In 1991 thirteen nations located in or bordering on the Caribbean Sea were members of the Caribbean Community and Common Market (Caricom--see table B, this appendix). Observers included Anguilla, Bermuda, the British Virgin Islands, the Dominican Republic, Haiti, the Netherlands Antilles, and Suriname. In 1991 the British Virgin Islands, the Dominican Republic, and the Turks and Caicos Islands were being considered for full membership. The members faced problems typical of many developing societies: high birth rates, unemployment and an unskilled labor force, inadequate infrastructure, balance of payments constraints, and insufficient domestic savings to achieve development goals. In addition, Caricom nations lacked diversified economies and were incapable of producing most capital goods and some basic consumer goods necessary for productive expansion. The Caricom nations, therefore, were forced to rely heavily on imports of essential goods. As a result, development goals were subordinated because of the need to raise foreign exchange to pay for the imports.
Since 1981 the ability of Caricom nations to raise the needed capital via export expansion has been severely limited by the lack of export diversification and reliance on primary products and tourism services, which are extremely vulnerable to changing forces of demand, supply, and price in the international political economy. In 1991 intraregional cooperation was urgently needed to create an atmosphere conducive to overcoming the handicaps of small market size, economic fragmentation, and external dependence.
Caricom's goal of regional integration was designed to serve as a catalyst for sustained growth in the short or medium term by allowing for market expansion, harmonization of production strategies, and development of economies of scale. Integration was also expected to promote industrial growth by eliminating excess capacity in the manufacturing sector and by stimulating investment in new sectors of the expanded market. The long-term hope was for balanced growth, minimal unemployment, a higher standard of living, and optimal use of available human and natural resources.
Following the example of the European Economic Community (EEC), many nations have organized themselves into regional integration schemes, such as Latin America's Central American Common Market, the Latin America Integration Association, and the Andean Pact. The Commonwealth Caribbean archipelago made a serious move toward establishing a unit of integration by forming the West Indies Federation (WIF) in April 1958. The federation, formed under the auspices of the British, was doomed from the start by nationalistic tendencies and the lack of taxation privileges and failed when Jamaica and Trinidad and Tobago attained independence and withdrew in 1962. Nevertheless, a few institutions, such as the University of the West Indies (UWI) and the Regional Shipping Council, were established under the short-lived federation and continue today. After the demise of WIF, economist Arthur Lewis attempted to organize a smaller body among the Eastern Caribbean islands; however, his efforts yielded little success, and most of the islands reverted to British colonial status.
The next call for a regional Caribbean community was made in a January 1962 speech by Eric Williams, former prime minister and first head of state of the independent Trinidad and Tobago. However, it was not until the late 1960s that advocates of a new federation focused their attention on the issue of regional integration. In July 1965, the contemporary nations of Antigua and Barbuda, Barbados, and Guyana signed the Treaty of Dickenson Bay, which established the Caribbean Free Trade Association (Carifta). Under the terms of the 1968 Treaty of Saint John's, Carifta was widened to include Anguilla, Dominica, Grenada, Jamaica, Saint Kitts and Nevis, Saint Lucia, Montserrat, Saint Vincent and the Grenadines, and Trinidad and Tobago. Although a free-trade area was established, Carifta did not provide for the free movement of labor and capital or the coordination of agricultural, industrial, defense, and foreign policies. Thus, over the next five years, little progress was made toward creating a regionally integrated unit. In 1970 the prospect of Britain's joining the EEC alerted the islands to their vulnerability to any disruption in their preferential trading ties with Britain. In the same year, economists at the UWI issued a report contending that the creation of a free-trade area alone was not sufficient to procure full gains from regional integration. These events led to the development of the present Caricom structure.
In 1973 the Carifta nations signed the Treaty of Chaguaramas, replacing the ineffective Carifta structure with Caricom. Caricom has three essential components: economic integration based on a regional common market; functional cooperation in such areas as culture, education, health, labor relations, tourism, and transportation; and coordination of foreign and defense policies. Although the regional common market is an integral part of the broader-based community arrangements, it has a completely separate identity juridically. Thus, it was possible for the Bahamas to become a member of the community in 1983, without joining the Common Market. In 1981 the seven Eastern Caribbean island nations-- Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Lucia, Saint Kitts and Nevis, and Saint Vincent and the Grenadines-- established an associate entity, the Organisation of Eastern Caribbean States (OECS), which replaced the West Indies States Association (WISA) as the islands' major administrative body. The OECS coordinates development strategies among the member nations and provides for cooperation in economic, foreign policy, and defense matters. The OECS was created after studies indicated that most of the benefits derived from integration were flowing to the larger nations of Caricom (especially Jamaica and Trinidad and Tobago) at the expense of the smaller nations.
The institutional structure of Caricom consists of the Heads of Government Conference, Common Market Council of Ministers, Caribbean Community Secretariat, and other special bodies (see fig. A). Unlike in the EEC, these bodies are not supranational; each member has a right of veto and thus retains much of its national sovereignty. Decision making in Caricom, although centralized at some levels, is quite decentralized at others.
The Heads of Government Conference is the supreme decision- making body. Each member state has one vote, and a unanimous vote is required to legislate decisions or to make policy recommendations. The conference determines the policies to be pursued by Caricom's related institutions. This conference also is responsible for concluding all treaties, making financial disbursements, and maintaining relations with other international organizations.
The Common Market Council of Ministers is the second principal body of Caricom and the principal body of the regional Common Market. The Common Market Council consists of one ministerial representative from each nation. Decisions are also made by unanimous vote, with minor exceptions. This council resolves problems and makes proposals to the Heads of Government Conference to achieve efficient development and operation of the regional common market.
The Caribbean Community Secretariat is Caricom's principal administrative component. The Secretariat operates to serve the interests of the region rather than those of each government. Although the Secretariat has no decision-making power, its discussions, studies, and projects have made it a dynamic element in the integration process.
Other offices responsible for specific sectoral aspects of regional integration are the thirteen Standing Committees of Ministers (health, education, labor, foreign affairs and defense policy, finance, agriculture, mines and natural resources, industry, transport, legal affairs, energy, science and technology, and tourism). In addition, independent associate institutions include the Caribbean Agricultural Research and Development Institute, the Caribbean Development Bank (CDB), the Caribbean Examinations Council, the Caribbean Tourism Research and Development Centre, the Council of Legal Education, the University of Guyana, the UWI, Disaster Emergency Response Agency, the Caribbean Meteorological Organisation, the Caribbean Food Corporation, the Agricultural Research and Development Institute, the Regional Shipping Council, the Caribbean Trade Information System, and the Caribbean Marketing Enterprise. Finally, the Joint Consultative Group, comprising business, consumer, and trade groups, meets to review the integration process and ensure interest group participation in Caricom activities.
Caricom seeks to achieve economic integration through market forces. The Common Market was established to promote intraregional trade through: trade liberalization by removing duties, licensing arrangements, quotas, and other tariff and nontariff barriers to trade; Rules of Origin; a Common External Tariff (CET) and a Common Protective Policy (CPP); and trade arrangements such as the Agricultural Marketing Protocol and the Oils and Fats Agreement.
The Common Market contains a number of important mechanisms for liberalizing trade. These include eliminating extraregional export duties, removing quantitative restrictions on regional exports, permitting free transit for products of member nations, and eliminating quantitative restrictions on imported goods. Article 28 of the Treaty of Chaguaramas permits the application of quantitative restrictions if the nation has severe balance of payments problems. At the 1987 annual conference, Caricom agreed to abolish all obstacles to trade by October 1988. Seventeen products, however, were allowed an additional three years of protection with all tariffs on them to be removed by 1991.
The Rules of Origin establish the conditions of eligibility of regional products so that they may be considered of Common Market origin and thus qualified for preferential treatment. In 1986 a new set of Rules of Origin was adopted to increase the use of regional products and promote employment, investment, and savings of foreign exchange.
The Treaty of Chaguaramas mandates gradually implementing a CET and CPP. The CET stimulates local production by imposing low tariffs on capital goods and industrial raw materials and higher tariffs on value-added (finished) products. The CPP standardizes quantitative restrictions to protect specific regional industrial sectors. Together, the CET and CPP, coupled with intraregional trade liberalization, were expected to stimulate reciprocal investment and trade among member countries.
The final market integration mechanism aims at providing guaranteed markets and prices for Caricom exports to overcome the volatile trade in primary commodities. The Agricultural Marketing Protocol and the Oils and Fats Agreement regulate intraregional trade via certain buy-and-sell accords at fixed prices resulting from shortages or surpluses within Caricom. Caricom also has a Guaranteed Market Scheme whereby in certain circumstances Jamaica, Barbados, and Trinidad and Tobago will purchase fixed quantities of agroproducts from the other member nations.
Joint regional action in production and marketing activities is viewed by Caricom as a means of coordinating and controlling each member nation's output to avoid injury to other members or to the entire region. Coordinating policies is also intended to encourage specialization and complementary production. One important mechanism in this regard is regional industrial programming aimed at promoting specialization and economic diversification and avoiding duplication of investment. Although industrial programming was first considered in 1973, concrete actions did not begin until 1985. In 1988 members agreed to fully implement the Industrial Programming Scheme by 1993 but progress toward realizing the plan was slow. The most-cited example of industrial cooperation and integration was a regional alumina refinery that was to use bauxite from Jamaica and Guyana and oil from Trinidad and Tobago. Although the project was thoroughly discussed during the 1970s, it remained doubtful in the 1991 that such a project would ever be realized. In addition, there were agricultural programs that represented joint efforts to provide extension, marketing, and research and development services to reduce unit costs, increase quality and yield, and slash imports of basic foodstuffs.
The Regional Food and Nutrition Strategy is the main instrument for Caricom's agricultural development, and it establishes a framework and identifies priorities for a regional approach to agricultural self-sufficiency. The Caribbean Food Corporation, founded in 1976, is the main mechanism for planning and implementing the strategy's objectives. Also, a Food and Nutrition Institute was established at the UWI in Mona, Kingston, Jamaica.
Transportation is indispensable for effective trade, export promotion, and other integration objectives. Cooperation in maritime transportation was envisioned through the West Indies Shipping Corporation (WISCO), which was established in 1961 and restructured in 1975. WISCO went bankrupt in 1992 and was replaced by the Regional Shipping Council. WISCO theoretically provides services to all Caricom nations. In early 1987, however, Belize, Dominica, and Saint Vincent and the Grenadines withdrew from WISCO, claiming they had received few benefits from the service. In 1991 air transportation remained inadequate because of the lack of coordination among the existing airlines. Standardizing air transport by coordinating and planning routes and fares, as well as mergers, was necessary to improve service and reduce costs. A proposal was made in 1991 to restructure and coordinate regional air service.
Tourism is important to the region, providing foreign exchange, increasing employment, encouraging the production of tourist- oriented products and services, and stimulating the construction of basic infrastructure. Some regional cooperation in tourism has been carried out by the Caribbean Tourism Association, the Caribbean Tourism Research and Development Centre (located in Barbados), and the Hotel Training School at the UWI in the Bahamas. Nevertheless, in the early 1990s further cooperation was needed to link the tourism sector to the rest of the economy and to establish regional tourism enterprises.
Financial cooperation is intended to fulfill the objectives of economic integration by facilitating payments for intraregional trade and by mobilizing investment funds to productive sectors of the economy. The principal vehicle for financial cooperation is Caricom's Multilateral Clearing Facility (CMCF). It was established in 1977 by the central banks and other financial entities of Caricom's members. The facility's objectives are to reduce the use of foreign exchange and expedite intraregional payments through credit and other financial arrangements. Other related mechanisms include harmonizing exchange rates by pegging the six existing currencies to the United States dollar and by issuing regional travellers' checks through the Central Bank of Trinidad and Tobago. Finally, the CDB contributes to the equitable development of the region by providing low-interest loans for projects and related integration plans.
The Treaty of Chaguaramas also envisioned coordinating efforts in many noneconomic areas. The Caricom structure has formalized and expanded this type of cooperation to include meteorological services and hurricane insurance; health and nutrition services; technical assistance; public utilities; education and job training; broadcasting, printed media, and information; culture and language; social security, labor, and industrial relations; science and technology; and harmonizing the laws and legal systems within Caricom. This cooperation has been successful in improving services to the member nations (especially the smaller ones) and lowering costs of activities through joint ventures. The regional university and health and nutrition systems are examples of successful functional cooperation.
The Heads of Government Conference and the Standing Committee of Foreign Ministers of Caricom are responsible for coordinating the defense and foreign policies of member nations to increase their international bargaining power. Caricom has been able to present a regional foreign policy position in defense of the principles of regional security and nonintervention, support of the territorial integrity of Guyana and Belize in their border disputes; and various negotiations for the Lomé Convention (see Glossary), by which many less developed nations have gained preferential access to EEC markets and economic assistance. The Lomé Convention is updated every five years.
One method of evaluating Caricom's integration efforts is to look at three of its principal goals: defense and foreign policy coordination, functional cooperation, and economic and trade cooperation. In 1991 some positive results had been achieved in defense and foreign policy coordination. Caribbean expressions of solidarity on issues of regional security and territorial integrity focused international attention on the region and strengthened Caricom's bargaining position in negotiations with regional and extraregional nations and in international forums. Ultimately, however, national concerns have always overshadowed regional interests. The ideological pluralism of the region and the often drastic changes in government orientation have hurt the coordination process through bilateralism and polarization of interests.
Functional cooperation had improved by 1991 as reflected in the plans for regional air transport, education, and health systems. However, Caricom had not expanded beyond these programs to develop common cultural and political linkages. Although a Caribbean parliament could potentially be an important force, in 1991 none appeared likely to materialize. Many observers argued that Caricom had spread itself too thin and should concentrate on solving problems rather than expanding.
Economic and trade cooperation had also improved. Examples of such improvements are Caricom's collective ability to mobilize large volumes of external capital, to gain greater access to external markets, to facilitate significant financial transfers to its members (especially non-oil-producing and non-oil-refining nations), and to achieve a fair degree of internal market access. Nevertheless, two outstanding shortcomings remained: the failure to achieve significant benefits from complementary use of the region's human and natural resources and the inability to formulate a common policy vis-à-vis foreign investment. Both of these issues have immense significance for the long-term development objectives of greater self-reliance and reduced external dependence.
Although the increase in intraregional trade in the 1973-81 period consisted largely of manufactured consumer products not previously traded, such an increase indicated neither diversification nor specialization of production as envisioned by Caricom's designers. On the contrary, duplication of production was evident. Coupled with the foreign-exchange crisis and the weak extraregional trade performance since 1981, the nations have been forced to borrow from abroad; this has caused increased foreign debt and reduced imports of consumer goods, which comprise much intraregional trade. The Caribbean Community Secretariat reported that the decline in intraregional trade was approximately 33 percent in 1986, following declines of 3.3 percent in 1985, 10.9 percent in 1984, and 12.2 percent in 1983. The late 1980s, however, saw a dramatic reversal in the trade decline. The value of trade within within the community rose 8 percent in 1987, 156 percent in 1988, and over 20 percent in 1989.
At their eighth annual meeting in 1989, the Conference of Heads of Government agreed to implement completely the provisions of the Treaty of Chaguaramas by July 1993. These measures included the full implementation of a common external tariff, free movement of skilled labor, establishment of the Caricom Industrial Programming Scheme, removal of all barriers to internal trade, and establishment of regional air and sea transportation systems.
Since its inception, Caricom has experienced continuous crises. These have occurred to such a degree that many observers have come to regard the situation as a natural condition associated with developing nations, especially in light of external debt and trade constriction. However, in the early 1990s many Caribbean experts expressed cautious optimism because the institutional framework of the community remained intact, intraregional dialogue was maintained, and trade and functional cooperation continued to show resilience.