Transcript CARICOM’s Orientation in External Trade Negotiations:

CARICOM’s Orientation in External
Trade Negotiations:
Regional Integration and Economic Growth
Dr. Claudius Preville*
Paper presented at the International Conference on Small States and
Economic Resilience, University of Malta, Valetta, Malta.
April 23-25, 2007
OUTLINE
INTRODUCTION
REGIONAL INTEGRATION THEORY
CARICOM’s EXPERIENCE
PATTERN OF TRADE
GROWTH PERFORMANCE
EXTERNAL TRADE ORIENTATION
GROWTH AND TRADE POLICY
CONCLUDING REMARKS
INTRODUCTION
CARICOM – Caribbean
Community and Common
Market;
15 members;
Notified under GATT Art.
XXIV October 1974;
Active FTA negotiations
with EU;
Existing FTAs – Costa
Rica, Venezuela,
Colombia, Dominican
Republic, Cuba;
FTAs contemplated with:
USA, MERCOSUR,
Canada;
USA and Canada
interested in renewing
non-reciprocals;
Little progress with
MERCOSUR;
Paraguay holding out on
renewal of CBI;
CARIBCAN seems ok;
INTRODUCTION
GDP – $ 50.7 Bn;
Per capita – $8,112;
Inflation < 5%;
Trinidad and Tobago main growth pole;
Growth driven by: Services; Agriculture;
and Manufacturing;
REGIONAL INTEGRATION THERORY
Countries come
together to create an
economic bloc;
FTA;
Customs Union;
Common Market;
Economic Union;
Rationale for
integration:
Expand economic
space, increase
efficiency via
specialization, exploit
scale economies and
common governance;
Security;
REGIONAL INTEGRATION IN PRACTICE
WTO GATT Article XXIV – Countries must
liberalize tariffs on substantially all the
trade among members of the integrating
bloc;
Substantially all the trade commonly
means 90 percent or more;
In FTAs between WTO members further
liberalization must take place, incl. other
restrictions on commerce;
REGIONAL INTEGRATION IN PRACTICE
CARIFESTA;
LIAT (1974);
WISCO;
ENLARGEMENT –
HAITI (2002);
CSME;
SINGLE SPACE
INITIATIVE (CWC);
PATTERN OF TRADE - GOODS
IMPORTS
Machinery and
Transport
Equip.29.3% - US;
EU; ASIA;
Manufactured goods
–US, EU, CSME;
Mineral fuels and
lubricants – LAIA;
M = USD 10 BN;
EXPORTS
Mineral fuels – 29.7%
- US, CSME, other
Caribbean;
Food – 17.5% - EU,
CSME, US;
Chemicals – US, EU,
CSME;
X = USD 6.6BN;
PATTERN OF TRADE - SERVICES
IMPORTS
Commercial Services
39% - US; EU; ASIA;
Transport -34% – US,
EU, CSME;
Travel – US, EU,
CSME;
M = USD 3.97BN;
CS=1.55; TN= 1.35;
EXPORTS
Travel – 72.4 %; - US,
EU, CSME, other
Caribbean;
Commercial Services
-Food – 14.9 - EU,
CSME, US;
Transport – US, EU,
CSME;
X = USD 6.98BN;
TR = 5.05; CS=1.04;
Year
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
30
29
28
27
26
25
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
09
08
07
06
05
04
03
02
01
00
15%
20
20
20
20
20
20
20
20
20
20
CHART - SERVICES
50%
45%
40%
35%
30%
25%
20%
Percentage difference
10%
5%
0%
GROWTH PERFORMANCE
GDP (1999) = USD 17.7BN;
GROWTH (1999/98) = 3.2%;
UNEVEN;
CONTRACTION – Jamaica, Montserrat,
Guyana;
Manufacturing sector weak;
Trinidad – major growth pole – oil and gas;
Others – Services; Light manufacturing;
TRADE ORIENTATION
GENERALLY
Defensive;
Exclusions;
Long Phasing;
Development
assistance;
Non-reciprocal
preferences;
Services – more
offensive;
WTO – SVEs work
programme;
Redressing
imbalance from UR;
Market access v
development;
Importance of policy
space;
Contribution less than
other developing
countries;
GROWTH AND TRADE POLICY
Services – main driver of economic growth
for most members;
Distributive trade very important in
services;
Liberal import regime enables growth of
the manufacturing-oriented members;
But, fiscal reform is necessary as a precondition;
CONCLUDING REMARKS
Economic integration, as is being pursued
through the CSME process can maximize
efficiency by encouraging specialization
according to comparative advantage,
resulting in higher levels of economic
growth for all;
But, more liberal trade policy is needed
especially in Services and fiscal reform
ahead of liberalization in manufacturing;