Agenda For Growth in the Caribbean

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Ambassador Amos Tincani, Head of EC Delegation

in Barbados and the EasternCaribbean

There has been much concern and debate of late in the Eastern Caribbean in relation to declining growth patterns, mounting public debts, maturing productive sectors (with a now long-standing crisis in the agriculture sector) and, in general, a perceived loss of productivity and competitiveness further undermining the structurally vulnerable position of the region’s small island states. This has been compounded by a gradually less favorable external environment combining pressure towards additional trade liberalization, preference erosion, shrinking development aid, worsening global-warming-related natural disasters and additional costs and constraints resulting from the war on terrorism.

Whether, under those circumstances, Eastern Caribbean countries can successfully compete and grow without special measures (export and import quotas, comparatively high tariffs, longer transitory periods for trade liberalization) tailored to their vulnerabilities, and whether this Special and Differential Treatment (SDT) should be temporary or permanent, are issues focusing current debate in the context of the Caribbean Single Market and Economy, the Economic Partnership Agreement with the EU and the WTO Doha Development Round (DDR).

These are matters that I had the opportunity to discuss with Governmental and Non-Governmental representatives during a set of seminars on competitiveness, agriculture and economic diversification that the EC co-sponsored with six OECS Governments (Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines) and the World Bank between 20 October and 2 November.

The purpose of these seminars was to disseminate and discuss in-country, and with a focus on Non-State Actors, recent analytical work on growth and competitiveness by the World Bank (“OECS: Towards a New Agenda for Growth”) and, in the case of the Windward Islands, research on agricultural development by Oxford Policy Management (“Agricultural Development and Economic Diversification in the Windward Islands”) that had been commissioned by the UK Department For International Development (DFID) and the EC and had already informed a seminar held in Barbados in June.

The debate was open and frank. The overall message “a time to choose/change” was hammered throughout during the proceedings, stressing that changes in the external environment are affecting all countries big and small, (e.g. the high energy prices, erosion of trade preferences), that change is accelerating and that each country needs to adapt to it to maximize comparative advantage and minimize its limitations.

At the risk of oversimplifying, two schools of thought could be identified through the seminar: some participants highlighted the structural vulnerability, lack of competitiveness and need for protection of OECS economies and called for current preferential arrangements to be maintained or reduced more slowly. In that regard, the need to create the Regional Development Fund, as stipulated in the CARICOM Treaty, was stressed, together with the need to maintain Treaty of Chaguaramas Art. 56 protection for OECS countries within the CSME and equivalent Special and Differential Treatment within an eventual EPA and the WTO DDR.

On the other hand, a number of actors seemed to fully understand and embrace the need for change and for jointly addressing existing constraints that significantly hamper the capacity of Eastern Caribbean countries to compete, including the high costs of infrastructure services in the Caribbean, such as energy, water, air and sea transport, and their knock-on effect on doing business; the worsening fiscal deficits and mounting public debts; the failure of the financial sector to play its role of financial intermediation, particularly regarding venture capital and risk-based financing; the inadequacy of the skill-base, work ethic and cost of labor; the equally high-cost and generally low value-added manufacture and agriculture sectors; the less than ideally efficient public sector; and the partial regional integration, which still prevents labor and capital from moving freely and imposes many tariff and non-tariff barriers to the free circulation of goods, services and capital.

While the future of the Eastern Caribbean lies somewhere between these two stances, the seminars showed an increasing realization of a need to change and the readiness to undertake necessary reforms to seize opportunities that further regional integration and international trade liberalization will offer.

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