Ryan Ramkirath

“CARICOM cannot last for five more years!”

Discuss the extent to which you agree with this statement in view of the challenges faced by
CARICOM.
Total 30 marks

CARICOM came into being with the signing of the Treaty of Chaguaramas signed July 4, 1973 by
Jamaica. Trinidad, Barbados and Guyana. Its operations began on the 1 st of August. It’s main objectives
include improvement in economic development through trade liberalization (removal of trade barriers),
functional cooperation in areas such as health, education, culture, broadcasting, technical assistance,
disaster management, common policies in dealing with non member states and transnational companies
such as services offered by various institutions, and economic strength as resources are pooled.

In 1973, the smaller, largely English-speaking countries of the Eastern Caribbean launched the Caribbean
Community and Common Market (CARICOM), an integration plan intended to coordinate and enhance
the collective economic and social development of 15 countries. After three decades of incremental
success, CARICOM’s strategy for achieving complete economic integration now rests on implementing
the Caribbean Single Market and Economy (CSME) formally established on January 1, 2006, and
intended to be fully in place by 2015.

However, as of 2006, Trinidad and Tobago’s president Patrick Manning stated that CARICOM needs to
“deepen its need to deepen friendships in our neighbourhood and beyond, so that when one door is closed
either through arrogance, indifference or domestic preoccupation, we could make a call across the
Atlantic or the Pacific”.

The major initiatives of CARICOM have included the establishment of the Common External Tariff, the
harmonization of fiscal incentives to corporations wanting to invest in the region and the stimulation of
trade, investment, regional ownership and the joint development of natural resources. There have also
been efforts to establish a regional stock exchange and the Caricom Multilateral Clearing Facility
(CMCF), the latter an initiative to allow for trade payments across national boundaries. The achievements
are significant in the expansion of trade (with intra-regional trade virtually doubling between 1973 and
2001 according to the Caricom Secretariat. The Caribbean Stock Exchange is just about to become reality
but the financial clearing mechanism, the CMCF (Caricom Multilateral Clearing Facility), has crashed.

Despite all the successes of CARICOM, it is having challenges including economic integration, and trade
policy issues. CARICOM faces dual challenges in its quest for economic integration through the CSME.
First, it must complete the intraregional integration scheme, including tightening a loose common external
tariff and intraregional trade policy, integrating more fully labour and capital markets, and deepening
“functional cooperation” – pooling resources to improve efficiency in the delivery of public services.
Second, it must devise and implement strategies for “inserting” the CARICOM economies into a dynamic
and competitive global economy in the wake of expiring preferential trade arrangements with its two
largest trade partners, the United States and the European Union (EU).

The Caribbean Basin Trade Partnership Act (CBTPA) preferences will expire on September 30, 2008,
unless extended by the U.S. Congress. Although these preferences currently apply to only seven
CARICOM members and have already been eroded considerably by U.S. free trade agreements with
other countries in the region, CARICOM strongly advocates their renewal and expansion as it evaluates
Ryan Ramkirath

the costs and benefits of pursuing a reciprocal FTA of its own with the United States. This report
evaluates CARICOM’s development and implications for U.S. foreign economic policy.

Another major challenge regarding CARICOM include is to establish a common currency. Within the
Caribbean today, there is not a common currency for which the region can use. Countries use their own
currencies which range in value from the U.S dollar. If CARICOM is able to achieve a common currency,
then the Caribbean countries would have fairer, or better trading with European or North American
countries.

There is also the issue of modernistic healthcare and education. The Caribbean countries lack capital
which makes it a difficult task for there to be a high standard of healthcare and universal and free
education for all citizens.

In conclusion, contrary to the many successes of CARICOM, it has had and is having a fair share of
challenges including economic integration, issues with trading policies, and failure to establish a common
currency, and issues concerning healthcare and education.