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Creating synergies to improve trade in the Caribbean

Creating synergies to improve trade in the Caribbean

The Hub and Spokes II Programme provides trade experts to national ministries and regional trade organisations to enhance trade capacity in the African, Caribbean and Pacific (ACP) group of states. It is a joint Programme of the European Union (main donor), ACP Group Secretariat, the Commonwealth Secretariat and the Organisation internationale de la Francophonie.

Sunday Oghayei, a regional trade adviser, has been supporting the Caribbean Community (CARICOM) in Guyana on trade development since July 2015.

Read his blog below:

During the past year, my focus has been on promoting Caribbean Community (CARICOM) regional integration by creating synergies between the Hub & Spokes II Programme and other trade capacity building initiatives. This has involved helping these countries access additional financing and providing them with technical briefs on multilateral trade agreements to realign national trade implementation with multilateral commitments.

Since CARICOM countries face challenges with regards to their small size, regional integration is the only way to create larger markets that are attractive to investment and trade. This is critical for bringing about sustained growth, creating jobs and transitioning to a more inclusive development model. Regional integration will also help link landlocked and small island countries facing high transportation costs to international markets and support trade between CARICOM members, which will inevitably boost their competitiveness.

The World Trade Organization (WTO) Trade Facilitation Agreement (TFA) aims to expedite the movement of goods. WTO members belonging to a regional economic community can adopt regional approaches in the implementation process. The CARICOM Council for Trade and Economic Development (COTED) has agreed to adopt this approach and has earmarked technical and financial assistance towards implementation. I have been leading on the COTED mandate, which has the potential to reduce the high costs of implementing trade agreements by taking a unified approach.

The priority has been to assist countries to complete their WTO TFA national implementation schedules. I have coordinated technical support for Suriname and Haiti in this regard. Alongside CARICOM colleagues, I have reviewed country submissions towards the development of a regional strategy. The resulting roadmap we produced emphasises the need to attract technical and financial support from donors for implementation. I have developed proposals that attracted World Bank, WTO Trade Facilitation unit, UNCTAD and ITC technical assistance to support countries to adopt a regional approach. To date, six CARICOM countries - Belize, Grenada, Guyana, Jamaica, Saint Lucia and Trinidad and Tobago - have ratified the TFA.    

During this period, I also assisted in setting up a regional trade facilitation committee under the COTED mandate and approached donors (World Bank and UNCTAD) for funding for national and regional trade facilitation activities. This included securing World Bank expertise to help develop the CARICOM regional plan and implementation of the TFA. The projects developed under the regional plan will be presented at a donor meeting at the end of 2016 to secure additional financing.

Implementation of the WTO TFA in the CARICOM region has the potential to address various trade challenges in four areas: ports, customs, the regulatory environment and infrastructural deficiency. Other benefits include diversification of exports, increased access to global value chains, expanded participation of small and medium-sized enterprises, increased foreign direct investment and greater revenue collection.

Overall, the expectation is to improve the region’s trade competitiveness and enhance levels of revenue to help advance development goals.

We are on the road to formalise what has traditionally been an informal sector.

Background

The Caribbean Community Secretariat (CARICOM) is based in Guyana, in northernmost South America. CARICOM comprises fifteen countries and six associate members. While its member countries share common characteristics, they also differ in many respects - their physical and economic sizes, level of economic development and per capita incomes vary considerably. With the exception of Haiti, all members are categorised as high-income to lower middle-income countries, though Haiti accounts for 59 per cent of CARICOM’s population.

All CARICOM countries except Trinidad & Tobago currently exhibit a negative trade balance, where imports exceed export levels, with a regional deficit of US $-4960 million in 2013. The majority of countries import fossil fuels for trade and development purposes. Trinidad & Tobago is the only net exporter of oil and natural gas in the region, whilst Suriname is the only energy independent country. In the other CARICOM countries, about 87 per cent of the energy consumed is from imported petroleum for electricity, transportation and gas, making these countries very vulnerable to fluctuating prices.

One of CARICOM’s major objectives is bringing about greater economic integration by expanding trade and economic relations with third party states, increasing the level of international competitiveness and raising productivity. CARICOM has made efforts to consolidate regional integration under the Caribbean Single Market and Economy (CSME). But strategies for achieving full economic integration depend on successful implementation of CSME, which requires members to commit to integration. To achieve this, members must complete the intra-regional integration scheme, strengthen the common external tariff and intra-regional trade policy, integrate labour and capital markets and deepen cooperation. They also need to develop and implement strategies for integrating their economies into the competitive global economy, taking into account expiring preferential trade arrangements with the United States and the European Union - two of the largest trade partners.

For more information on the Hub and Spokes II Programme, please email the team