Private
Sector Preparations for Free Trade Area (FTA) Negotiations
A Caribbean Perspective
David E. Lewis, Ph.D
Chief of Party
Caribbean Policy Project
Presentation for the Colloquium on "Diplomacy
after 2000: Small States and Negotiating Space in the New
International Trading Environment". Institute of
International Relations. University of
the West Indies, St Augustine, Trinidad & Tobago. October
8-9, 1996
Contents
Introduction
A. Hemispheric Trade and Investment Liberalisation
Processes
1. The Hemispheric
Context and its Implications
2. The FTAA-2005/WHFTA
Initiative
3. General
Implications of the FTAA for CARICOM countries and Negotiation
B.The Role of the Private Sector
1. The Regional
Situation
2. The Private Sector Impact
3. Private Sector
Strategic Planning
4. Making FTA Negotiations Work
for the Caribbean Private Sector
References
The hemispheric initiatives underway point to the need for the
extension of Caribbean integration commitments to cover the
widening range of subjects included in modern trade agreements
(for example, services, investment, intellectual property rights
and government procurement), since CARICOM
countries will be required to negotiate in these areas within the
FTAA process. The also give added urgency to the need for
ensuring that CARICOM should make rapid progress in deepening
integration even while seeking, in the case of the former
grouping, to broaden membership. Deepening is essential so as not
to be bypassed or otherwise weakened by the dynamic of broader
regional processes, and in order to serve as an essential vehicle
for the region's competitive thrust. For this to occur
integration must provide the right framework of regulations and
economic policy.
Herein lies the importance of making progress towards the
CARICOM Single Market & Economy (CSM&E) as a foundation
upon which to then enter into extra-regional Free Trade
Agreements (FTA'S). Similarly, the regional private sector can
only really contribute to such FTA negotiations when it has
successfully been able to effectively negotiate an intra-regional
CSM&E based on a set of private sector interests. To the
degree that the regional private sector is able to engage the
public sector and social partners in this process, both
domestic/regional and extra-regional, then to that degree the
role of the private sector in FTA negotiations will be important
to Caribbean economic Development and integration.
A. Hemispheric Trade and Investment Liberalisation Processes
I. The Hemispheric
Context and its Implications
Most countries in this Hemisphere are consciously exposing
themselves to increasingly more competitive environments, by
reducing access restrictions at national and regional levels,
both within the group and in regard to third countries. They have
also sought market opportunities and advantages through bilateral
and group compacts covering trade, investment and other areas.
The countries of the region are very much a part of this
dynamic. They are signatories of the CARICOM-Venezuela Trade and
Investment Agreement (1993) and of the CARICOM-Colombia Agreement
on Trade, Economic and Technical Co-operation (1994). They were
instrumental in creating the Association of Caribbean States
(ACS), whose objectives include economic integration, active and
co-ordinated participation in multilateral forums, functional
co-operation, as well as environmental presentation and
conservation of natural resources of the region and especially of
the Caribbean Sea. CARICOM Member States have also undertaken,
along with 21 other countries, to promote prosperity through
economic integration and free trade by constructing a Free Trade
Area of the Americas (FTAA), in which barriers to trade and
investment will be progressively eliminated, and to conclude FTAA
negotiations no later than 2005. Various Working Groups have been
meeting to discuss and give shape to the various negotiation
subjects, which must be interpreted as evidence that the process
of setting FTAA negotiations is underway.
This kind of involvement is a departure from the past in at least one crucial respect - it is increasingly based oil the principle of reciprocal benefit, which means that in order to maintain market access benefits, each country and regional trade grouping must provide increased access to its domestic market for foreign goods and investment.
For the reasons mentioned economic and trade integration is
nowadays not just an option but an imperative for economic
survival and national development, especially for small
countries. Without integration such countries would be
marginalised in the international economy. Those countries that
have benefited most from integration have not merely implemented
bold initiatives to deepen such processes, but have recognised
that successful integration involves incremental loss of national
sovereignty in favour of increasing supranational authority.
The hemispheric initiatives underway point to the need for the
extension of Caribbean integration commitments to cover the
widening range of subjects included in modern trade agreements
(services, investment, intellectual property rights and
government procurement, to note a few), since CARlCOM countries
will be required to negotiate in these areas within the FTAA
process.
They also give added urgency to the need for ensuring that the region's primary integration groupings -- CARICOM and OECS -- should make rapid progress in deepening integration even while seeking, in the case of the former grouping, to broaden membership. Deepening is essential so as not to be bypassed or otherwise weakened by the dynamic of broader regional processes, and in order to serve as an essential vehicle for the region's competitive thrust. For this to occur integration must provide the fight framework of regulations and economic policy. Herein lies the importance of making progress towards the CARICOM and OECS Single Market goals.
2. The
FTAA-2005/WHFTA Initiative
The FTAA Plan of Action laid out a two-track work plan:
The first track (consistent with the concept of "open
regionalism") promotes building upon existing regional
and subregional free trade agreements. At present there are
26 such agreements in the Western Hemisphere, of which the NAFTA
and the Southern Cone Common Market (MERCOSUR)
are the major groupings.
The second track directed the countries to work toward free trade by progressively dismantling tariff and non-tariff barriers on goods and services and by pursuing "balanced and comprehensive agreements" on those aspects of trade in goods and services involving tariff and non-tariff barriers. Overseeing the two-track approach, is a canopy principle that calls for the full and rapid implementation of global trading arrangements under the newly established World Trade Organization (WTO).
The Denver Ministerial (/995). At the first meeting of trade ministers in Denver in June 1995, seven working groups (with specific terms of reference and country coordinators) were set up to cover several of the areas, approved in the Plan of Action in Miami, and which are the real subject matter of trade and investment:
The groups are composed of working-level public sector experts
from all the Summit countries. Their progress will be evaluated
at each annual Trade Ministerial, presumably until the completion
of the FTAA.
The Cartagena Ministerial (1996). At the second ministerial trade meeting, held in Cartagena, Colombia in March I L)96, the work program was continued and the commitment to conclude negotiations on the FTAA, no later than 2005 was reiterated. Following on a commitment at Denver, four new working groups were created (with specific terms of reference and country coordinators ):
In addition, it was agreed that the Third Ministerial and
Business Forum Meetings would be held in Brazil during the second
quarter of1997 and the Fourth Meeting of same in Costa Rica in
1998.
After Cartagena: An Assessment. Optimism about the
future success of the hemispheric economic integration process is
warranted. The main reason why the FTAA process has not stalled
is that the second track--that of the technical working
groups--is making significant progress. By the time of the
Cartagena Ministerial, the work of the groups had consisted
mainly of information and data collection, resulting in what has
been termed "an early harvest" of three types of
agreements: information dissemination, business facilitation, and
limited scope agreements. The working groups are where the rules
are being studied and compiled, where the negotiations will be
taking place, and the manner of harmonization will be worked out.
This is the sort of process from which the Uruguay Round of GATT
and all other major negotiations have emerged. So at the
operational level of the FTAA process, the dispersion of
activities among the working groups, together with numerous
players involved in the process, have increased the interests in
and incentives for, all parties to produce a positive outcome. It
has also reduced the ability of any single country to prevent
progress.
There are some important concerns about the FTAA-2005 process
after Cartagena:
Clearly, many countries in the hemisphere would still resist
the establishment of any institution that resembles a
supranational authority or that eventually might assume such a
role. However, many regional technocrats advocate the
establishment of a small secretariat, as a depository for
documents and for the distribution of information. A networking
secretariat, such as that of MERCOSUR, could also be an option,
but this issue has yet to be tackled in an effective
institutional and administrative manner
ldeally, the private sector should have representation off the
official working groups themselves or at least have some form of
"transmission belt" to provide its input into what is
otherwise entirely, an i)official process. When goods, services,
technology<v, and capital move in a developing FTAA, the
private sector is the prime move. They are not waiting on formal
agreements to trade.
A private sector initiative is the Business Network for
Hemispheric Integration (BNHI),which was initiated by a
proposal from the Central American Private Sector Confederation
(FEDEPRICAP). The BNHI initiative is a private sector space and
business agenda within the FTAA process. Although the regional
private sector, via the CAIC, has participated in the FTAA
meetings and is supporting the BNHI initiative, they have yet to
take "ownership" and "invest" into the
process as part of their own regional and extra-regional agenda.
Until this happens the prospects for complete public-private
sector participation in these hemispheric liberalisation
processes will be limited.
As such, the BNHI itself still deciding on what role it can
play in the FTAA process. There appears little disagreement that
it should serve as a network for circulating information to its
75 member private sector organizations about developments and
advances in the FTAA process. It could also serve as a forum in
which private sector positions are developed and presented to the
various Working Groups, Vice-Ministerial and Ministerial
sessions, and the March 1997 Belo Horizonte Business Forum.
Likewise, many groups are adverse to the idea of the BNHI
becoming the private sector spokesperson for the hemisphere.
Rather, many would prefer to continue working at the national
level with their governments, prior to commencing regional and
sectoral discussions which would be very complex and
asymmetrical. However, most agree that the BNHI can make a useful
contribution to the FTAA process if it becomes a general force
for private sector hemispheric integration.
According to the Inter-American Development Bank (IDB), the
actual and potential vitality of intra-regional trade can be
explained by several developments: the removal of obstacles to
exchange markets and capital movements; the movement of goods
into the markets of neighboring countries or of members of a
subregional integration agreement; the proliferation of
commercial ties among individuals and enterprises of member
countries of subregional groups; the intra-regional movement off
national private capital, stimulated by privatization of public
enterprises and elimination of barriers to foreign investment.
These factors are contributing to a situation in which
intra-regional exports are continuing to expand more quickly than
exports to the rest of the world.
Some trade analysts suggest that the most feasible approach to the FTAA is to link the region's top 5 trade pacts: NAFTA, MERCOSUR, the Andean Pact, the Central American Integration System and CARICOM. A likely scenario is that, the Andean Pact and MERCOSUR would combine to form a single trading area--SAFTA. The Central American Integration System and CARICOM would be invited to join NAFTA. The two megablocs, NAFTA and SAFTA would in turn negotiate the FTAA. The United States and Brazil remain as arbiters or prime movers of the outcome.
3.General
Implications of the FTAA for CARICOM countries and Negotiation
Options
Preparations for hemispheric free trade should be seen as part
of a process of erecting a framework to move Caribbean countries
from protected inward looking arrangements to a system which will
improve their chances in dynamic global markets, in the Western
Hemisphere, Western Europe, Asia or elsewhere.
Many Caribbean countries are more dependent on foreign trade
for their fiscal revenues than are some of their larger Latin
American neighbors. They also maintain a lower percentage of
international reserves. Consequently, a strong dependence on
external financing, a more liberalized trade system and a
concentrated and vulnerable export structure would pose greater
external risks for them.
In order to increase their readiness to join FTAA, the CARICOM
countries should continue to implement macroeconomic policies and
institutional changes designed to achieve low inflation rates,
stable exchange rates and higher levels of saving and reserves;
promote gradual processes of trade liberalisation, particularly
in agriculture; implement policies and allocate resources to
improve the coverage and quality of education and increase the
assimilation of technology; and, in general, make a significant
effort to improve their public administration.
The negotiations over the FTAA remain at a preliminary phase.
It is too early to say whether the FTAA process will produce an
alternative to the NAFTA accession or whether it would merely
provide a stepping-stone to NAFTA accession. In the interim,
progress may be made on tariffs which could be implemented at an
early date, addressing many of the issues of concern to Caribbean
businesses now competing with more favoured Mexican firms in the
US market. Caribbean exporters should consider ways to penetrate
new markets, taking advantage of CARICOM'S preferential trading
arrangements with Colombia and Venezuela and similar arrangements
being sought by CARICOM with other Latin American countries and
groupings such as MERCOSUR.
It might be possible for CARICOM countries to pursue all
options at once (though logically, NAFTA parity would precede ill
NAFTA membership), to assure its exporters of maximum market
opportunities. But this will demand extensive negotiating
energies, even if there can be an effective division of labor of
the various issue portfolios with the other members of CARICOM
and the CARICOM Secretariat, and effective collaboration between
the government and the private sector in CARICOM/OECS countries.
Integration into the global economy is the best option for
Caribbean countries, but managing the process might be difficult.
Trying to meet the demands of the FTAA process will lead
countries toward meeting the criteria for global integration.
These include, long term strategic planning, market
diversification, stronger institutional capacity, and efficient
marketing. Simultaneously, relations with traditional trading
partners in the EU and relations with Latin American and selected
Asian countries should proceed apace, with the objective of
encouraging investment and trade from these groups.
The options might appear to be complex, but they all point
toward increased global interaction. Any choice will have
repercussions for regional economic policy and business
prospects. The current goals of a single market and economy, and
even gradual progression to the FTAA by way of the ACS, might nut
necessarily be consistent with the ongoing western hemispheric
dynamic.
It is sometimes argued that the ACS could provide a
"way-station" to the FTAA. This will only be possible
if the process of transformation within the ACS is so efficiently
and expeditiously managed as to provide a liberalizing momentum
to cascade into the FTAA. The chances of using the spur off the
FTAA to persuade the "laggers" seem to be better within
the familiar confines of CARICOM/I than in the newer and more
heterogeneous ACS. For the "leaders, the ACS could provide a
test ground for market opening but the timing is unlikely to be
sufficiently generous for that benefit to be realized.
Integration into the FTAA market, like integration into any
limited market, will always be seen as technically second-best to
integration into the global market. But given the state of
thinking in the region, it might be easier to sell the benefits
of a binding hemispheric arrangement, with reciprocal rights and
duties and a dearly defined "club", than the more
diffuse and difficult to grasp concept of integration into the
global economy. The latter might represent to large a qualitative
change to be readily embraced while conceptually, the FTAA could
be explained as pan of a process of measured steps, from CARICOM
to the ACS to the FTAA. Impetus off action might also be
propelled by the fears of being left out or behind, or by the
envy that a neighbour could gain a benefit to which one would be
denied.1
In conclusion, preparations for hemispheric interaction should
be seen as pan of a process, a process which should erect a
framework to help Caribbean countries to move from protected,
inward-looking arrangements to a system which will improve their
chances in dynamic global markets. Simultaneously, as the Single
Market initiative develops CARICOM countries should try to reap
any benefits they could from increased factor mobility in the
region to build productive and competitive enterprises.
B. The Role of the Private Sector
At the start of' the 1980s Caribbean governments adopted a
market-oriented approach to development in which a reformed
private sector is expected to be the engine economic growth. In
this new strategy government will concentrate on the provision of
public goods (such as education, health, roads, etc.) and set an
environment that facilitates the growth of private sector
activity largely through an enhanced policy and regulatory
framework. The first phase of this programme concentrated off
macroeconomic stability and structural adjustment, a key element
of which was trade liberalisation. The second phase sought to
deepen the reforms by liberalizing the foreign exchange market,
accelerating privatization programmes and removing the barriers
to domestic and foreign investment. To varying degrees and
different speeds all these reforms are now being undertaken with
a view to preparing Caribbean economies to fully participate in
hemispheric free trade and universal trade and investment
liberalisation. A significant amount of reforms is still to be
implemented in order to complete the adjustment-process.
The response so far to these reforms has been varied in the
region with some economies performing much better than others,
has enjoyed relatively high growth rates over the last decade
largely due to the accelerated diversification of the economy
into tourism, other services and manufacturing, in part, this
success was due to sound macro-economic management, high levels
of foreign investment and the development of the human resources
of the country. Inflation rates have been low, the exchange rate
has been stable and export performance relatively positive.
Recently, iii the last two or three years, growth has however
slowed as the economy faces a major problem in the restructuring
of its banana industry. Saving rates continue to appreciably lag
behind the investment rate with a high dependence on external
capital inflows.
Long and medium tern prospects are now largely conditioned by
the implementation of a new policy agenda geared to further
diversify the economy and take account of the erosion of
preferences and the spread of universal and hemispheric trade
liberalisation. The success of these policies will largely,
depends on the responsiveness of the private sector which is
large and active comparatively. As an example private investment
in accounts for about 28% of GDP which is high by regional
standards.
The private sector comprises a variety of enterprises ranging
from small and micro-enterprises to large foreign corporations.
Micro and small enterprises (less than 10 employees ) cover a
wide range off activities and groups in industry, agriculture,
construction, distribution and other services. Cooperatives are
an important part of this sector. The informal sector is also
significant especially in agriculture and trading. The foreign
private sector is active in large-scale tourism facilities,
banking and offshore assembly. While some pre-conditions for
private sector development have been met in terms of
macro-economic stability, liberalized foreign exchange
transactions,etc. several anti-market distortions such as price
controls, business licensing, import tariffs, quantitative
restrictions, absence of adequate company law, excessive controls
and discretionary criteria on foreign investment, etc., which
inhibit the promotion of competitiveness and the growth of the
private sector.
CARICOM countries have not focused on private sector
development in any systematic way One reason could be that the
public sector is not large and government expenditure huge to the
point where credit to the public sector is seen as crowding out
the private sector. In this regard Sear of government increasing
its taxes to finance the public sector is not a major concern in
the private sector. Even though the reduction in the size of
government is not a burning issue, government still needs to
reduce its role in the economy in order to provide the correct
enabling environment and the adequate provision off public goods.
The private sector role in economic development is hardly
debated nowadays. In order to assume this responsibility fully,
the private sector must be aware of the nature of the challenges
faced in today's globalised world, be able to evaluate its
strengths and possibilities, and make a psychological leap that
would shift it unreservedly to a more competitive mode through
adjustments at the firm level. Information and the quality of
available human resources are critical factors in this
undertaking. It trust be also be prepared to abandon activities
that stand little chance of competitive survival and that serve
to misallocate resources.
An important institutional role must be played as well, if an
effective partnership is to be forged with government in devising
appropriate national policies and strategies to enhance the
business environment, and in tackling the wide range of external
issue areas that must be addressed, especially in regard to (lade
negotiation agendas, and crossing implementation hurdles. This
impacts directly on the economic and business possibilities of
individual firms and off the countries as a whole. For this
partnership to develop in any meaningful way, the private
sector's institutional capacity will have to be adequate to the
task of defining not just broad private sector advocacy
positions, but specific policy positions based on analysis of the
implications of policy alternatives for different sectors. A
judgement must, therefore, be made by the national private
sectors whether they can support an institution of sufficient
critical mass to carry out such responsibility or whether
resources should be pooled at the regional level to do so.
Institutionally, one would expect CAIC to perform such a
function, but to date it has lacked the dynamic participation of
individual firms required to produce a collective private sector
initiative.
Institutional effectiveness at such levels is a pre-condition for effective private sector action at the broader regional level, as the national or sub-regional entity feeds into the regional process and is in turn nurtured hi, it. There is a pressing need to strengthen the regional private sector's institutional capability owing to the need for continuous interfacing with similar bodies iii respect of very complex discussion agendas.
Caribbean countries are faced with global developments which
raise challenges to their accustomed positions. While the
implementation of the Uruguay Round-GATT/WTO commitments
facilitates market access globally, it also reduces the
advantages which these countries have enjoyed and increases
export competition. For example, the phasing out of the
Multifiber Agreement over the next ten ( 10) years will increase
competition in apparel exports from large Asian producers with
limitless cheap labor, such as China, India, Pakistan and
Indonesia.
Within the hemisphere, Mexico's participation in NAFTA has
affected certain Caribbean exports and diverted investment flows,
and the FTAA process will also increase competition in these
areas. The present political climate in the U.S. Congress offers
little security for the CBI benefits, notwithstanding its
"permanence", the program could face future legislative
challenges in such areas as rules of origin and be affected by
legislation concerning environmental, health, and technical
standards, since it does not rest on a negotiated foundation. The
situation in Congress has also prevented CBI beneficiaries from
gaining acceptance for their goal of NAFTA parity.
The new context, therefore, requires Caribbean countries to
prepare for difficult negotiations ahead, and especially to ready
themselves for a shift to reciprocal trade relationships even
with advanced, industrial economies, since non-reciprocity has
become politically less defensible even in North America and
Europe. Reciprocity will increase third-country competition in
domestic and regional markets, which will affect all Caribbean
countries, particularly those in CARICOM. These have been for
approximately two decades the most privileged of developing
countries in terms of the breadth of preferential trade access
enjoyed in the major world markets. Yet their record shows an
inability to take advantage of the opportunities, for merchandise
export values have not risen as quickly or substantially as might
have been expected and their share of those markets has declined
significantly. The reasons for such low performance could be
guessed at but require in-depth study for more precise diagnosis.
CARICOM'S performance contrasts markedly with that of the
Dominican Republic and Central America's stellar record in the
U.S, market. However, heavy reliance on apparel exports to a
single market is a source of the latter's vulnerability as well
as for a number of CARICOM countries.
Apart from addressing the problem of market vulnerability, the
CARICOM countries are challenged to convert current formal market
access opportunities into effective access, by addressing a
number of simple supply side problems and marketing inadequacies.
In seeking to overcome such limitations they need to determine
clearly the areas in which they can be internationally
competitive, paying far more attention also to expanding and
developing the services sector, especially with a view to
expanding exports beyond tourism in a significant way. Such an
objective could clearly be assisted through exploitation of
possibilities at the regional level by making services far more
central to regional cooperation and trade integration activities.
In the meantime, every effort must be made to preserve and
expand market access advantages, but it must be recognized also
that the current regional, hemispheric, and international changes
will eventually adversely affect the terms of entry of
traditional protected CARICOM exports and that non-reciprocity in
quickly approaching its demise. Market access at any rate,
however, is an insufficient asset. Survival will eventually
depend on the development of competitive advantage in selected
areas, without which access advantages cannot be fumed. into
effective benefits, as CARICOM'S unsatisfactory performance under
the CBI (Caribbean Basin Initiative, 1983 ) illustrates.2
The small, open, and protected economies (and producers) of
the region need to register quick progress in improving their
competitive position. In this context more attention needs to be
focused on ways of attaining product diversification, and
increasing productivity through more appropriate human resource
development, the expansion and upgrading of essential physical
infrastructure (telecommunications, roads, ports), as well as
improving external transportation facilities and international
marketing capabilities. Finally, increased attention could be
usefully directed towards service-sector development in a range
of new areas that could serve to enhance the production of both
goods and services.
While these initiatives will assist in the competition in local markets, they will also provide the foundation upon which new trade and investment opportunities in other regional and extra-regional markets can be exploited.
3. Private
Sector Strategic Planning
Private finance and direct foreign investment will flourish if
an attractive institutional, regulatory, and policy environment
is established that is conducive to economic prosperity. More
than ever, the region will have to rely on its private sector as
the engine of growth. The Caribbean governments should continue
to empower the private sector and forge ahead with sustainable
private sector development strategies.
Significant progress has been achieved in monetary reform,
privatization, modernization off business codes, reduction of
tariff barriers, fostering of new capital markets, and other key
elements of an export-driven, private sector-oriented free market
economy. However, these important policy reforms should be
buttressed by additional reforms to ensure sustainable and
long-term economic development.
Private-public sector collaboration is now more important than
ever. Although the business environment in the Caribbean has
improved significantly, many obstacles remain to increasing
investment and expanding production. These include delays in
processing investor applications, administrative requirements,
discretionary public sector interventions and taxation levels, as
well as other factors related to exchange rates, currency
convertibility, company laws, and banking regulations. Together,
these constraints contribute to uncertainty regarding the rules
off doing business in the region. Thus, on the one hand the
Caribbean governments must convince the private sector that they
are serious about reform; on the other hand, the private sector
needs to support the governments in helping them to adopt and
maintain sound macroeconomic policies that will foster a more
competitive and productive business environment.
In the end, economic prosperity will depend on Caribbean
countries improving their production and their competitiveness.
This calls for advances in worker training, management quality,
and all areas linked to the production of goods and services;
both at the private and public sector levels. The foreign sector
has an important role, working closely with the indigenous
private sector, to infuse capital, and introduce modem
technologies and managerial methods. How far Caribbean
governments continue to implement reform agendas with the private
sector as the engine of growth will determine the degree of their
eventual economic prosperity and stability.
Private sector institutions in the region tend to be weak.
They include chambers of commerce, manufacturer's associations,
employer's federations, and sectoral associations. Assistance is
required to make these national organizations stronger. This
includes capacity building in areas of economic analysis, trade
data collection and analysis, and negotiation techniques, which
will allow the private sector to become an elective partner to
public sector policy initiatives at the national, regional, and
international levels. There is a clear need and market
opportunity for seminars, workshops, and training courses on a
national and regional basis, as well as to provide business
advisory services in the term off studies in relevant areas, the
compilation of market information, covering regional sources and
markets, sources of technology, as well as trade rules and
regulations.
The existing regional institutions also need support and need to be more market-driven in their work The CAIC needs to become more proactive with its national members and to be more involved in productive activities with the enterprise community in the region. The embryonic Caribbean Enterprise Foundation (CEF), whose aim is to act as a business incubator for the purpose of developing products on an external market-demand basis, rather than on the traditional approach of merely seeking markets for whatever is produced, can also serve as a key catalyst and stimulus institution for private sector initiatives.
4. Making FTA
Negotiations Work for the Caribbean Private Sector
What all this regionalist complexity of relations leads to is
a very real concern over the Caribbean's capacity to make this
work. Clearly there is within CARICOM a divergence of interests
and capabilities in terms of advancing not only extra-regional
linkages but, also, intra-regional integration; Trinidad and
Jamaica leading the way, Barbados somewhat committed but not
overly excited, and the OECS and somewhat lagging and more
concerned over the magnitudes of size discrepancy within these
initiatives. While the work of Caribbean Export and CARIFORUM
will advance the cause of greater extra-regional integration, it
is clear that unless the region practices some sort of "flee
rider" option vis-à-vis the larger countries and regional
groupings, it will effectively be unable to seriously participate
in all these initiatives. Foremost on all our minds, of course,
is the regional ability and capacity to deal with the myriad of
commitments adhered to under the FTAA process.
A "free rider" option requires, however, a degree of
"attitudinal opening up" by the region to the many
potential benefits of extra-CARICOM integration linkages. On the
many technical commitments off the FTAA, for example, one could
envision the region "free riding" on the policy
positions adopted arid negotiated by other hemispheric groupings,
the G-3 or MERCOSUR for example. This would be in lieu of the
region's incapacity to develop and negotiate policy positions for
itself in some areas (e.g., standards and technical barriers to
trade; intellectual property fights; sanitary and phytosanitary
measures; among others).
In order for such a concept to advance, and thus make
strategic alliances work in favor of regional integration,
CARICOM and the many other regional integration institutions need
to begin to refocus attention on the maximization of resources
which results from the "deepening and widening"
process. Economic, political, and social interlocutors need to be
brought in to assist in this process, as well as social actors
and organizations of civil society. A recent example of this has
been the initiative of former Costa Rica President, Oscar Arias
Sánchez, seeking to broker a meeting of Caribbean and Central
America banana producers in order to reach a sub-regional accord
prior to a WTO ruling on the US-led claim against the European
banana preference regime, This initiative in and of itself( not
to mention its potential success, could very well advance
sub-regional cooperation and integration efforts more than many
previous initiatives. In the final analysis, however, the success
of regionalism will depend on the degree to which we are able to
show to the peoples, governments, businesses, and civil societies
of the Caribbean that there are more gains than losses to be won
by pooling our diverse resources in favor of closer cooperation
and integration.
Of critical importance also will be the degree to which the region can attend to the non- hemispheric FTA initiatives which are in place and are being developed. Already the CARICOM- Venezuela and Colombia trade agreements begin to become reciprocal as of 1997 and 1998, respectively, but there is little (if any) public or private sector initiative to attend to this new challenge for the regional market and its producers. Similarly, various initiatives are in place for developing trade agreements, and eventually free trade regimes, between the CARIFORUM countries (CARICOM + Haiti and Dominican Republic). Has the private sector developed a stance on this? Are we aware off the cost-benefit analysis of such an initiative? Moreover, similar initiatives are under&vay between CARIFORUM countries and others such as Cuba, Costa Rica, and other Central ,American countries. All these initiatives are much closer to home than the FTAA/WHFTA, and will have a more immediate impact as well. To the degree that the private sector can assist in the "servicing" of these initiatives in a successful manner, then there will be a significant contribution to the regional and hemispheric FTA commitments and negotiations.
ENDNOTES
1. Although within CARICOM the smaller OECS countries are already
questioning whether ACS or FTAA participation will serve their
needs at all.
2. Only Jamaica, the Dominican Republic, and Central American producers have effectively expanded their exports into the U.S. market under these preferences, the result more than likely of their competitive production costs and not of the market access in and of itself.
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