UWI-CARICOM Project
Strategic Alliance for Institutional Cooperation

CSME:  IT IS NOT FOR FREE

 
Full implementation of the CARICOM Single Market and Economy (CSME) is an expensive transition for the Member States of the Community, from separateness to togetherness; a truth that is imperative for all stakeholders to comprehend.

Mr. Ivor Carryl, Programme Manager of the CSME Unit in Barbados, recently imparted a genuine life-lesson in CSME issues and procedures during an interview with the UWI-CARICOM Project. The discourse between Mr. Carryl and the Project underscored a triathlon that began with the Grand Anse Declaration in Grenada 1989, and more substantively with the signing of the Revised Treaty of Chaguaramas, which includes the CSME, by Heads of Government of CARICOM at the 22nd Meeting of the Conference in Nassau, The Bahamas, on 5 July, 2001.

Liberalisation, harmonisation/homogenisation and establishment of institutions are the necessary implementation tasks to be comprehensively executed in order to place each Member State on a secure, track-worthy CSME train for a lasting destination towards Caribbean integration. Simultaneously, stakeholders are obliged to conquer the other two limbs of the tripartite cognitive challenge relating to parameters of the Treaty, the association of sovereign states model for economic integration, and the need for superlative economic resources for implementing the CSME.

Money

Acknowledging that the pace of implementation is not as quick as the public would like, arguably, chiefly concerns the mass Caribbean public, Mr. Carryl in a manner not contrived, said:

“This thing (integration) is not for free. It costs money to do; all of it. It costs money to set up new institutions. One of the reasons why some of these implementation tasks have not been done is because Governments are checking to see if their fiscal capacity can afford them. The same people who are complaining about the [lack of] speed at which it is happening have to be prepared to pay their taxes so that the Governments can contribute to the requirement of putting the measures and institutions in place. The idea that integration is not moving quickly has to be disabused of people’s minds because it is not for free; it costs money,” he said.

Treaty parameters

Moreover, Carryl believes that political leaders are more willing to take up the challenge to steer their states into full integration in today’s environment, compared to those who signed the Treaty of Chaguaramas 1973.

“We had a Treaty of 1973 that talked about a Common Market, but did not have all of the commitments and instrumentalities in order to create it. There were two legal entities created under that Treaty, the Caribbean Community and the Caribbean Common Market. These were two separate legal entities according to the rules of international law that govern treaties.

The Common Market is now being transformed into the CSME. The Common Market provisions of the 1973 Treaty said that we will have a common trade policy in relation to goods, but there shall be no free movement of people. It spoke about the right of establishment but did not demand the elimination of exchange controls. The only sure thing that the Treaty of 1973 did was permit market integration in goods; little else.

If you do not have the legal basis within the agreement that was signed among States under the 1973 Treaty, you cannot force any state to do anything, or you cannot compel them to comply, because they didn’t commit to doing anything.

We have to be careful about statements like, ‘It has been 30 years’, because the question should be, 30 years agreeing to do what? If you didn’t agree 30 years ago to create a Single Market and Economy, then there is no possibility that it could have come into being,” Carryl reasoned.

Accordingly, a meagre half decade has elapsed since CARICOM’s political leaders signed the Revised Treaty unanimously agreeing thereby to pursue implementation of a Single Market and Economy.

“What we have done from then (2001) to now is fundamentally different from what we have done from 1973 to 2001", Carryl said.

Sovereignty

In addition, CARICOM’s approach to integration precludes political unity - making it more difficult to directly have sanctions imposed by the CARICOM Heads of Government or CARICOM organs on Member States.

“The Community makes the policies and the rules. But implementation is at the national level. For example, when the Heads of Government Conference made the decision for states to remove a specified list of restrictions, each Parliament, separately, must then change the domestic laws. The centre [that is the Community] can make the policy and rules but it cannot implement them. This has to be done by the Executive and the National Assembly, in each Member State,” he said.

The clutch on individual sovereignty by each member state is another reason that all of the Regional Institutions needed to help administer the CSME are yet to be established.  According to Carryl,

“It is a part of the fact of life; that states are not very inclined to giving up the power to do things at the national level, even if some of those things can be done better at the regional level – cheaper/more economically.”

Selecting the Regional Competition Commission for illustration, Mr. Carryl pointed out that EC$20M is required to run the Commission for its initial five years. However, the cost to each member state will double if attempts to administrate its own competition commission are made, instead of collectively operating one.

“First, it is [neither] sustainable nor viable to set up a commission in every country. Some of the domestic markets are just too small to support a commission. If each state puts its 10 cents into the Regional Commission it will give them all the services [that] they need. And we will be able to recruit the best expertise in the Region, so that the services would be of a certain quality,” Carryl appealed.

Single Market Vs Single Economy

The Single Market addresses liberalisation, harmonisation/homogenisation and establishment of institutions, relating to access to the market. The Single Economy tackles the formulation, coordination and implementation of macro-economic policies. The gamut of issues under the microscope for magnifying economic oneness include, monetary policy, the supply of money in the economic system, taxation and expenditure, the level of interest rates, the price system, inflation control, the stability of exchange rates etc.  Carryl said,

“The Single Economy phase is about measures, decision-making processes and institutional arrangements that are horizontal in their effect across the economy, as distinct from the Single Market phase which deals in specifics about, the labour market, the capital market, the market for goods, the services markets and so on.”

The will to work together in now very strong and CARICOM States have demonstrated that an active singular approach will enable full implementation of the CSME. There has never been a shift from the holistic idea of the CSME. It is only being implemented in progressive steps.

“It is not a question of a shift from Single Market to Single Economy. It is a question of progression. Integration is a process not an event and one cannot write an agreement like this and expect that every State will be able to put it in place tomorrow morning. It is not possible in our circumstances. You can [only] do it if all parties are agreed on everything and are prepared to take all of the legislative actions to transform the entire national economy that they control and this assumes that they have the resources to do so,” Carryl reiterated.

Liberalisation

The Liberalisation process was completed within the last five years. Liberalisation of trade in goods was done before that of services, capital establishment and skills which started in earnest in 2001. Only a small number of goods (less than 1 percent) are affected by non-tariff restrictions. In the case of services only telecommunications, air and maritime transport are not fully liberalised. Liberalisation of trade in services, liberalisation of capital, right of establishment (right of companies to move) and movement of people skills translate into a removal of restrictions at the border of CSME participating countries. The removal of restrictions blots out differences between nationals and non-nationals.

“That (liberalisation) has been completed for the most part. There are minor cases where this still needs to be done. And it is never going to be perfect. It is not perfect in the European Union. Not even in the US which is a federal structure is there perfect homogeneity within. For example, tax laws in different states are different. One of the things that people wrongfully do is expect 101 percent perfection. That is not going to happen.” Carryl stated.

CARICOM nationals can enter the market outside of their home state by three means:

  • As a wage earner
  • As self-employed
  • As a company

Harmonisation

In the current scheme of things, intra-regional migrants are forced to grapple with different market regulations upon entry into another state, and “that is not what produces a single market space.”

Consequently, harmonisation/homogenisation is essential for creating the Single Market zone. Mr. Carryl explained,

“It is not only important for a CARICOM national to cross the border freely without being discriminated against, because one is not a national. [But] it is also important that when one is inside the border that you are also treated without discrimination. The only way that this can happen is if the market is blind to who is in it. The only way that can happen is if the rules are fully harmonised or better homogenised among all States. For example, registration requirements, qualification requirements and standards of practice must be the same. Non Nationals cannot be confronted by different rules from nationals or, else you’re not talking about a single market; you’re talking about different domestic markets if they (nationals) are required to comply with different rules from non nationals.”

Valiant strides are still to be made in this enterprise (the CSME) to ensure that the laws, regulations, administrative practices and procedures, and institutions responsible for control and enforcement become consistent throughout CARICOM.

“[This] phase of the CSME project is not a question of difficulty; it is a question of time. It’s time- consuming to resolve all of the specific rules and regulations and how they are to be administered on a day to day basis,” Carryl said.

Before the generic market milieu in the Region comes into being,  each Member State must implement domestic laws required for the protection of those executing transactions in the market place.  Carryl, with emphasis, said.

"If one State has domestic laws to protect intellectual material and another country does not have it, the country without the domestic protection may be prevented from trading their goods in the other country’s [domestic] market. I don’t know if they were pirated because there is no law to say that they were not. There must, however, be evidence of grounds for action which must be authorised by the Community first before any action is taken.

Because you have not done your part, I can legitimately deny the entry of your goods into my market with the authorisation of the Community.”

Institutions

There is absolutely no basis for the formulation of regulations minus the support system for their enforcement. Standard practice dictates that rules in the market be enforced by a Court of Law, assuring that those authorised to supervise these areas comply with the law. Ministries of a government and statutory bodies are the agencies assigned the administration of the law in accordance with aspects of the law. For example,  Ministries of Trade deal with consumer protection, Ministries of Transport regulate air and sea transport, Ministries of Labour handle labour laws.

Statutory bodies are specially created under the law, such as the Competition Commission under the Competition Act and the Standards Bureau under the Standards Act.

“The relationships between those within the market (buyer and seller) and between the market and governmental bodies are generally governed by law. The law regulate what people in the market place do; you have to apply to them (Governmental bodies) for permits to establish and carry on most types of business ventures; we are sometimes required to sell at a certain price and comply with the weights and measures regulations etc. And when we feel that their (Governmental bodies) interpretation of the law and what they have done injure our interest in the market place, we have the right to go to them and appeal saying that we think that what was done is inconsistent with our rights under the law in the market place. And when we don’t get justice from them then we go to the ‘Court’, in the case of governmental bodies, at the notional level".

For instance, a customs department is a governmental body, with the authority to enforce the customs act and if this body “overcharges you customs duty on imported goods of CARICOM you can go to the Local ‘Court’ (not the CCJ) citing that they [customs] have no justification for overcharging and if the court agrees it can mandate that customs reimburse the overcharged sum.”

“When the matter in issue amounts to a dispute between two states we involve the regional court to settle the dispute.  [The Caribbean Court of Justice (CCJ)]. That is how the Single Market will work as well,” Carryl said.

The process of creating the CSME, therefore, includes establishing Regional institutions whose purpose is to assist the organs of the Community administer the CSME in the same manner in which national statutory bodies assist ministries to carry out certain functions at the local level.

Two types of bodies are to be established:

  • National bodies (e.g. national accreditation council, national competition and anti-dumping authorities, standards bureau)
  • Regional bodies

Thus far, two regional institutions have been founded:

The Caribbean Court of Justice (CCJ), and

The Caribbean Regional Organisation of Standards and Quality (CROSQ).

The following three other regional bodies are required:

  • The Community Competition Commission,
  • The Regional Accreditation Body, and
  • The Animal Health and food Safety Agency

“These three bodies have not yet been established mainly because the recurrent costs proposed in the budget for them have not been settled among member states. The budgets [for running the institutions] have been prepared; we know what the institutions’ designs are like. All that is required is for member states to say that they are ready to pay their share and they haven’t said that as yet. The delay in the establishment of the institutions is essentially about money; nothing else; everything else is in place,” Carryl revealed.

Disadvantaged Countries, Regions and Sector Regime

The CSME is an innovative model for the Caribbean which, for many CARICOM nationals and political leaders, alike, presents challenges for the preservation of sovereignty and the threat of competition. Such sceptics like The Bahamas have opted to remain outside of the CSME loop. [Although, it was on Bahamian soil that the Revised Treaty which built-in the CSME, was inked]. Other small island states within the Organisation of the Eastern Caribbean States (OECS) cluster have taken solemn consideration of their geographical proportions, which put them at a developmental disadvantage.

Thus the Disadvantaged Countries, Region and Sector Regime – a special and differential regime – has been instituted as a safeguard mechanism to maintain balance in the CSME. Carryl’s analogy is,

“If everyone is going to stay aboard the CSME train then there has to be a way for the train to stop and wait for them sometimes. And if the train can’t stop at a particular time then one must have another vehicle that can catch up with this train and put them back on board if they fall off. Since each country is required to remove the restrictions at the border then one of the ways that they can fall off the train is if incoming competition crush them. So stopping the train from time to time would mean being able to re-introduce the restrictions temporarily under certain circumstances. That is one of the things that Chapter Seven [of the Revised Treaty] does; it says that you can stop the train if the threat is so grave that it can damage the economy and make it impossible to repair.”

The Development Fund is a fledgling of the Disadvantaged Counties, Regions and Sectors Regime which facilitates the transfer of resources (from the Fund) to countries in difficulty for restoration of their economic status.

“Let us say that the manufacture of wooden furniture in one Member State collapses because of import of wooden furniture from other CSME States; 5,000 people are unemployed; the communities in which the manufacturing businesses were located begin to decline. The responsibility of the Community in such a case under Chapter seven (of the Revised Treaty) is to use a mechanism such as the Development Fund to transfer resources from the Fund to the States in difficulty so it can restore its industry and maintain trade and business with these States those which have more or are in a better condition to those which have difficulties,” Mr. Carryl explained.

The Regional Development Agency is another offshoot of the Disadvantaged Counties, Regions and Sectors Regime which is to provide technical assistance to states in an economic bind.

To kick-start any safeguard mechanism one of CARICOM’s Councils or the Heads of Government must be outrider to affected member states. It is mandatory for such a state to provide proof of its injury or threat thereof to the relevant CARICOM Council.  Carryl reiterated,

“It cannot be a problem that they (the Member State) created themselves [or] a problem that originated outside of the CSME. The state must prove that the difficulty arose as a result of their relationship with the CSME.”

CSME Public Education Programme

The CSME Unit, based in Barbados, has been running a vigorous Public Education Programme (PEP) utilising, mainly, the print and electronic media. CSME booklets and other documentation are also available at the Documentation Centre of the CARICOM Secretariat. The CSME Unit is about to launch a fresh round of public education activities, which will be funded under a project valued at C$7.5M [support from the Canadian International Development Agency (CIDA)].   In addition to disseminating updated information via currently used channels, the project will ascertain other appropriate channels of reaching the mass audience with CSME messages.

Additional information about the CSME can be obtained at:

CARICOM Secretariat, CSME Unit,
Sixth Floor, Tom Adams Financial Centre,
Church Village,
Bridgetown, Barbados.
E-mail: info@csme.com.bb

 

UWI-CARICOM Project
October 27, 2006
 

 
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