CARICOM Single Market and

           Economy (CSME) and the Free Trade

                   Area of the Americas (FTAA)

CSME And FTAA: Possible Impact on the Jamaican Labour Market  

The CSME and Labour  

The Free Trade Area of the Americas (FTAA)  

Labour in the Context of CSME 

CSME and the Free Movement of People

Frequently Asked Questions

               CSME and FTAA: Possible Impact

                   on The Jamaican Labour Market

The intensification of globalization in the last quarter of the twentieth century has resulted in the removal of protection for developing countries, the formation of large trading blocks and increased trade liberalization.  In response to this, the small economies of CARICOM have sought to:

• to gain membership in the soon to be established Free Trade Area of the Americas (FTAA) which, it is anticipated, will include all of the countries in this hemisphere except Cuba;

• to deepen regional integration by taking steps to establish the CARICOM Single Market  and Economy (CSME);

• to enter into an agreement with the European Union {Economic Partnership Agreement (EPA)} as part of the African Caribbean and Pacific (ACP) countries; as well as

• to enter into bilateral trade agreements with countries such as the Dominican Republic, Venezuela, Colombia and Cuba.

Some Jamaicans have expressed fear at what could happen with the implementation of the CSME and the FTAA.  There is the feeling that local businesses, especially the manufacturing sector, will be undermined and that the country could be relegated to being an importer of goods.  This would be translated into the closure of local businesses and job losses.  The implementation of both the CSME and the FTAA could result in advantages for Jamaica, however, as the negotiations are seeking to address several areas of concern to various sectors of the economy.

Free Trade Area of the Americas (FTAA)

Negotiations in relation to the FTAA for example include issues such as competition, investment, market access, smaller economics as well as subsidies, anti-dumping and countervailancing duties. The negotiating body for CARICOM {Trade Negotiating Committee (TNC)} is seeking to protect the region by pressing for policies which address:

• differences in the sizes and levels of development of the economies of the participating countries;

• a flexible framework which will accommodate the peculiarities of each participating country;

• transitional methods which may be supported by technical co-operation programmes;

• reaching a common understating in relation to the operation and enforcement of trade law remedies;

• giving longer periods for compliance with the obligations under the FTAA to more vulnerable economies;

• the establishment of a body which will facilitate and promote competition by regulating the development of a competition policy and enforcing regulations; as well as

• the establishment of a dispute resolution mechanism.

It should be noted that the interests of labour can be presented to the FTAA as there is an 'open and on-going invitation'¹ for the participation of civil society which includes labour.  Contributions may be submitted via e-mail, facsimile, mail or courier. In addition, the Jamaican Government has regular consultation with various interest groups, including labour, in an attempt to address the varied concerns of the country.

CARICOM Single Market and Economy

The CSME is similar to the FTAA in principle, however, it will only include participating members of CARICOM.  Provisions are made for the CSME under the Revised Treaty of Chaguaramas.  It seeks to address areas such as the free movement of goods, services, persons and capital; macroeconomic co-ordination; fiscal harmonization and monetary union.

It is anticipated that:

• the free movement of goods will facilitate intra-regional trade as there will be the removal of barriers such as licences, discriminatory taxes and other fiscal charges;

• the free movement of services will facilitate trade in services.  This includes those provided by self-employed persons, entrepreneurs, as well as technical, managerial and supervisory staff and their spouses;

• the free movement of persons will facilitate access to skills within the region;

• the free movement of capital will facilitate investment and the establishment of businesses within the region;

• there will be collaboration and co-ordination to promote sound macro-economic policies within member states;

• fiscal harmonization to ensure that the tax regime in participating countries are similar; and

• monetary union that is, a single currency.

Advantages of Participating in the FTAA and CSME

The potential benefit of the FTAA and CSME to CARICOM is tremendous.  To reap those benefits there will have to be changes in the way that some things are done. Both trade agreements will provide a vast market for the goods of the region but the people will have to look outside the proverbial box.

The citizens of the regions can ensure that the business environment remains viable and facilitate job creation by:

• looking for feasible investment opportunities within and outside of their countries;

• looking outside of traditional markets and products for opportunities;

• changing the focus of production for example, looking at the development of by-products of their production processes whenever feasible;

• developing new products;

• identifying and producing goods and services for niche markets;

• copyrighting the names of goods, services and products wherever possible;

• investing in science and technology;

• approaching business in a way that ensures that the needs of the consumers are met, this should involve quality control; and

• meeting and surpassing international standards.

Changes will have to be made in relation to the human resource factor, such as:

• modifications to the educational and training system within the CSME.  The new focus should be on encouraging analysis rather than learning by rote, as this will foster innovativeness and creativeness.  Education and training institutions should develop their programmes in conjunction with the business community so that the skills being produced are those that the employers require;

• regional accreditation of education and training institutions (within the CSME) or the programmes offered by them to establish and ensure that minimum standards are met;

• articulation of education and training programmes within the CSME so that the credits can be transferred from one institution to another;

• the development of a regional labour market information system (LMIS) within the CSME.  This will inform policy at both the regional and local levels.  It will also provide information and data on the types of skills needed and where they are needed, emerging occupations, opportunities within the region for training, sectors which are expanding and contracting, as well as on dying occupations.  Another important factor would be provision of information on the qualifications of the regional labour force as this has implications for education and training.  The LMIS is especially important in the context of the Caribbean where there is high unemployment particularly among youth and women:

• the free movement of persons so that skills can move to areas of high demand;

• changing the management style to one that is more inclusive of workers.  This would make the workers feel more involved in the process and facilitate increased productivity;

• introduce productivity-based incentives within companies as well as for companies at the sector and/or national levels.  This could include competitions within and among organizations.  There should be prestige attached to prizes especially at the national level:

• the portability of pension.  Ensuring that the pensions of persons are linked even if they work in more than one CSME territory.  This will provide some degree of social protection during retirement.

The Jamaican Context

The implementation of the FTAA and the CSME should result in a new Jamaican economy with 'new industries, new forms of business organization and new business arrangements.'²  Jamaica could have an advantage of size in the context of the CSME as it is the largest English-speaking country in terms of land mass and population.  It is therefore, anticipated that the country will attract considerable investment from the Caribbean.  This should have a positive impact on both the productive sector and job creation.

Local businesses will have to transform the way that they function as they will have to aggressively seek, pursue and seize opportunities locally as well as in the two trading blocks.  They will have to improve their products in order to ensure their survival and growth.

Changes in the business environment will have a major impact on the local labour market.  Workers will play an important role, however, they will have to improve their work ethic for example, be more punctual and reduce absenteeism. Management should strive to make them a more integral part of the process and efforts should be made to have less adversarial relationship between employers and employees.  This can be achieved by cultivating a culture in which both groups believe that they have and are working towards a common goal.

A national labour market information policy will have to be developed and this will have to be compatible with a larger policy for the CSME.  This policy should be formulated in consultation with various private sector groups, the Government, workers' representatives, and education and training institutions.  The policy should be scientifically developed that is, it should be based on empirical studies and the analysis of primary and secondary data.  There should be continuous monitoring to determine the factors affecting employment and job creation at the sector and national levels.

The importance of a national labour market information policy cannot be over emphasized.  It could be used to:

• determine whether there is need for fundamental changes or minor adjustments to the education policy;

• assist education and training institutions so that they react in a timely manner to changes in the labour market; and

• assist individuals in making sound choices when investing in education and training.

Formation of the trading blocks will pose new challenges.  Jamaican management and workers will have to adjust how they think and Government will have to focus on policy formulation and implementation.  In addition, a closer relationship will have to be fostered among education and training institutions, private sector, Government and workers representatives.  Together we can chart a path for success and prosperity as we enter into the CSME and FTAA.

________________

¹ www.ftaa-alca.org/spcomm/SOC/INVITATION/SOCr4_e.asp

²  Andrew S. Downes, "Labour Market Policy in a New Caribbean Economy"

References

Brewster, Havelock R., "The Caribbean Single Market and Economy: Is it realistic without commitment to political unity?"                                 

URL: http://www.caricom.org/speeches/csme-policticalunity-brewster.htm

Caribbean Export Development Agency, "Trade negotiations: the impact of the private sector in the Caribbean"

Downes, Andre S. PhD, Labour policy in a new caribbean economy, April 2003

"Furniture makers will face open competition", July 2003, Jamaica Observer

URL: http://www.jamaicaobserver.com

Thompson, Tracey, "Ministry of Foreign Affairs and Foreign Trade: Investment and employment opportunities to flow from CSME." April 2002

URL: http://www.jis.gov.jm/foreign_affairs/html

URL:  http://www,ftaa-alca.org

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                                      The CSME and Labour

The concept of the CARICOM Single Market and Economy (CSME) is the continuation of an evolutionary process that began with the establishment of the Caribbean Free Trade Association (CARIFTA) in 1968.  CARIFTA facilitated growth in trade within the English-speaking Caribbean, as there was a reduction in import duties and quantity restrictions.  In 1972, the region decided to deepen the integration movement and CARIFTA was converted into the Caribbean Community and Common Market (CARICOM).  This was formalised with the Treaty of Chaguaramas in 1973.  The Treaty expanded the areas of co-operation from trade to include health, agriculture, tourism, other productive sectors and telecommunications.  In addition, the participating countries agreed to have a co-ordinated approach to foreign policy. 

 During the 1980’s there was increased globalisation of the world economy and this resulted in a re-assessment of the region’s integration process.  Consequently, in 1989 the Treaty of Chaguaramas was revised through nine protocols to facilitate the establishment of the CSME.  Its objective is to improve CARICOM’s chances of survival by transforming the countries from small vulnerable individual states to a regional economic space, by facilitating the pooling of all their resources (including human resources).  It is anticipated that this will provide benefits such as a larger market for trade, a larger labour market and economies of scale in production thereby allowing firms in the Community to be more competitive.

 1.1  Labour and the CSME

Labour is recognised as an important component of the CSME and one of its goals is to provide the foundation for a mobile labour force by the integration of labour markets.  Under Article 45, the Treaty of Chaguaramas states that the ultimate goal of the CSME is to have free movement of nationals throughout the region.  This is being initiated with provisions for the free movement of skilled persons such as university graduates, media workers, sports persons, artistes and musicians.  Protocol II along with Articles 32 and 34 also facilitate the free movement of services and additional skills.  They expand the free movement of skilled persons to include:

• managerial, technical and supervisory staff, their spouses and immediate family members; as well as

• self-employed persons involved in commercial, industrial, agricultural, professional and artisan work.

The Treaty seeks through Article 63, to ensure that the labour market will be responsive to the CSME’s needs by stipulating that:

• human resource development measures are to be implemented to provide support to the region’s attempts to improve its competitiveness in the development, production and delivery of goods and services;

• the region should foster an environment which encourages entrepreneurship;

• education and training should be strengthened through non-traditional modes such as distance learning; and

• the curricula for education and training institutions should be developed to meet the specific needs of industries.

 Article 73 recognises the importance of industrial relations.  It states that member states should implement measures that promote harmonious, stable and enlightened industrial relations.  The Article also encourages collective bargaining, tripartite consultations and improved living and working conditions.  In addition, each participating territory is to respect the rights of all of the Community’s workers and treat them fairly regardless of nationality.

Improved productivity is vital to the region’s survival.  Article 67.3.(b) and (c) indicate that one of the objectives of the CSME is to create an environment for enhanced efficiency in the production and delivery of the region’s goods and services.  This is to be achieved by enhancing the productivity of the regional labour force.  Additionally, Articles 67.5 and 67.6 provide for the establishment of regional and national bodies that set and regulate the standards for processing, production, packaging and labelling.  This means that one area of focus should be the establishment of organisations that will focus on improving labour productivity.

 1.2  Social Security under the CSME

In order for the CSME to be successful, attempts have been made to minimize the possibility of persons losing social security benefits as they capitalize on opportunities in the region.  Article 46.2.(b).(iv) of the revised Treaty of Chaguaramas calls for the “harmonization and transferability of social security benefits”.  Another article [Article 75.2(b)] indicates that reciprocal social security agreements should be negotiated by the member states.  It should be noted, however, that the CSME only addresses the transferability of long-term social security benefits. 

 Subsequent to the signing of the revised treaty, a CARICOM Agreement on Social Security was signed.  This agreement outlines the social security benefits of migrant CARICOM workers and seeks to ensure equal treatment as they move from one member state to another.  It allows for benefits to be determined and payments made based on all the contributions made to several different social security organisations.  This will ensure that persons who are retiring do not suffer a decline in income due to insufficient contribution periods to any one social security organisation.  Article 2 of the CARICOM Agreement indicates that it covers:

• invalidity pension;

• disablement pension;

• survivors’ pension;

• death benefits in the form of pension; and

• old age and retirement pension.

 The social security provisions of the CSME are also positive for the governments as it lessens the likelihood of people becoming dependent on the state. It is also anticipated that it will result in the enlargement of the contribution bases of social security organisations in countries that have net increases in immigration.  Another advantage of the expanded contribution base is that it will decrease the dependency ratio (that is the number of younger persons contributing to social security to support the retirees).  In addition, the CSME will provide more investment opportunities for social security funds.

 1.3  Areas of focus for the Ministry of Labour and

        Social Security

The Foreign Nationals and Commonwealth Citizens (Employment) Act, 1964 has been amended to facilitate Jamaica’s participation in the CSME.  In addition, CARICOM nationals who qualify under the Caribbean Community (Free Movement of Skilled Persons) Act, 1997 are exempted from work permit.  Workers in this category can now move freely to another member state and enjoy the same benefits and rights regarding conditions of work and employment as those given to local workers.  It should be noted that CARICOM nationals are not required to pay a fee for the processing of their Certificate of Recognition.  To date, the Ministry of Labour and Social Security has issued 49 Certificates of Recognition to Jamaicans seeking employment under the CSME.  Additionally, 308 Certificates of Recognition have been granted to CARICOM nationals who have sought employment in Jamaica. 

 Provisions will be in place to harmonise and transfer social security benefits for persons who qualify under the Caribbean Community (Free Movement of Skilled Persons) Act, 1997.  In fact, eight claim applications have already been submitted to the Ministry under this Agreement.  Under the CARICOM Social Security Agreement, pension contributions will be totalled and benefits disbursed to the individuals irrespective of their nationality.  The Ministry has in place an International Social Security Unit that is responsible for taking care of the benefits that fall under the umbrella of the CARICOM agreement.  This Unit also administers agreements with Quebec, Canada and the United Kingdom.

 1.4  Plans for the Future

The Ministry of Labour and Social Security has been in dialogue with the Ministry of Foreign Affairs and foreign Trade to discuss other social security benefits that are not included in the reciprocal agreement.  This will include social security assistance such as those under the Programme of Advancement Through Health and Education (PATH).

 Regarding the Certificate of Recognition, member states are currently negotiating to have a standard certificate which will be easily recognisable.  This certificate will bear the CARICOM logo.  The contents of the certificate are however still being examined.

 In keeping with Article 73 of the Treaty of Chaguaramas, the Ministry of Labour and Social Security recognizes the importance of harmonizing the labour laws of the region and is in the process of examining the relevant laws.  A legal team from the Ministry, as well as the Jamaica Confederation of Trade Unions (JCTU) and the Jamaica Employers’ Federation (JEF) will be reviewing these laws at the Labour Advisory Committee (LAC) level.  In addition, the Ministry will be embarking on an intense public education programme during 2005/2006.  Efforts will be made to inform the public of how the CSME will impact labour.

 The CSME has implications for the human and social development of the region.  This integration is expected to create opportunities for the region as it increases competitiveness and removes barriers to trade, services, goods, capital and people.  The Ministry of Labour and Social Security therefore plays an important role in this development, particularly as it relates to the free movement of labour. 

THE FREE TRADE AREA OF THE AMERICAS (FTAA)

The Free Trade Area of the Americas (FTAA) is the name given to the process of expanding the North American Free Trade Agreement (NAFTA) to all the other countries of the Western Hemisphere except Cuba.  It is however, important to make the point that the countries are of widely differing sizes and levels of development. The total includes 21 countries in the Greater Caribbean each having less than one-fiftieth of the size and resource endowment of the United States and less than one-twentieth of the size and resource endowment of Brazil and Canada.  As such, if the FTAA is to bring all-round benefits to Latin American and Caribbean countries, it must make specific provisions for the smaller countries and disadvantaged social groups.

 The FTAA was launched by the leaders of 34 countries of North, Central and South America and the Caribbean at the December 1994 Summit of the Americas in Miami, Florida.

The Aims of the FTAA

·        To remove barriers to trade and investment over time and thereby increase world trade.

·        To avoid polices or measures that will have a negative effect on trade and investment in the Hemisphere.

There are certain objectives associated with the establishment of the FTAA, such as:-

• Improving the living standards and work condition of all people in the Americas.

• Better protection of the environment.

• Facilitating the participation of all countries in the Hemisphere.

• Strengthening cooperation among the principal international institutions in the Hemisphere.

How the FTAA is Organized

The FTAA is organized as follows:-

1. Trade Ministers whose role is to develop the overall plan.

2. Nine negotiating groups – at first there were twelve working groups, established by the Ministers, to find out about trade relations in the Hemisphere.

3. Vice Trade Ministers whose role is to coordinate the negotiating groups and make recommendations to the Trade Ministers. 

The Trade Negotiations Committee (TNC) has the central role of managing the FTAA negotiations. The TNC guides the work of the negotiating groups and other committees and groups and decides on the overall architecture of the agreement and institutional issues. The TNC is also responsible for ensuring the full participation of all the countries in the FTAA process, ensuring transparency in the negotiations, overseeing the administrative secretariat, and overseeing the identification and implementation of business facilitation measures.   The TNC established an administrative secretariat in Miami and established a TNC subcommittee on budget and administration.

It is important to point out that, equally, the FTAA negotiations will examine the interrelationship which exists between certain key negotiating areas, such as agriculture and market access, services and investment, competition policy and subsidies, antidumping and countervailing duties, among others, so as to ensure that the outcome of negotiations are as proficient and liberalizing as possible. The differences in level of growth and size of participating economies will be taken account of in the negotiations in order to ensure that the smaller countries within the Hemisphere will be able to equally benefit from the subsequent trade liberalization. During the negotiations, elements of civil society will have the opportunity to make their views known on issues to be negotiated, on the important relationship between trade and the environment and on labour issues. A committee of government representatives will also provide the link between the input from interested sectors of society and the negotiators on these issues.

As one further examines the FTAA, it is important to point out that the negotiations on the agricultural provisions in the proposed FTAA continues to be contentious. This agricultural issue and its future in a FTAA for the states of the Caribbean and perhaps for most other states is one of great importance. The idea is that FTAA's negotiating objectives for agriculture calls for the removal of tariffs and other barriers to agricultural imports in each country, developing disciplines on the use of export subsidies and other mechanisms that distort agricultural trade, and ensuring that rules on food safety and animal and plant health are not used as disguised trade barriers. The current situation confronting the Caribbean economies in light of the potential dismantling of preferential and non-reciprocal trade relations linking the Caribbean and other regions has opened the eyes of many as to the potential devastation facing millions in the sub-group. Further, with limited resource capacity and underdeveloped indigenous private sectors, Caribbean Non-Governmental Organizations see very little actual benefit to be amassed  to the sub-region from joining any free trade arrangement in the Americas that seek not only to imitate the existing WTO rules, but to enact “WTO plus” arrangements.

In relation to market access, this is potentially the most contentious issue within the FTAA process. On the one hand each of the major stakeholders in the process agree that the joint removal of trade barriers among nations is the most feasible way to promote and achieve increased trade in goods and services and through this an increase in economic growth. On the other hand, few can deny that because of the inherent uneven stage and pace of economic and social development and obvious limitation of resource capacity of some nations, full liberalization of trade rules is bound to obliterate the livelihoods of millions.

The issue is not whether countries should remove all tariff and non-tariff barriers to trade, but rather, can this be done in a manner that reflects the reality of economic and social development in the various countries in the hemisphere. This leads one to wonder, if the FTAA can be fashioned in such a way that it allows recognition of the fact that some countries in the process will not be able to meet all the requirements to attain full liberalization and as such will be provided the suitable exemptions to allow them to make the radical alterations that are essential to be FTAA ready.

Labour Issues and the FTAA

 The Miami Summit launching the Free Trade Area of the Americas (FTAA) process recognized that free markets and free societies work best when they work together. The core labour standards—freedom of association and the right to organize and bargain collectively, freedom from forced labour, the abolition of child labour, and freedom from discrimination—are part of the summit-FTAA process because they strengthen both markets and democracy. These core standards are broadly recognized as deep-seated rights to which all workers are entitled, regardless of the level of development of the country or the sector where they work.  In an environment that promotes democracy and market-oriented economies, as the FTAA is intended to do, there is no trade-off between these principles and development; indeed, they become mutually reinforcing.

At a time when the importance of social institutions in development has been widely recognized, the real debate is over how and with what prerequisite to promote the core labour standards. In this debate the questions include whether universal means uniform and what that implies for development. And, of course, the central question is whether implementation and enforcement of global labour standards should be explicitly linked to trade agreements.

Many developing countries have refused to support the link of labour standards in trade agreements in multilateral trade negotiations. Despite the possible benefits of free trade to improve living standards, many countries fear that the affluent developed countries with their stronger economies can easily use trade sanctions and protective measures in order to benefit themselves at the expense of the smaller countries in their export trade.  The point is that such a situation will lead to growing inequalities between the developed rich countries and the developing poor countries, and create uncertainty in the labour market. It is however important to make the point that Government and the social partners together can exploit the benefits of free trade to counteract disadvantages associated with unrestricted free trade. While they oppose the labour-trade linkage, developing countries in the Americas have already committed themselves to complying with the International Labour Organisation (ILO) core labour standards, attested to by their authorization of the relevant ILO Conventions. In order to promote and monitor compliance, a regional mechanism, the Inter-American Conference of Ministers of Labour, was established by the third Summit of the Americas, for consultation on labour matters. More particularly, Government's responsibility through the Minister of Labour is to ensure honest work and adequate labour protection at the work place through social dialogue. It is the responsibility of governments as managers of the national economies to take the necessary joint actions to advance economic growth, social equity and fairness through the creation of the FTAA.

It is imperative that one acknowledges that the Governments of CARICOM States and their social partners are in pursuit of building a national consensus on economic and social policy, with the vision of developing a system of labour and social relations consistent with international standards, norms, and principles. These standards and principles are reflected in policy, legislation and practice by corporate enterprises in these States. The standards are set out in international and regional instruments, in particular, the basic labour Conventions of the ILO. These fundamental labour standards are embodied in the ILO Declaration on Fundamental Principles and Rights at Work, adopted by the International Labour Conference (ILC) in June 1998. Developing countries in the Americas, to which CARICOM States belong, recognize and uphold basic workers rights as set out in ILO's core labour standards. It is argued that the monitoring and enforcement of these standards should remain within the domain of the ILO and its supervisory machinery, and that labour standards should not be integrated in trade agreements. The fear is that the linkage will be used to introduce new trade barriers, which can deny market access, and result in the loss of jobs through the collapse of vulnerable industries and enterprises. In such circumstances, poverty will prevail, thus impacting on and endangering the prosperity of the whole region. Persistent poverty is a threat to peace and stability. The idea is that poverty alleviation and its rapid reduction is one of the difficult challenges for the Americas in this era of free trade. It is important to note that The Declaration of Quebec City (where the Heads of State and Government of the Americas met), declared that free trade, without subsidies or unfair practices, along with an increasing flow of productive investments and greater economic integration, would promote regional prosperity, thus raising the standard of living, and improving the working conditions of the people of the Americas.

 Problems for CARICOM in Relation to the FTAA

The Caribbean Community (CARICOM) faces urgent and undeniable challenges: the challenge to regional economic integration in the creation of the CARICOM Single Market and Economy, the challenge to establish new relationships with countries in the Americas under the process leading to free trade, the challenge to maintain and forge new relationships with Europe, and the challenge of the global community in the World Trade Organization (WTO). These encompass challenges of global competition, trade liberalization, deregulation and privatization  which exert tremendous pressure on established employment relations, job security, and labour relations both in the private and public sectors. The small, vulnerable economies of CARICOM States face the challenge to compete with large and strong economies, and to mediate the process of Hemispheric integration - the FTAA. The FTAA challenges small, less developed countries to come to grips with the need for increasing competitiveness in the new international environment. These countries are constrained to prepare their economies for increasing competition in response to international trends favouring an increasing globalization of production and liberalization of trade. There is also the problem of vulnerability of macro-economic policy. What this suggests is that the exchange rate may go up in countries where the domestic finances are not strong enough to deal with the freeing up of the broader financial services. Furthermore, there are the prospects for more interdependence. This is so, in the sense that, while countries will profit from having one set of trade arrangements for the Hemisphere, they may also find that they lose some of their independence as the FTAA creates new interdependent relationships. It is therefore critical that these countries strengthen their internal capacity so as to improve their prospects for participation in the FTAA.

Benefits for the Caribbean Through the FTAA

The FTAA should facilitate free access to a Hemispheric market. Through this, countries can trade with other countries that are outside of their own sub-regional trade groupings within the Western part of the world. Jamaica, for example, would be able to trade with other countries, not in CARICOM and outside of the United States. One of the major benefits is the reduction in the cost of trade. This means that trade in the Hemisphere should cost less depending on the agreements made in the regions and sub-regions. Furthermore, there should be a widening and deepening of regional integration. The idea is that the region could grow closer and stronger with improved political ties, better free trade arrangements, growth in trade and investment and an increased variety of exports.

BIBLIOGRAPHY

Human Rights Commision. “FTAA dangers and the urgent necessity of an alternative for 

               Development.”

              <http:www.cetim.ch/en/interventions_details.php?id=35>. 2004.

Jurenas, Remy. “Agriculture in the Free Trade Area of the Americas.”

              <http://www.cnie.org/nle/crsreports/briefingbooks/Agriculture/Agriculture%

                20in%20other%Free%20Trade%20Area%20of%20of%the20%Americas.htm>.

Official Website of the Free Trade of the Americas (FTAA). “Antecedents of the FTAA

                Process.”

              <http://www.ftaa-alca.org/View_e.asp>. 1994-1998.

Peoples Consultation. “Background Information.”

              <http://www.peoplesconsultation.org>.

San Jose Ministerial Declaration. “Free Trade Area of the Americas.”

              <http://alca-ftaa.iadb.org/eng/nggp_e.htm>.

San Jose Ministerial Declaration. “Negotiating Groups on Market Access.”

              <http://alca-ftaa.iadb.org/eng/ngma_e.htm>.

Yankey,  Dr. J.Bernard. “The Organization of the Eastern Caribbean States and Free 

               Trade Area of the Americas Negotiations.”       

              <http://hostings.diplomacy.edu/iirt/conf/Dip/2000/Text/YANKEY.HTM>. 2000.

Labour in the Context of The Caribbean Single Market

In 1989, 13 of the now 15 members of CARICOM decided on an integrated development strategy to chart their way into the 21st century. These 15 members’ states include: (Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago). This decision was driven by the need to deepen the assimilation process and reinforce the Caribbean Community in all of its proportions to respond to the challenges and opportunities presented by changes in the global economy. Chief among these, were the liberalization of trade and other economic activities, the deepening phenomenon of globalization and the emergence and expansion of regional economic blocs. The idea is that the CSME gives this region of small states the benefit of greater critical mass, pooled resources, improved ability to recruit skilled workers, source inputs from resource rich locations and achieve greater economies of scale for enhanced external competitiveness. Clearly then, a united Caribbean Community with the deepening of the integration process by systematically removing barriers/ tariffs and restrictions and coordinating economic policies, is better equipped to cope with the global challenge than members states acting individually.

This strategy or decision which was elaborated in the Grand Anse Declaration has as its key features:

·        Deepening economic integration by advancing beyond a common market towards a  Single Market and Economy.

·        Widening the membership and thereby expanding the economic mass of the Caribbean Community – thus Suriname and Haiti were admitted as full members in 1995 and 2002 respectively.

·        Progressive insertion of the region into the global trading and economic system by strengthening trading links with non-traditional partners.

The strengthening of CARICOM’s participation in the global trading arena has been done through a series of bilateral trade agreements with Venezuela, Colombia, Dominican Republic, Cuba and most recently, Costa Rica – as well as by the full and effective participation in multilateral and other major trade negotiations, e.g., the World Trade Organization, the renegotiation of the Lomé and Cotonou arrangements with the European Union and the FTAA. As a result, CARICOM has been very active in implementing all three components of this strategy.

In examining the idea of the CSME it is important to make the point that the Revised Treaty of Chaguaramas provides the legal basis for the operation of the CSME. One will recall that the treaty of Chaguaramas is the Treaty  which established the Caribbean Community (CARICOM). It was first signed at Chaguaramas, Trinidad, on 4 July 1973. In 1989 it was revised through nine protocols to facilitate the establishment of the CSME. Furthermore, matters regarding the legal interpretation of the Treaty will be addressed by the Caribbean Court of Justice (CCJ) which was  inaugurated in April 2005.

The CSME is designed to represent a single economic space where people, goods, services and capital can move freely. This will also require the harmonization and coordination of social, economic and trade policies by participating member states. What this suggests is that the two major components, that is, single (i) market and (ii) economy needs careful examination. The idea is that The Single Market: - on becoming a reality will allow CARICOM goods, services, people and capital to move throughout the Caribbean Community without tariffs/barriers and without restrictions so as to create a single large economic space, and to provide for a harmonious economic regime and trade policy for all CARICOM States; The Single Economy: - will facilitate the coordination and harmonization of inter alia foreign exchange and interest rate policies, tax regimes, laws and common currency, among other things, so as to achieve more homogenous economic performance across CARICOM member states. Both arrangements should lead to greater efficiency for the benefit of the region.  Furthermore, successful regional integration requires the commitment of a strong and dynamic private sector. The private sector must be more directly involved in regional policy making. This entails institutional strengthening of regional private sector organizations. The establishment of regional private sector associations in newly emerging sectors (IT, financial sector, etc.) should be supported. The CSME can give support to the private sector through institutional strengthening, entrepreneurship development and appropriate frameworks for investment incentives.

Within the framework of the CSME, there are two types of competitiveness that exists. These according to Dr.Gem Fletcher are National Competitiveness and Enterprise Competitiveness. National Competitiveness proposes for consideration that the national economy needs to carve its place in the global market for its exports of goods and services as well as being able to attract investment for its growth; while Enterprise Competitiveness is primarily concerned with risk taking in order to make a profit in domestic, regional and international markets. The idea is that both National and Enterprise competitiveness are mutually supporting and as such, must be the enabling environment where the policies, infrastructure and legal and regulatory environment is conducive to achieving both points of the combined force. The CSME serves as the facilitatory framework which enhances the chances for success. Of the combined thrust’ and international markets

It should be noted that the Prime Minister of Barbados, Hon. Owen Arthur has the lead responsibility for the CSME. Jamaica’s role in the implementation of the CSME is to work with the other members of CARICOM, to ensure that all the Protocols are implemented. Jamaica also has the responsibility for External Negotiations under the CSME. Prime Minister Patterson chairs the Prime Ministerial Sub-Committee on External Trade Negotiations. Through the Regional Negotiating Machinery and under the direction of the Prime Ministerial Sub-Committee, CARICOM has been coordinating its participation in the negotiations for the Free Trade Area of the Americas (FTAA), the World Trade Organization (WTO) and Coutonou, the new trading arrangements with the European Union. As the Caribbean Community intensifies its efforts to transform itself into a single economic space through the creation of the CSME, there are many challenges which confront the Region. These include synchronizing its external and internal arrangements where the capacity to grant reciprocity in free trade arrangements is concerned, and to maintain advantages to operators in the Single Market. A major challenge is how to ensure that the external partnerships reinforce and strengthen the internal arrangements. One of the major concerns for people is the potential for an increase in unemployment as a result of more persons competing for the few available jobs. There is also the issue of increased pressure on social institutions and the question of whether Caribbean countries have the resources to deal with increased crime rates, poverty and unemployment. These issues are yet to be addressed.

However, CARICOM’s major priority at this time is to give effect to a trade in services regime, which will provide for the establishment of enterprises throughout the community and the free movement of capital and certain categories of skilled labour, leading to the free movement of persons. Furthermore, a framework for strengthening the region’s dispute settlement mechanisms, which will also include the Caribbean Court of Justice, has also been established in the amended Treaty of Chaguaramas. It should be noted, that some CARICOM Member States including Jamaica have started this process of institution building and restructuring. These changes, however, require enormous resources for a successful transition. It will take time and must be managed carefully to avoid social dislocation and policy reversal.

As one further examines Jamaica role within the CSME it is important to note that we (Jamaica) have enacted the Revised Treaty of Chaguaramas into domestic law and have established a CSME Unit within the Ministry of Foreign Affairs and Foreign Trade along with an Inter-Ministerial Consultative Committee to coordinate the implementation process. This committee comprises ministerial and other representatives of the Ministries of Foreign Affairs, National Security, Agriculture, Commerce, Science and Technology, Finance and Planning, Labour and Social Security and the Attorney General’s Department. “Under the Free Movement of Persons category, Jamaica has already enacted the Caribbean Community (Free Movement of Skilled Persons) Act, 1997 entitling five groups of CARICOM nationals and their dependents to offer services in Jamaica without the need for work permits”. This under the Revised Treaty, enables university graduates, media workers, sports persons, artistes and musicians, service providers, supervisory or technical staff. and self-employed persons engaged in activities of a commercial, industrial or agricultural nature, to establish a business in any other Member State without restrictions. It entitles these five categories and their dependents to offer services in Jamaica without work permits.   

Regionally, agreement has been reached on the implementation of two lines at the ports of entry, one for CARICOM nationals and the other for non-CARICOM nationals, which Jamaica has already complied with. The Revised Treaty of Chaguaramas provides for the establishment of a regime for trade in services similar to the trade in goods and the government has already started taking action towards meeting its commitment .
The CSME will also aid entrepreneurs to

·        transfer money to another country without having to obtain prior authorization,

·        buy shares in any company in any member state and

·        access a wider pool of skilled persons from which to recruit. The establishment of the CSME is intended to assist member states of CARICOM to achieve national objectives such as sustained economic development and expansion of trade, full employment of all the factors of production, improved standards of living and work and effective economic relations with other countries. What this means is that the implementation of all the major elements of the CSME will result in a single, seamless economic space within which all transactions will take place. As such, another aspect of the CSME that is in progress is the establishment of a Regional Accreditation Body which is designed to oversee authorization and equivalency of degrees, diplomas, certificates and other qualifications.

In addition to facilitating improved ability to recruit skilled workers from across the region the CSME will also allow for increased job opportunities for all CARICOM nationals as well as enhanced access to specialized training and technology transfer which will serve to expand the knowledge base and enhance possibilities for skills development in the various sectors. From an anthropological/sociological perspective the CSME will promote a greater sense of regional identity and cross-cultural interaction and individuals, communities and other groups stand to benefit from greater exposure cultural norms and practices from across the region

The regime governing the free movement of goods is fully implemented.

Trade in Goods

 Jamaica, along with most other Member States, apply the Common External Tariff (CET). All goods which meet the CARICOM rules of origin are traded duty free throughout the region (except The Bahamas). There are, however, some areas still to be developed: These include:

n      Treatment of products made in Free Zones – there is need for regional agreement on how these goods are to be treated.

n      The removal of some specific non-tariff barriers in various member-states – national action required/none for Jamaica.

In order to engage in the free movement of goods there has to be a guarantee that goods and services are of an acceptable standard. To this end, CARICOM members have established the Caribbean Regional Organization on Standards and Quality (CROSQ). This Organization was established by a separate agreement and has been implemented in domestic law in Jamaica by the Caribbean Regional Organization on Standards and Quality Act. The Organization will be responsible for establishing regional standards  which all Member States must adhere to in the manufacture and trade of goods.

Notwithstanding the obvious affirmatives, one needs to make mention of certain critical challenges such as the resistance to change that some stakeholders are expected to demonstrate towards the changes required by the CSME. The Ministry of Foreign Affairs and Foreign Trade is already engaged in facilitating partnerships between civil society and private sector groups at a national and sectoral level. It is hoped that this strategy will help to facilitate the movement towards the attainment of national objectives under the CSME.

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Frequently Asked Questions

1. What does CSME mean?

Ø      CSME means CARICOM Single Market and Economy.

2. What is the CARICOM Single Market and Economy all about?

Ø      The CSME refers to the creation of a single large market and economic space among 12 Caribbean nations as opposed to 12 separate and distinct markets and economies, each governed by its own rules and separated by difficult barriers.  It allows for free movement of CARICOM goods, services, people and capital in the participating Member States through the removal of monetary, legal, physical, technical and administrative barriers which have historically prevented such activities from taking place.  It is a structure that ought to facilitate harmonization of economic, monetary and fiscal policies and measures in the participating States.

3. When was the CSME formed?

Ø      It was formed in 1989 out of the revised Treaty of Chaguaramas. This Treaty established the Caribbean Community (CARICOM). It was signed at Chaguaramas, Trinidad, on 4 July 1973 and was later revised to establish the CSME.

 4. Which countries are involved in the CSME arrangement?

Ø      The countries are Suriname, Trinidad and Tobago, St. Lucia, St. Vincent and the Grenadines, Jamaica, Antigua and Barbuda, Belize,

      Dominica, Barbados, St. Kitts and Nevis, Guyana and Grenada.

 5. Who has the lead responsibility for the CSME?

  Ø      The Prime Minister of Barbados, Honourable Owen Arthur.

6. How will the CSME help disadvantaged countries in the region?

Ø      Protocol VII of the revised Treaty of Chaguaramas was designed with the aim of assisting disadvantaged countries and sectors towards becoming economically viable and competitive within the single market and economy through support programmes and mechanisms.

7. When is the CSME to be implemented?

Ø      The single market aspect was implemented on January 1, 2006, while the single economy is scheduled for the year 2008.

 8. What is Jamaica’s role in the implementation of the CSME?

Ø      Jamaica’s role in the implementation of the CSME is to work with the other members of CARICOM, to ensure that all the regulations are implemented.

9. What are som