Entrepreneurs, in particular do have a lot to gain, but only those who are prepared to take the risk and think out side the box will reap the rewards.

We are excited about 2006, because we have lots of ideas that will help you and your business make the necessary transition on the CSME.

We hope that you take your first step to this union by signing up for your CSME alerts.

To all of you who have made talkCSME the No. 1 place for information on the CSME, we wish to extend our since thanks and appreciation to you and look forward to your continued support as we face the challenges of the Single Market Economy.

May the New Year bring joy, peace, happiness and prosperity to you and your family. Please remember to sign up for your updates.

“If you advance confidently in the direction of your dreams, and endeavour to live a life which you have imagined, you will meet with success unexpected in common hours – Henry David Thoreau

Carla and Eldonna Lendor
TalkCSME.com Team

Considering Special and Differential Treatment for Disadvantaged Countries, Regions and Sectors

“The most unfair treatment is to treat things that are different the same. What is more unfair is to perpetuate the dependence of the already disadvantaged by creating a culture for derogation from the norms and obligations under the system, that promotes dependence and hinders adaptation.”

Notwithstanding the laudable objectives of the Caricom Single Market and Economy, a xenophobic culture among its constituents has threatened to undermine the CSME, even before its inception. Although boastful of its regional identity and interdependence, the xenophobia and dependence that has long plague this emancipated region, has instigated a myopic insistence on special and differential treatment for countries, regions and sectors disadvantaged under the system.

It is beyond challenge, that the proposed regional trading arrangements would lack equity and prospects for longevity, if it made no allowance for special and differential treatment. However, arguments for special and differential treatment for various countries, regions and sectors, although having some merit, have for the most part taken the form of highly politicised and emotional arguments, often lacking objectivity. The politicising of the debate without recourse to constructive application of established rules and principles of trade has unfortunately resulted in some legitimate economic and social concerns being undermined. While there is need to advance the notion of special and differential treatment for disadvantaged constituents, there is a prevailing need to distinguish the two cases in which special and differential treatment is being advocated. The first relates to situations in which the introduction of competition under the system has created a transitional or temporary disadvantage. The other speaks to circumstances where lack of competitiveness through blind adherence to inefficient trade practices and policies has created a permanent inability to adapt to the new trade climate. While the rules¹ provide a remedy for transitional or temporary disadvantage, there can be little tolerance for inefficiency under the proposed trade system or any other liberalised trade arrangements.

Regrettably, arguments for special and differential treatment although occasionally meritorious, have generally been in defence of inefficient trade practices. Additionally, these approaches are generally based on the same lines or argument rejected by the WTO² , despite many failed appeals. The gist of these arguments have generally been that less developed countries assume a disadvantaged position within a unified system of trade and should therefore assume the same privileges and rights as their more developed trade partners, with limited requirement for reciprocity and lesser obligations under the system. Slowly the principle of non-reciprocity, under the WTO and its multilateral agreements, is being whittled away, with beneficiaries of the system being required to reciprocate to some degree or to justify derogation. Proponents of non-reciprocity under the Caribbean Single Market and Economy may therefore be hard pressed to defend this proposition.

Special and differential treatment under the CSME is essential in maintaining an equitable trade system, which is consistent with, and supports individual national development objectives and strategies as well as continuing regional commitment to its advancement. It is conceded that uniform rights and obligations, among similar but in many respects diverse member states, could not serve the best interests of individual states or the region. However, derogation from rights and obligations under the system ought not to revolve around deviation from rules to protect sectors permanently incapable of suitable adaptation. Rather, the pivotal objective ought to be the upholding of individual economic and social rights and interests that promote the advancement and sustainability of the region.

There is need for countries, regions and sectors that claim transitional or temporary disadvantage as a result of the implementation of the CSME, to assess the impact of liberalisation and to explore measures that may effectively address the particular adversity. In so doing, they must seek to exploit the established rules of trade in developing strategies for minimising the negative impacts of trade liberalisation while maximising the benefits of its advantages.

Footnotes

¹ Chapter Seven, Disadvantaged Countries, Regions, Sectors; Revised Treaty of Chaguaramas Establishing the Caribbean Community including the Caribbean Single Market and Economy provides for transitionary initiatives to stem the dislocation and disruption to economies and industries that may affect disadvantaged countries, regions and sectors following the implementation of the Caribbean Single Market and Economy.

²The World Trade Organisation (WTO)

The unfair treatment is to treat things that are different the same. What is more unfair is to perpetuate the dependence of the already disadvantaged by creating a culture for derogation from the norms and obligations under the system, that promotes dependence and hinders adaptation. – Eldonna Lendor, Trade Consultant

Regional Integration is our Best Alternative

Why did the West Indian Federation fail? Many responses have been proffered to this much deliberated question and I wish to submit my own view on the issue albeit without possibility for resolution. While the notions expressed by the many commentators are germane to the issue, in my view, the principle reason for the failure of the West Indian Federation was that the Federation remained at that time optional as a mechanism for ensuring the advancement and survival of its constituents. A situation, which I dare say, has changed, due to recent developments affecting global trade. At that time, constituents were not pursuing nor were there significant pressure to pursue a common regional trade, economic and development agenda. Principally, there was there no commitment among its constituents to refrain from adopting actions, policies and positions that would undermine or derail the objectives of the Federation. Changes in the global trade environment now dictate regional integration as a critical mechanism for ensuring the survival of its constituents. In the absence of such or similar alliance, the economic viability of that constituent is significantly threatened.

Perhaps there was no principle factor that led to the collapse of the Caricom Federation and its demise was really the result of cumulative factors. In the absence of finite diagnosis, many remain concerned as to whether its successor, the Caribbean Single Market and Economy will satisfy its objectives. Indeed, there may be no real merit in deliberating further on the question as to whether the single market ought to be pursued, since regional governments have already committed themselves to compliance and introduction of the CSME come January 2006. On this premise, it is recommended that the debate should instead focus on how state and non-state actors may advance the objectives of the Caribbean Single Market and Economy. With its inevitable introduction, questions, which must be answered, are, “How can trade arrangements under the CSME facilitate the advancement of individual and regional trade interests? How may disadvantaged countries, regions and sectors exploit its benefits and overcome its disadvantages?”

One reason why regional governments have lent support to the CSME despite failures in previous attempts at regionalism is because of the prospects that it holds for assisting the region to integrate into the world economy. In fact, it can be said that the Caricom region’s recent transition to economic and some political integration is pioneered not by the regional climate or psyche but rather global developments in trade which have forced its transition to regionalism as a mechanism for survival.

Choosing to focus primarily on the obstacles and reluctant to embrace and exploit the benefits, many commentators have continued to present challenges confronted by the European Union as a caution to the region to abort its initiative towards greater regional integration. What is striking is that despite reports of its failure and mounting challenges, new states continue to seek membership into the European Union. Perhaps the integration of these European states into the Union stems from recognition that even in their worst state within a regional trade system; their prospects for surviving these harsh “global trade winds” are much improved over facing it alone.

In the Caribbean, while the option of going alone is no longer an option, we continue to look with suspicion at our Caribbean brothers, treating them like bastard children and at the same time oblivious to the attack being mounted stealthily by bigger sharks. So that while the little fish are in a frenzy, fighting over territorial waters, these schooled sharks, now allies, steaming rapidly in our direction, fuelled by the resolve to survive the emerging currents of global trade with all alacrity, and “sheeped” in the guise of ¹NAFTA, ²FTAA and ³EU , unknown to us, are already at our doorsteps.

¹The North American Free Trade Area (NAFTA) became effective in Canada, Mexico and the United States on January 1, 1994 and forms the world’s second largest free trade zone, bring together approximately 365 million consumers.

²Free Trade Area of the Americas (FTAA) – The Free Trade Area of the Americas is an attempt to expand the North American Free Trade Area (NAFTA). Negotiations began after the completion of NAFTA in 1994 and was supposed to have been completed by January 1, 2005: Free Trade of the Americas: Hugh Victory January 2005; www.globalexchange.org

³The European Union (EU) was formerly established in November 1993 and includes 25 member states speaking over 21 different languages. Former Yugoslav Republic of Macedonia is one example of a country that has recently applied for membership.

But one of the greatest advantages is that it will encourage intra-regional trade and allow CARICOM states to negotiate as a single entity. This will afford them a better opportunity to influence policies concerning global trade. Perhaps the region may soon be a force to reckon with in the next round of World Trade negotiations.

The major issue for each state is whether its existing businesses and workforce can survive the increased competition when businesses that are more successful enter the local market. Many states are uncertain as to whether their local economy can survive the transition. From all indications, it appears that the CSME is about survival. Businesses that do not have the resources or capacity to compete will surely whither away. States that fail to develop their capacity must prepare to deal with economic calamity.

But the most debated issue is the implications for employment. The free movement of labour is limited to qualified and skilled persons. Therefore, the idea that with the emergence of the CSME will result in mass movement of unskilled persons to more prosperous member states seems far-fetched.

Of major concern to the Governments and people of the region is the potential for an increase in local unemployment as a result of more persons competing for the few available jobs. Another concern is the increased pressure that may be placed upon social and economic institutions, in the event of mass migration, and their ability to cope. Governments of the region are exploring various measures to assist the public and private sectors to adapt. However, many are of the view that, the question of whether these states have the resources to deal with negative externalities including increases in crime, poverty and unemployment levels is yet to be strategically addressed.

Whatever the issue, the CSME is a reality that all member states must confront. At the end of the day, sink or float, it’s all about survival of the fittest.