Sun | May 24, 2015

Should Jamaica leave CARICOM?

Published:Sunday | July 11, 2010

Kevin O'Brien  Chang, Contributor

Would it make any difference if Jamaica left CARICOM? I asked 20 randomly selected people this question last week. They all shrugged their shoulders. It was like the old joke about ignorance and apathy - they didn't know, and they didn't care.

What is CARICOM anyway? Well its official website gave no accessible definition. But Wikipedia says "The Caribbean Community (CARICOM), is an organisation of 15 Caribbean nations and dependencies. CARICOM's main purposes are to promote economic integration and co-operation among its members, to ensure that the benefits of integration are equitably shared, and to coordinate foreign policy."

CARICOM currently has 15 full and five associate members. Full members include Antigua and Barbuda, The Bahamas , Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Lucia, St Kitts and Nevis, St Vincent and the Grenadines, Suriname, Trinidad and Tobago. Associate members include Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Turks and Caicos Islands. In short, it is the English-speaking Caribbean plus Haiti and Suriname.

ignorance

Most Jamaicans know virtually nothing about Haiti and Suriname, and their only real connection to the rest of the English-speaking Caribbean is West Indies cricket. Ask who Kamla Persad, David Thompson, Bharrat Jagdeo, or Baldwin Spencer are, and 99 times out of a 100 you will get blank stares. But the names Brian Lara, Gary Sobers, Shiv Chanderpaul and Viv Richards will ring instant bells. Of course, given the cricket team's recent dismal performances, Jamaicans are beginning to care as little about the West Indies as they do about CARICOM.

The benefits of being a CARICOM member theoretically include:

1. Jamaican goods enjoy duty-free access within CARICOM markets; i.e. without the preferences conferred by the Revised Treaty, Jamaican exporters to the region would cumulatively face most favoured nation (MFN) applied rates amounting to millions of United States dollars.

2. Jamaican companies have the right to establish and operate businesses in any CARICOM member state under the same terms and conditions as local companies, i.e. "national treatment".

3. Jamaican service providers e.g. consultants, are able to offer their services throughout the region without work permits, usually on a temporary basis;

4. Given the continuous erosion of preferences in Jamaica's traditional export markets due to multilateral and regional trade arrangements, the protectionist nature of the CARICOM Single Market and Economy (CSME) serves to provide a 'competitive cover' for Jamaican exporters.

5. The CSME regime offers Jamaican small businesses the economic space, through preferential tariff, to orient themselves with the intensification of global competition.

If Jamaica was not a member, then:

1. Jamaica would then abide only by its multilateral commitments in the World Trade Organisation (WTO), i.e. it would be able to set tariff rates up the bound levels in the WTO.

2. There would be more flexibility in the application of safeguard measures.

3. Our trade deficit with CARICOM would be significantly reduced. Jamaica's trade balance with the region has continuously deteriorated, even when adjusted for "necessary items" such as petroleum products and food items not produced locally. The trade balance went from a 1984 surplus of US$24 million to a 2008 deficit of US$1.635 billion. Even when necessary items are removed, the 2007 deficit was US$670.1 million.

4. Revenue in terms of duty collection would be increased significantly. As much as a cumulative J$25.43 billion in government revenue has been forgone from 2006 to 2009 due to Jamaica's participation in the CSME regime.

5. If it were not bound by the Common External Tariff, Jamaica would now not have to seek its suspension through the Council for Trade and Economic Develop-ment to import critical consumer items such as rice, etc.

caricom benefits

The benefits of merely being an associate member include:

1. Ability to vote as a member of CARICOM in international organisations such as the United Nations.

2. Benefits from technical co-operation from organisations such as European Development Fund.

3. Benefits from institutions and bodies of CARICOM such as the Caribbean Agricultural Health and Food Safety Agency, Caribbean Agricultural Research & Development Institute - Jamaica.

CARICOM is an unbalanced entity mainly because, as an oil producer, Trinidad has a tremendous natural advantage over other members.

Energy cost in select CARICOM states (2006)

Country Average Cost

(US$/kWh)

Bahamas 0.23Barbados 0.229Jamaica0.238Grenada0.266St. Lucia 0.293Trinidad 0.05

If Jamaica's productive base is to be given a fair chance of competing within CARICOM, Trinidad would need to allow other members the opportunity to purchase energy at the same price that is provided to its own economy.

As it stands now, Trinidad's lower energy costs subsidises its entire economy, and therefore is not in breach of the treaty. They then get a duty waiver from CARICOM to import raw materials, like peanuts for further processing, using subsidised energy and it further benefits from the free-access trade arrangements within CARICOM. This triple-barrel advantage gives Trinidad an unfair advantage over its CARICOM trading partners, with Jamaica being the most affected victim due to its market size and its dependence on a local primary productive base. Jamaica's 15-to-one trade imbalance with Trinidad is largely due to Trinidad's energy subsidies.

Our farmers and agro processors cannot compete on this basis. It could not have been envisioned that the treaty was intended for one country to have such a commanding advantage. It is time to review the treaty or for Trinidad to share its energy advantage, as it benefits from a free access to all CARICOM economies.

There are also doubts as to whether products that are brought into Trinidad extra-regionally are sufficiently converted to be consi-dered a CARICOM product. There is supposed to be at least a 50 per cent conversion rate, and there are questions as to whether this takes place. CARICOM must move to strengthen the verification process by which products are certified, based on rules of origin.

Logic suggests that an official report should be commissioned by the finance ministry or Planning Institute of Jamaica to weigh all pros and cons, and calculate the precise economic cost of Jamaica staying a full CARICOM member. After we know the real monetary cost, then we can start seriously talking about whether the 'invisible political benefits' are enough to outweigh the economic losses. Jamaica could then either:

a) Withdraw completely from CARICOM.

b) Decide to become either an associate member or a non-customs union member, like The Bahamas.

c) Negotiate more favourable membership terms. After all, $25 billion in lost customs' duties is not 'monkey money'.

Now, I must admit an emotional grudge against CARICOM. As a life-long West Indies cricket fan, I resent the way in which it has allowed an incompetent and structurally flawed West Indies Cricket Board to destroy something I once loved almost as much as women and books. My interest in West Indies cricket began to dwindle after the WICB sent a substandard team to the ICC Trophy in South Africa last September, despite all players being available for selection. If the people in charge don't care if the West Indies win or lose, then why the hell should I?

Incompetent as they are, even if all current WICB members resigned in mass, the fact remains that with two cricket members from each territory, the WICB set-up, is fatally flawed. The only long-term hope for West Indies cricket is for the Patterson Report on WICB restructuring to be implemented as soon as possible. Then, each territory would have only one cricket representative, and accredited professionals would be in the majority. Then, we might stop seeing debacles like the two-over 'beach' test match in Antigua last year, and WICB might no longer stand for Woefully Incompetent Clownish Blunderers.

But, so far, CARICOM has been unable or unwilling to get the WICB to implement the Patterson Report. And if West Indies cricket dies, then CARICOM will surely soon follow.

Send emails to changkob@hotmail.com.