arrangements are in place.
Any person in the approved categories, who is desirous of working in another Member State, must first obtain a Certificate of Recognition of CARICOM Skills Qualification or what is now called a CARICOM Skills Certificate.
This Certificate will provide Immigration officials with proof that the person who is seeking to enter another Member State belongs to one of the approved categories. It is important to note that persons who do not belong to the approved categories will have to apply for a work permit.
There are two other critical aspects of the CSME of which members of the society must be aware.
Firstly, CARICOM nationals will be able to set-up a business or provide a service in any Member State, subject to the same rules which apply to nationals of the host country. This is called National Treatment.
Secondly, CARICOM nationals will be subject to all the applicable tax laws in the country in which they are employed. The Intra-Regional Double Taxation Agreement protects self-employed CARICOM nationals from paying taxes twice on the same earnings.
Apart from the challenge of correcting the 'information deficit' which currently exists, there are a few other challenges which I would like to raise. They are not necessarily new points, but points which I nevertheless believe ought to be kept on the front burner.
AIR TRANSPORT
First, the provision of adequate air transportation services for intra and extra-regional destinations has been constantly discussed. We cannot adequately create a single market in the region without making travel far less simple, less time consuming and cheaper.
The four airlines which operate out of the region are all doing so as a result of constant government subsidy. BWIA made net losses of US$28 million in 2003 and US$140 million in 2004. Air Jamaica made losses of US$55 million in 2003 and US$99 million in 2004. Bahamas Air has received capital injection from its Government and LIAT is currently seeking US$10 million capital injection. This situation cannot continue forever. As a matter of urgency, it is imperative that a regional approach be taken to pursue common functions jointly - both in the interest of the Single Market and in order to bring these airlines to profitability and reduce their burden on the region's public purse.
POLITICAL SOVEREIGNTY
Second: the issue of political sovereignty. Prime Minister Owen Arthur points out that one of the lingering consequences of the failure of political federation in 1961 is the 'strongly held conviction that any venture to forge deep political integration in the region is both inappropriate and impractical' .
In speaking about the CSME he further said that, ' a false pragmatism holds in the Caribbean that economic and political affairs can be compartmentalised'. Professor Alvin Wint refers to this situation as the 'dilemma of governance' , while Professor Norman Girvan describes it as 'the sovereignty dilemma' .
The position of the Government of Jamaica is quite clear on this matter. Prime Minister Patterson summed it up in 2003 when he outlined that, 'the leadership and the people of the region should explicitly accept that for the foreseeable future the Community will operate as an association of states, exercising sovereignty individually and collectively, and without prejudice to sub-groupings of the membership entering into political integration among themselves if they so desire'. Havelock Brewster describes this position as 'discretionary inter-governmental cooperation' .
The issue, therefore, of whether or not the CSME can become a meaningful reality without an alteration and rearrangement of the existing regional 'governance' structures has been and will continue to be a serious challenge to the leaders and people of the region.
INTRA REGIONAL TRADE
Third: The full implementation of the CSME will allow any CARICOM national to undertake economic activities in any country without restrictions. Let us remember, however, that except for a few hitches from time to time, we have had the free movement of goods prior to the advent of the Single Market. Despite this reality, the volume of intra-regional trade currently stands at approximately ten percent of total trade. This is primarily due to what is described by Alvin Wint as the lack of trade complementarity of Caribbean economies.
Except for Trinidad and Tobago which exports oil and lubricants, all the CARICOM countries are literally producing and exporting the same things. Intra-regional trade will only increase when there is increased diversification in what we produce. The challenge therefore is for the owners and managers of companies within the CSME to pool their resources in order to penetrate the markets of other countries and regions and secondly, for the Governments and the private sector of the region to develop a greater culture of production integration. The CSME will become stronger when greater efforts are made to pool our resources.
IMPLEMENTATION
Fourth: The CARICOM Single Market, having come into effect on January 1 this year, the real test or challenge will be the implementation of what is prescribed in the Treaty. In this regard, the people of the Caribbean Community are expecting the regional bureaucracy to work for them, not against them. The respective governments must ensure that the different agencies of government are familiar with the change in rules and regulations. This is particularly so at our airports and seaports.
CONCLUSION
Finally, the CSME must be made to be meaningful in the lives of the people of the Caribbean. There will always be the 'doubting Thomases', but as with the University of the West Indies, the Caribbean Examinations Council (CXC); the Caribbean Development Bank, and West Indies Cricket, among others, the CSME must be made to come to life. Let us all leave here with that resolve.
Senator, the Honorable Delano Franklin, a KC Old Boy, is currently Minister of State in the Ministry of Foreign Affairs and Foreign Trade. He gave the following address at the Mona Campus of the University of the West Indies ' 8 th Annual Research Day. January 26 th , 2006 .