STATUS OF IMPLEMENTATION OF THE CARICOM SINGLE MARKET AND ECONOMY : PRESENTATION AT THE CARIBBEAN ANNUAL PRIVATE SECTOR MEETING, 10 JUNE 2006, BRIDGETOWN, BARBADOS

 
At this stage of implementation twelve CARICOM Member States are participating in the Single Market. To date six (6) Member States are Single Market ready, namely Barbados, Belize, Guyana, Jamaica, Trinidad and Tobago and Suriname. The other six Member states, Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines would be fully compliant by 30 June  2006.

The primary elements of the CARICOM Single Market and Economy are:

  • Free movement of Goods
  • Free Move of Skilled Nationals
  • Free Movement of Services, and
  • Free Movement of Capital

THE FREE MOVEMENT OF GOODS:

There already exists a free trade area within CARICOM. There are no import duties on goods of CARICOM origin. Further tariffs and quantitative restrictions in all Member States have been removed and the treatment of intra-regional imports will be different from those coming from the rest of the world.

Establishing a Customs Union is an integral part of the Single Market,  and the Inter-American BD has agreed to financially support the initiatives of the Community to create a regime for free circulation of goods, safeguards and the harmonization of rules on Non-Tariff Barriers. The Customs Union would also include other arrangements for trade in goods such as the Common External Tariff, Anti-Dumping and Subsidies and other regulations of commerce.

With respect to Anti-Dumping, the Revised Treaty does not prohibit dumping but it authorizes Member States to impose Anti-Dumping Duties and Counter Measures if either there is a threat of injury or actual injury from dumped imports. If dumped imports originate outside of the Region, the WTO provision on dumping could be invoked.

STANDARDS OF PRODUCTION:

Regional Standards that conform to International Standards of Production are critical to market expansion and export market development, and in recognition of this CARICOM has established the CARICOM Regional Organisation for Standards and Quality (CROSQ) which operates out of Barbados.

FREE MOVEMENT OF SKILLED NATIONALS basically means that such persons have the right to seek employment and to work without the need to obtain a work permit. Within the Single Market the following persons have the right to free movement:

  • University Graduates
  • Media Workers
  • Sports Persons
  • Artistes and Musicians
  • Managerial, Supervisory and Technical Staff of CARICOM Nationals moving to provide a service or establish a businesses

A Skills Certificate is necessary in order to facilitate the free movement of these eligible categories of persons.

EXPANSION OF THE ELIGIBLE CATEGORIES

Member States are of the opinion that at this phase of implementation it is appropriate to expand the categories of CARICOM nationals who should be granted the right of free movement within the Community;

It is important to note that in February of this year at the Inter-Sessional Meeting the Conference of Heads agreed that Member States should complete consultations at the national level in order to facilitate a decision on the expansion of categories for free movement at this year’s Conference of Heads. (July 2006)

The February 2006 Conference furthermore requested that Member States should give particular consideration to the granting of free movement by July 2006 to workers in the hospitality industry, artisans, domestics, nurses and teachers who are non-graduates.

Please note that 7 Member States namely Barbados, Dominica, Grenada, Guyana, Jamaica, Saint Lucia and Trinidad and Tobago have indicated their support for the proposed expansion of eligible categories of Skilled Nationals. Antigua and Barbuda, Belize, St. Kitts and Nevis, St. Vincent and the Grenadines and Suriname are expected to advise of their position on the proposed expansion at the next Conference of Heads. 63+

FREE MOVEMENT OF SELF-EMPLOYED PERSONS:

Prior to the coming into effect of the CARICOM Single Market the self-employed were allowed to enter Member States as a visitor or business traveler and given sufficient time to regularize their business, including obtaining a work permit and permits of stay.

Given the fact that the CARICOM Single Market came into effect on 1 January 2006, the issue of procedural and administrative arrangement have to be brought to conclusion especially, since CARICOM Nationals are already trying to exercise their rights in the Single Market.

In this regard the COTED approved the procedural and administrative arrangements for the free movement of service providers seeking to enter another Member State on a temporary basis, thereby taking into account the objectives of the CSME and the agreed principle that any new procedure should not be more onerous than prior arrangements for the movement of these persons.

With respect to the movement of persons establishing a business the COTED agreed that entry procedures should also be simplified and harmonized. The Secretariat was requested to undertake necessary work in this area.

CONTINGENT RIGHTS:

Contingent Rights is one of the areas for which the Community must still develop a policy with the ultimate aim of developing a Protocol to supplement the Revised Treaty. In this regard a consultancy project is currently ongoing.

ACCREDITATION BODIES:

Only Jamaica, Belize and Trinidad and Tobago have National Accreditation Bodies. The establishment of the Regional Accreditation Body is very dependent on the establishment of National Accreditation Bodies and accordingly it is anticipated that all other Member States would have National Accreditation Bodies in the near future.

CARICOM PASSPORT:

Five (5) Member-States namely, Suriname, St. Vincent and the Grenadines, St. Kitts and Nevis, Dominica, and Antigua and Barbuda have introduced the CARICOM Passport. Barbados, Grenada, Guyana and Trinidad and Tobago are expected to complete implementation in 2006 and Belize, Jamaica and St. Lucia would complete implementation in 2007.

TRANSFER OF SOCIAL SECURITY BENEFITS:

The Agreement for the Transfer of Social Security Benefits is in place in all Member States except Suriname, which does NOT have a comparable social security system and accordingly cannot implement the Agreement.

FREE MOVEMENT OF SERVICES:

Member States would be required to remove any impediment, which restricts the right to provide services across the single market. Member States must ensure that Service Providers from other Member States have access to land, buildings and other property on a non-discriminatory basis if so required in the provision of services.

Besides the free movement arrangements within the Single Market, the Community would also implement free movement in the context of the General Agreement on Trade in Services (GATS). The GATS provides for four modes of supply of a service, namely:

  • Mode 1- Cross Border Supply;
  • Mode 2- Consumption Abroad;
  • Mode 3- Commercial Presence;
  • Mode 4- Presence of Natural Persons.

Modes 3 and 4 are the most relevant modes of supply of a service when talking about free movement and comparable with the movement of self-employed persons and their key staff in the CARICOM Single Market. This of course should not come as a surprise, since CARICOM’s Single Market arrangements are all GATS and WTO compliant

Mode 4 however is meant to be temporary and most WTO members have only made commitments with respect to senior executives and managers, persons representing an advanced level of training and expertise and business visitors.

FREE MOVEMENT OF CAPITAL:

Free movement of Capital would allow CARICOM Nationals to:

  • Transfer money to another Member State on the same basis as a National of the Member State from which the money is being sent.
  • Have equal rights to buy stocks and shares and freely move capital from one Member State to another.
  • Have access to a wider source of capital with the potential of lowering costs in national markets, thus reducing the cost of capital.
  • Diversify investment portfolios and to invest in best performing stocks and shares across the region at lower costs.

Capital market integration is critical to the CSME, and it is proposed to have a regional stock exchange, which would facilitate cross listing and trading of securities. Various proposals, ranging from the designation of an existing national stock exchange as the regional stock exchange to providing for the electronic interconnectivity of all the existing stock exchanges, as well as a hybrid of these two, are currently under consideration by CARICOM States. The issue is complicated by the fact that many of the existing stock exchanges are owned by the Private Sector, and the establishment of the regional stock exchange on the basis any of the proposals will represent an interesting public private partnership for the Community.

In recognition of the importance of private sector investments, we want to go the distance in making the business environment a more conducive and facilitative one, and one that is in alignment with a single economic space. In this regard Member States are in the process of developing a harmonised investment policy framework that will be designed to achieve increased flows of investments and improved competitiveness of the Region’s business sector.

The proposed investment policy framework would include:

  • A CARICOM Investment Code that will address the protection and promotion of both intra-regional and foreign investments in the Community.
  • Implementation of wide ranging reforms of national investment policy frameworks including streamlining the investment approval process
  • The adoption of a harmonised investment incentives regime for the main economic sectors - industry/manufacturing, tourism and agriculture.

GOVERNMENT PROCUREMENT:

The Region is moving towards a regional best-practice framework ensuring that Government Procurement becomes an open and free process without any discrimination particularly those on the basis of nationality. Further Initiatives on Government Procurement would include the development of a Regional Policy, which would guide the Community in the development of a Protocol on Government Procurement.

RIGHTS OF ESTABLISHMENT includes the right to engage in non-wage earning activities of a commercial, industrial, agricultural professional or artesian in nature and to create and manage related economic enterprises. The exercise of the right requires the removal of restrictions against individuals and legal entities seeking to establish in any Member State of the Community.  Establishment rights include access to Land, Buildings and Property as set out in the Revised Treaty and the right to transfer managerial, technical and supervisory staff.

The establishment of companies must be done under the Company Law of Member States and, depending on the sector in which the business is to be conducted, other laws such as the Business Names Act and the Banking and Financial Institutions Act may apply.

Key to the Rights of Establishment is the removal of restrictions, which is actively engaging the attention of Member States. In addition, steps to harmonize the relevant laws and administrative practices for establishing businesses are being taken. In this regard the Second Meeting of Registrars of Companies agreed on the principles which would govern the Rights of Establishment within the CSME. The Registrars also agreed on a possible minimum list of requirements for the registration of CARICOM Companies seeking entry into other CARICOM jurisdictions.

COMPETITION POLICY

Barbados, St. Vincent and the Grenadines and Jamaica have articulated National Competition Policies while Barbados and Jamaica have established National Competition Authorities. A model Competition Bill was approved by the Legal Affairs Committee in October 2003 and is being used by Member States for the enactment of national competition legislation.

At the Community level, the Revised Treaty established the Community Competition Commission and in this regard the November 2004 Heads designated Suriname as the Headquarters State for the Commission. A Task Force on Implementation Chapter 8 of the Revised Treaty, including the Community Competition Commission, is actively engaged in continuing the process towards operationalizing the Commission.

CARIBBEAN COURT OF JUSTICE

As a step further in the deepening and strengthening of the regional integration process and a symbol of our true independence is the Caribbean Court of Justice. The CCJ, an essential part of our Community’s development, was inaugurated in 2005 year and has two jurisdictions, an original jurisdiction and an appellate jurisdiction.

In its original jurisdiction the court would be an international tribunal with compulsory and exclusive jurisdiction for the interpretation and application of the Revised Treaty and is tasked with the responsibility to hear and deliver judgments on:

  • Disputes arising between contracting parties to the Agreement
  • Disputes between contracting Parties and the Community
  • Disputes between Community Nationals, Contracting Parties, Community Institutions or between nationals themselves

In its appellate jurisdiction, the CCJ would consider and determine appeals in both civil and criminal matters from courts within the jurisdiction of Member States of the Community which are parties to the agreement establishing the CCJ.

The regional DEVELOPMENT FUND for Disadvantaged Countries Regions and Sectors established under Chapter Seven of the Revised Treaty is also high on the agenda for implementation. The Eleventh Special Meeting of the Conference of Heads agreed that a Regional Development Agency be created and located in an OECS Member State to provide the policy support for the Fund. The Fund, which would be operationalized under a separate charter, is intended to provide financial or technical assistance to disadvantaged countries, regions and sectors through concessional loans, grants and an interest subsidy programme.

REGIONAL TRANSPORTATION ISSUES

Regional transportation issues relate essentially to the paramount need for the safety and security of the regional transport infrastructure, the delivery of adequate, fair, and competitive transportation services, and the sustainability of regional air carriers.

SAFETY AND SECURITY

The Regional Aviation Safety Oversight System (RASOS) has responsibility for safety and security of regional air transport. We are aware that ships and sea ports in the Region continue to be vulnerable to acts of terrorism and accordingly CARICOM States have achieved and are seeking to maintain compliance, at considerable cost, with a comprehensive, security regime for international shipping. Given the importance of seaborne trade to the development of our economies, particularly the Cruise Shipping Industry Member States need to ensure the security of their ports and vessels that call at these ports.

Air Services Agreements

International air transport is conducted on the basis of a complex system of air services agreements and arrangements and the first round of joint consultations on the conclusion of an open skies bi-lateral agreement with the United States was held. The proposed agreement is aimed at providing more liberal arrangements for the conduct of air services between the contracting parties, improving the competitiveness of their air carriers and improving market access and operational flexibility.

In addition to these bilateral agreements there is the Air Transport Agreement among the Member States and Associate Members of the Association of Caribbean States. An issue that needs to be resolved is the precedence of conflicting provisions where two States are parties to several of the same air services agreements that govern the operation of air services between their cities.

The Secretariat has a role to certify that these agreements do not prejudice or place at a disadvantage the position of other CARICOM States vis-à-vis the Revised Treaty.

REMOVAL OF RESTRICTIONS IN THE INTERNATIONAL TRANSPORT SECTOR

Schedules for the removal of restrictions of the 12 CSME Member States have been approved and these are being removed by legislative and administrative amendments. Restrictions that are still in place in Member States relate to:

  • The granting of air transport service licenses or similar authorization to non-citizens;
  • The granting of traffic rights; and
  • Those services which are directly related to the exercise of traffic rights.

It is proposed that given the peculiar characteristics of international air transport the removal of restrictions in this sub-sector can best be addressed in a revised CARICOM Multilateral Air Services Agreement which is supported by appropriate national legislation and to which all Member States are parties.

RESTRUCTURING OF REGIONAL AIR CARRIERS

The matter of restructuring our regional air carriers has been an ongoing exercise and has its genesis in the recognition by regional Governments of the critical importance of their sustained participation in international and regional transportation and the need to optimize the use of the scarce resources of the region in an effort to guarantee the provision of reliable air transport services. The ongoing initiative of restructuring the regional air carriers needs to be accelerated.

REGIONAL STUDY

The Conference, at its Special Meeting in November 2004, in considering the issues involved in moving to the Single Economy, agreed that critical among the support measures necessary for the successful realization of a Single Economy would be that of a reliable and affordable transport infrastructure. The Conference mandated Ministers with responsibility for transportation to determine a strategy for addressing the transportation needs of the Region. In pursuance of this mandate, a regional study on the transportation of agricultural and other products within the Community is in progress. The conclusions of this study will inform the deliberations of a Special Meeting of COTED [Transportation] which would be convened in September 2006.

CARICOM BI-LATERALTRADING AGREEMENTS

CARICOM is a signatory to the following Agreements:

  • CARICOM/Colombia Trade, Economic and Technical Co-operation Agreement
  • CARICOM/Cuba Trade and Economic Co-operation Agreement
  • CARICOM/Costa Rica Free Trade Agreement
  • CARICOM/Dominican Republic Free Trade Agreement
  • CARICOM/Venezuela Trade & Investment Agreement.

CARICOM/COLOMBIA TRADE, ECONOMIC AND TECHNICAL CO-OPERATION AGREEMENT was signed in July 1994 and entered into force in January 1995

  • A Protocol amending the Agreement was signed on May 21, 1998 addressing the issue of reciprocity for Colombian products
  • Negative Trade Balance 2000 - 2004

THE CARICOM/CUBA TRADE AND ECONOMIC COOPERATION AGREEMENT was signed in July 2000.

Experience to date:

  • Market is difficult to penetrate
  • Long periods of credit (120 days) demanded by importers
  • Problems to receive payments
  • Distribution of products a challenge
  • Business Council (CAIC & Cámara de Comercio de Cuba)
  • Positive Trade Balance 2000, 2003, 2004

CARICOM/COSTA RICA FREE TRADE AGREEMENT was signed in March 2004 and has been ratified by Barbados, Guyana and Trinidad and Tobago

  •  There was provisional application of the agreement between Costa Rica and Trinidad and Tobago on 15 Nov. 2005
  • Negative Trade Balance 2000 - 2004

CARICOM/DOMINICAN REPUBLIC FREE TRADE AGREEMENT was signed in July 1998 and the Rules of Origin, agreed to in 2005

  • Trade in Services still to be negotiated.
  • Republic Bank has operations in the D.R.
  • TYE is establishing a factory.
  • Prestige Holdings controls the franchise for KFC and TGIF in the DR

- Law 173
- DR Distributors usually insist on exclusive arrangements
- Industrial Relations Laws are biased in favour of the local labour force
- Inefficient/inadequate Air and Sea Transport
- Frequent Exchange Rate Fluctuations
- Lack of a CARICOM Business Facilitation Office
- Phased reduction of duties is not taking place at the forecasted rate
- Reported non-compliance with the rules of origin criteria
- Specific to the Soft Drink Industry
– High Duties, Product Duplication, Trademark Infringement, Unfair Competition and Contractual Challenges
- Poor Electrical Supply in the DR effectively excludes some products from the market e.g. Vaporizer Units for Mosquitoes

THE CARICOM/VENEZUELA TRADE & INVESTMENT AGREEMENT was as signed in October 1992 and entered into force on Jan 1993.

  • It is a one way preferential agreement.
  • However Venezuela has requested preferential access to the CARICOM MDC markets.
  • Negative Trade Balance

CONSTRAINTS:

  • Protracted testing, for e.g. every shade of nail polish.
  • Complex registration of products.
  • Legalized Letters of Authorization, Sales Certificate and Health Certificate required.
  • Sanitary and Phytosanitary Issues

Thank You. My colleagues and I would be pleased to answer your questions.

LEELA RAMOUTAR-NARINESINGH
 Specialist, Private Sector Facilitation
CARICOM Secretariat, CSME Unit
6th Floor, Tom Adams Financial Center
Church Village, Bridgetown
Barbados
Tel: (246) 429 6159/6064
Fax: (246) 436 2689
Email: leelan@csme.com.bb

 
 
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