1 Programme Manager, Single Market and Economy Ivor Carryl

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3 OVERVIEW OF THE CARICOM SINGLE MARKET AND ECONOMY(CSME): IMPLICATIONS FOR CARICOM By Ivor Carryl : Programme Manager CSME MAY 2004

4 BASIC CONDITIONS: We must remind ourselves why the enterprise of integration: Globalisation and liberalisation Debilitating force of smallness, vulnerability Slow internal development –any significant achievement in the last 25 years in any field that propels development ? in economics, in law, in entrepreneurship, in invention? Why not? Limited opportunities and growth Continued outward migration, unemployment, social restlessness and lack of social cohesion; Unnecessary obstacles among people to the natural development of markets and business activity

5 CHANGE IS INEVITABLE ensure that people benefit from change timing important but not always your own choice resistance to change cant do ; is not the way forward

6 THE RESPONSE OPTIONS: Go it alone or, Cooperate using following vehicles; –Common rights, law and rules in a regional economy –Integration of markets / –Access to resources –Common macro, sectoral and foreign policies –Common institutions –Collective governance responsibility

7 FUNDAMENTAL RATIONALE FOR INTEGRATION IN SUMMARY : Overpowering the limitations of ; Individual small size( labour force,consumer population, resources) Vulnerability to economic shock, natural disasters, structure of economy Economic viability of small economy/state Rigid economic structure based on preferences Separate action (Community political and social cohesion vital for progress)

8 Therefore The Global Strategy and World view of development into the 21 century : Deepen Economic Integration Widen economic mass of Community Negotiate together to participate in other regional and multilateral rules based frameworks

9 Integrating Theatres OECS CSME CARIFORUM BI-LATERALS ACS FTAA COTONOU WTO

10 Integrating Theatres : Non linear, but rather multiple theatres : Inner Core- OECS,CSME Cariforum Intermediate Structures (bilaterals,ftaa,cotonou,etc) Outer circle is multilateral system (WTO)

11 THE CARIBBEAN COMMUNITY Membership of the Community : Fifteen Countries and Territories ; Antigua and Barbuda, The Bahamas, Barbados, Belize,Dominica, Grenada, Guyana,Haiti, Montserrat, Haiti, Jamaica, St Kitts, and Nevis, St Lucia, St Vincent and the Grenadines, Suriname,Trinidad and Tobago

12 THE CARIBBEAN COMMUNITY Other kinds of Memberships : The Bahamas (full member but not of the CSME) TCI and BVI (associate members) Bermuda ( associate member) Cayman Is.(to be associate member) Anguilla

13 THE CARIBBEAN COMMUNITY More developed (MDS’s) Bahamas, Barbados Guyana Jamaica Suriname,Trinidad and Tobago Less developed (disadvantaged) Antigua/Barbuda, Belize,Dominica,Grenada,Haiti, Montserrat, St Kitts/ Nevis, St Lucia, St Vincent/ Grenadines, Issue - the concept of community is clear ; it however lacks enough substance and require further engineering, to give it common meaning and value ; in law, institutionally and practically

14 THE OBSTACLES, CONSTRAINTS,CHALLENGES : Resistant attitudes to change ; resistance to removing obstacles Internal pressures, limited economic growth,meager resources, national mindset not Community mindset Policy anchored irrationally by type of economic structure and preferences in trade The business organisation, the problem of cross border investment Preparedness to compete

15 THE OBSTACLES, CONSTRAINTS,CHALLENGES : Single space, collective governance, but separate sovereigns Instability in Haiti and lack if complete integration of some states Capacity of small state to act : policy, law,infrastructure, public administration reform Inadequate understanding Absence of Community Financing the Community Transportation, information and communication

16 THE CSME IS : AN INTEGRAL PART OF THE COMMUNITY A RULES BASED ENTITY AN ECONOMIC SPACE a regional economy a market system

17 THE CSME IS, A Rules Based Entity LEGAL ARCHITECTURE THE TREATY INTER-GOVERNMENTAL AGREEMENTS IMPLEMENTING LAWS REGULATIONS,ORDERS AND RULES DISPUTE SETTLEMENT REGIME ENFORCEMENT UNDER DOMESTIC LAW ENFORCEMENT UNDER CARIBEAN COURT OF JUSTICE ISSUE:: The rules in the treaty are inadequate to guarantee predictability, transparency and objectivity in respect of both enforcing rights and discharging obligations ;

18 INSTITUTIONAL ARRANGEMENTS Governance and decision-making arrangements Dispute Settlement Bilateral Approach Good Offices Conciliation Mediation Arbitration Judicial Settlement

19 THE CSME IS :A Regional economy/market ? YES :The Economic Theatre for Trade/ Business/Personal Development 15 Million consumers spread over 2000 miles When Bilaterals added, consumer population is over 75 Millions Combined GDP, about EC 60 Billions Total Export Trade in Goods EC 18 Billions Intra-regional Exports in Goods EC 3.4 Billions Services Receipts EC 4.9 Billions +Bahamas EC 2.0 Billions

20 THE SINGLE MARKET ECONOMY(CSME)? KEY PRINCIPLES UNDERPINNING CSME EQUAL RIGHTS AND TREATMENT FOR ALL PERSONS OF MEMBER STATES IN THE MARKET NON -DISCRIMINATION (i ) national treatment (ART 7) (ii) most favoured nation treatment (ART 8) EXCEPTIONS DIFFERENTIAL TREATMENT ; LDC’s /DISADVANTAGED CARICOM ISSUES IN DEALING WITH THIRD STATES AND GROUPS OF STATES –DIFFERENTIAL TREATMENT FOR THE DISADVANTAGED, SIZE, VULNERABILITY, FLEXIBILITY, PROGRESSIVITY, SCOPE

21 HOW TO CREATE ONE MARKET -ECONOMY FROM 15 SEPARATE ECONOMIES :? WHERE ARE WE IN THE OVERALL IMPLEMENTATION Negotiate the treaty Entrenching CSME legal personality, in all states Install/build institutions Reforming governance structures Market liberalisation Economic integration Structures and procedures for external policy The built in Agenda

22 THE FINAL PRODUCT Art 78(2) Full integration of national markets into single, unified, open market area Differential Treatment of Disadvantaged Common Policy On Treatment of Non- Members (Common External Policy)

23 THE FINAL PRODUCT A fully developed and implemented legal framework which includes the Revised Treaty, additional amendments to include the Article 239 built in agenda issues, ;inter-governmental agreements, implementing laws and regulations. A stronger collective governance framework which include increasingly effective implementation capabilities and new Community institutions with particular emphasis on the Caribbean Court of Justice, a Community Competition Commission, bodies to regulate educational standards and qualifications., and standards for agricultural and non agricultural goods and for services

24 THE FINAL PRODUCT The full enjoyment of national treatment by citizens and nationals of all Member States in respect of production and trade in goods, the provision of services, the movement / transfer of capital for the purposes of investment and current payments throughout the market area, The freedom to move around to seek work and compete for employment in any geographical part of the CSME : by university graduates, media workers, sportspersons, musicians, artistes, managerial, technical and supervisory persons (including their spouses and dependants) associated with establishing entities; and by entitled persons qualifying as self employed industrial, commercial, artisanal, professional and agricultural service providers.

25 THE FINALPRODUCT The freedom to create a company or other legal entity and establish and operate such an entity in any part of the CSME The freedom of nationals of Member States to travel within the Community,benefiting from national treatment at ports of entry and using machine readable travel documents including a Common Community Passport and embarkation/ disembarkation documents.

26 THE FINAL PRODUCT Functioning institutional arrangements, procedures and practices for the effective coordination of macroeconomic,sectoral and foreign trade policy, An informed public which understands and supports the CSME and demonstrate this understanding and support by their active participation /competition in the markets of individual interests. Stronger presence of the elements of Community and social cohesion

27 THE RESULT AND THE OPPORTUNITY MUST BE MARKET LIBERALISATION: FREE ESTABLISHMENT OF PRESENCE

28 Right of Establishment Obligations: Permit establishment in all areas Do not introduce new restrictions Remove existing restrictions

29 Establishment : Who has right? art 32 natural persons ; citizens nationals residents natural persons ;self employed,agricultural, industrial, commercial, artisanal and professional companies and other legal entities ; agencies, branches and subsidiaries

30 Establishment: Issues Does Common Regime mean single legal framework for establishment that extend beyond Articles 32,33 and 34? How to transform concept that, an entity established in one state is simultaneously in the CSME.

31 Establishment: Elements of regime; Company Law, incorporation, registration of business name Competing presence (direct foreign investment) Establishment includes presence and ownership (Articles 31, 32) Monopolies (Art 31) Access to land, buildings and property (art 34f) The protection of the interests of partners, members and other persons with financial interests in companies and other entities

32 When can right be denied monopoly established or maintained (art 31) qualification origin criteria not met (art32) exception approved by Community Organ balance of payments action (Art 43) safeguard invoked (art 47) disadvantaged situation justified according to Community Organ (chapter 7)

33 RECIPROCAL ENFORCEMENT OF JUDGENMENTS Draft Legislation in progress

34 THE RESULT AND THE OPPORTUNITY MUST BE MARKET LIBERALISATION: FREE MOVEMENT OF NATURAL PERSONS

35 SUMMARY ON FREE MOVEMENT OF NATURAL PERSONS (i) There are two Regimes : (a) Facilitation of Travel (Art 46) (b)Movement of Skills (Art 32,34(d),3637)

36 SUMMARY ON FREE MOVEMENT OF NATURAL PERSONS (a) Facilitation of Travel (Art 46) Common travel documents Common landing documents National treatment at ports of entry

37 SUMMARY ON FREE MOVEMENT OF NATURAL PERSONS (b) Movement of Skills : (i) Companies and Non-Wage Earners(self employed persons) (ii) Wage Earners: University Graduates, Musicians, Artistes, Sports Persons Media workers; Managerial, Technical and Supervisory Staff of establishing entities

38 SUMMARY ON FREE MOVEMENT OF NATURAL PERSONS Wage Earners Liberalisation,Removal of Work Permit: (a) Skilled Nationals Act ( University Graduates, Musicians, Artistes) Sports Persons Media workers (b) The programme to remove Chapter III restrictions ( Managerial, Technical and Supervisory Staff of establishing entities)

39 THE RESULT AND THE OPPORTUNITY MUST BE MARKET LIBERALISATION: FREE MOVEMENT AND TRADE IN GOODS

40 CSME TRADE POLICIES IN THE REVISED TREATY CSME MFN APPLICATIONS Origin of goods Art 84 Freedom of Transit Art 86(2) Export Drawback Art(89) (1) Quantitative Restrictions Art 91(3) CSME NATIONAL TREATMENT APPLICATIONS Community Origin Art 84 Internal Taxes and Charges Art 90

41 PROHIBITIONS : Import duties Art (87) Quantitative Restrictions Art (91) Governmental Assistance to Economic Development Art (93) Public Undertakings Art (94) Export Subsidies Art 99 ACTIONABLE Subsidies causing, nullification,impairment or serious prejudice Art (105 Subsidies causing serious adverse effects Art (111) Agricultural Subsidies Art 121 Dumping Art 125

42 EXCEPTIONS : Balance of Payments Art 43 Difficulties Occasioned by Particular Imports Art 92 Under the Special Regime For Less Developed Countries -Import Duties Art 160 -Community Origin Art Promotion of Industrial Development Art Public Undertakings Art 165 What remains to be done; Free Circulation, trade involving free zones

43 THE RESULT AND THE OPPORTUNITY MUST BE MARKET LIBERALISATION: FREE MOVEMENT AND TRADE IN SERVICES

44 LIBERALISATION REGIME APPROACH GATS ARTICLE V COMPLIANT NEGATIVE LIST FOR CSME MEMBERS UNIFORM LEGAL REGIME FOR TRADE IN SERVICES POSITIVE LIST IN THE CASE OF THIRD NON MEMBERS

45 LIBERALISATION REGIME : SCOPE : FREE MOVEMENT AND TRADE IN SERVICES Provision of services as a right (ART 30) All services will be open to competition except ;(a) those involving the exercise of governmental authority Art 30 (b) those where there is a monopoly Art 31 Non Discrimination apply to all laws, rules administrative measures and service industries

46 LIBERALISATION REGIME : SCOPE OF : FREE MOVEMENT AND TRADE IN SERVICES Services supplied by any of four modes (ART 36) Mode I : Cross Border Mode 2 : Consumption Abroad Mode 3 : Commercial Presence Mode 4 : Presence of Natural Persons

47 LIBERALISATION REGIME : PROCESS STANDSTILL Art 36 ROLLBACK Art 37 Existing restrictions law and in effect must be removed in by 31 December 2005: (a)As a general undertaking (ART 37) (b)As a specific undertaking ; in accordance with the Programme to Remove Restrictions established by the Thirteenth Inter-Sessional Meeting of the CONFERENCE

48 LIBERALISATION REGIME : PROCESS (CONTD) IN SPECIFIC CASES removed restrictions include ; Those restricting a company Those restricting Non-Wage Earners(self employed persons) industrial, agricultural, professional, commercial and artisanal providers Those restricting managerial, technical and supervisory persons Those restricting the Spouse and dependant persons

49 LIBERALISATION REGIME : Number of Restrictions Country All Restrictions Antigua Barbados Belize Dominica

50 LIBERALISATION REGIME : Number of Restrictions Country All Restrictions Grenada Guyana Jamaica Montserrat

51 LIBERALISATION REGIME :Number of Restrictions Country All Restrictions St Kitts 624 St Lucia St Vincent Suriname

52 LIBERALISATION REGIME :Number of Restrictions Country All Restrictions Trinidad TOTAL

53 EXCEPTIONS Balance of Payments Art 43 Restrictions to Resolve Difficulties Art 47 IN PROGRESS Agreement on Financial Services

54 BUILT IN AGENDA (art 239) GOVERNMENT PROCUREMENT TRADE INVOLVING FREE ZONES FREE CIRCULATION ELECTRONIC COMMERCE CONTINGENT RIGHTS

55 WHO BENEFITS THE COMPANY /BUSINESS ORGANISATION IN THE MARKET NATURAL PERSONS IN THE MARKET CONSUMERS

56 WHO BENEFITS CSME NOT AN EXCURSION INTO ACADEMIA CSME IS OPPORTUNITY TO IMPROVE QUALITY OF LIFE. It is about, The farmer who grow bananas, fresh fruit and vegetables. CARICOM imports over 2.7 billions US per year in food

57 WHO BENEFITS CSME IS OPPORTUNITY TO IMPROVE QUALITY OF LIFE :It is about, The fisherman who must supply more and more fish, shrimp, prawns, lobster etc to the resident and tourist populations

58 WHO BENEFITS CSME IS OPPORTUNITY TO IMPROVE THE QUALITY OF LIFE :It is about ; the furniture manufacturer who must put his best designs into CARICOM households from Belize to Suriname

59 WHO BENEFITS CSME IS OPPORTUNITY TO IMPROVE THE QUALITY OF LIFE :It is, The media worker who must see his workplace as including all CARICOM with Grenada being only one part of market The electrician and carpenter and other artisans who must see Grenada as only one of fifteen geographical markets to make money

60 WHO BENEFITS CSME IS OPPORTUNITY TO IMPROVE PROFITABILITY OF COMPANIES :It is about, Parbo beer in competition with Carib in TT and Banks in Guyana and Barbados, Red stripe in Jamaica Fernandes Limonade in competition with busta I-cee and coca cola. CIC in competition with Ansa Macal for the market for detergents

61 EXTERNAL NEXUS :COMMON DEALING WITH NON MEMBERS Common External Tariff Community Rules Of Origin No Quantity Restrictions Except as Authorised by WTO Community Examination in cases of Subsidised and Dumped Goods by COTED Art 78(3) (a) common instruments, common services,joint regulation,operation,administration of external commerce

62 COMMON DEALING WITH NON MEMBERS Common negotiating positions where possible Art 78(3)(a)(ii) Cooperation on External Trade arrangements –Community Bilateral Arrangements – National Bilateral Treaties Art 80

63 COMMON DEALING WITH NON MEMBERS; NEGITIATING ISSUES Special and Differential Treatment Size and vulnerability Scope of undertakings Disciplines to which we should be contracting parties Flexibility Progressivity

64 COMMON DEALING WITH NON MEMBERS; NEGITIATING ISSUES Subsidies, Resource Transfers, Technical Assistance Preferences

65 WHAT MUST A MEMBER STATE DO (i)IMPLEMENT THE CSME REGIMES (ii)NATIONAL STRAEGY (iii)COMPANY DEVELOPMENT (iv)INDIVIDUAL STRATEGIES

66 WHAT MUST A MEMBER STATE DO (i) IMPLEMENT THE CSME REGIMES get cabinet to focus on legislative agenda, nonpartisan parliamentary approach to CSME, push other Member States to do same

67 WHAT MUST A MEMBER STATE DO (ii) NATIONAL STRATEGY position the country in the CSME, set CSME targets, deepen non-state actors partnership, look at support of private sector in the wider CSME, macro and sectoral measures

68 WHAT MUST A MEMBER STATE DO (iii) COMPANY DEVELOPMENT business organisation, business outlook, develop market access know how, skills deepening, intensification of export marketing, technical and operational aspects of companies; non tariff barriers, preferences and safeguards

69 WHAT MUST A MEMBER STATE DO (iv) INDIVIDUAL STRATEGIES know your rights and the rules choice of careers, retraining, capital accumulation, support consumer advocacy organisations, question labour organisations regarding representation on CSME issues