regional integration. region: an area of a country or the world having definable characteristics but...

REGIONAL INTEGRATION

• REGION: an area of a country or the world having definable characteristics but not always fixed boundaries

Definable characteristics: noticeable features or qualities shared by the Caribbean islands

• INTEGRATION: the act of combining things to form a whole

• CARIBBEAN: relating to the region consisting of the Caribbean Sea, its islands and the surrounding coasts

Cooperation: working helpfully with others

TEAMWORK

7 DEFINABLE CHARACTERISTICS

DEFINABLE CHARACTERISTICS OF THE CARIBBEAN REGION

1. LIMITED NATURAL RESOURCESa) Minerals (T&T has oil, Jamaica has bauxite)b) Agriculture-based economies (fertile soils: sugar, bananas,

arrowroot, ground provisions)c) Tropical climate: suitable for agriculture and tourism

2. DEPENDENCE ON TOURISM– Historical sites, scenic beauty: eco-tourism (nature trails, bird

watching, mud volcanoes etc)– Tourism industry is characterized by fickleness e.g. H1N1

outbreak in Barbados can cause major losses in the hotel industry

– Present world economic and financial crisis crippling tourist industry worldwide

– Price fluctuations etc can lead to major losses of foreign exchange revenues

3. PRONE TO NATURAL DISASTERS: – e.g. hurricanes , floods and earthquakes which

destroy property and cause economic setbacks (Grenada)

4. SMALL POPULATION SIZE, SMALL PHYSICAL SIZE: – Small domestic markets– Distance between the islands and inefficient

inter-island transport• Hinders trade• Increases transport costs• Increases costs of production

5) BRAIN DRAIN– Skilled and educated people leave and migrate to

developed countries in search of more attractive jobs and a higher standard of living

6) COMMON HISTORY AND HERITAGE– Members of the British Commonwealth• Law, language, education system, social

institutions

7) VARIED ETHNIC COMPOSITION– Due to our cultural and national tradition

• Their small physical size, small population size, limited resources, underdevelopment etc led them to attempt to unite and cooperate for their common good

1. Define the following terms and concepts related to regional integration:– Bilateral agreement, multilateral agreement, common market,

single market, single economy, economic integration, independent state, underdeveloped country, developing country, developed country, trade liberalization, globalization, multinational corporation, regionalism, trading bloc, fiscal policy, monetary policy

2. Major challenges facing the Caribbean Region3. Major stages in the integration movement4. Functions of the various organizations (OECS Secretariat,

CARICOM Secretariat, Conference of Heads of Government)5. Objectives of the various organizations: OECS, CARICOM, CSME6. Factors that promote regional integration7. Factors that hinder regional integration8. Benefits of regional integration9. The role of individuals, businesses and government in the

integration process10. The role of regional agencies in the integration process

Definitions• Bi-lateral Agreement: An agreement

between two parties or states setting out the conditions under which trade between them will be conducted

• Multi-lateral Agreement: An agreement among more than two parties or nations setting out conditions under which they would cooperate with each other

• Common market: a type of trade bloc with free movement of goods, labour and capital between member states

• Single market: a more advanced form of common market. In comparison to a common market a single market envisions more efforts geared towards removing the physical (borders), technical (standards) and fiscal (taxes) barriers among the member states.

• Economic integration refers to trade unification between different states by the partial or full elimination of customs duties, tariffs, quotas, licenses and non-tariff barriers (anti-dumping measures and countervailing duties ) on trade taking place between them.

• This is meant in turn to lead to lower prices for distributors and consumers (as no customs duties are paid within the integrated area) and the goal is to increase trade.

• Independent state: –A state which has achieved

independence (self-government; exercising sovereignty)

• Developed country: a country with a relatively high per capita income, where most people have a higher standard of living with access to more goods and services than most people in developing countries. –Highly industrialized nations such as

Australia, Austria, Canada, France, Germany, Italy, Japan, Russia, the UK, and the US.

• Developing country: –A country whose resources and/or capital are

insufficient to have sustained reasonable standards of living–a country with a relatively low per capita

income, where most people have a lower standard of living with access to fewer goods and services than most people in developed countries. Also known as a third-world country.

• Underdeveloped country: A nation which, comparative to others, lacks industrialization, infrastructure, developed agriculture, and developed natural resources, and suffers from a low per capita income as a result.

High income Upper-middle income Lower-middle income Low income

http://upload.wikimedia.org/wikipedia/commons/1/1d/World_Bank_income_groups.svg

• Trade liberalisation means reducing the limitations on trade that countries around the world have erected over a number of years (tariffs, duties, quotas, licenses).

• Protectionism is a means of attempting to ensure that domestic industries are protected from competition from foreign producers through tariffs, which raise the price of goods coming into a country (imports), quotas - a physical limit on the number of goods that can be brought into a country, and other non-tariff barriers such as regulations and legislation that make it very hard for foreign competitors to sell goods into another country.

• Globalization: the greater movement of people, goods, capital and ideas due to increased economic integration. This in turn is propelled by increased trade and investment. It is like moving towards living in a borderless world.

• There has always been a sharing of goods, services, knowledge and cultures between people and countries, but in recent years improved technologies and a reduction of barriers means the speed of exchange is much faster.

Globalization

• Globalization refers to a variety of developments which have reduced the world to a “global village.”

• It is largely the result of technological developments, greater access to information and faster communication (computer technology, satellite communications, development of the Internet, air travel)

• Small countries have always depended on international trade i.e. they have never been self-contained. But today, all countries are more interdependent than ever before.

GLOBALISATION

• Characterised by:– Trade links being established around the globe

(comparative advantage-purchase from cheapest source)– Job creation by inflow of direct foreign investment– Technological development in production of goods and

services demands a skilled labour force – C’bean lagging behind

– Migration of skilled labour – brain drain from Caribbean to developed countries

• AS A RESULT OF GLOBALIZATION, SMALL, DEVELOPING COUNTRIES MUST UNITE IN ORDER TO SURVIVE

• Globalisation provides opportunities and challenges. Bigger markets can mean bigger profits which leads to greater wealth for investing in development and reducing poverty in many countries.

• Weak domestic policies, institutions and infrastructure and trade barriers can restrict a country's ability to take advantages of the changes. Each country makes decisions and policies that position them to maximise the benefits and minimise the challenges presented by globalisation.

Globalization

1. Airbus: Holding capacity and speed of airbuses allow people to travel across the globe in a relatively short space of time.

2. News Agencies: News is reported across the world via satellite, wire-photo, television, internet etc.

3. Internet: the internet is an intricate web which covers the entire globe. (provides information on any topic imaginable, facilitates distance education, trade etc)

Issues to consider1. Communicable Diseases can easily become

pandemics (spread throughout the world) – SARS, H1N1, Bird Flu

2. World climate: All countries are affected by global warming, ozone depletion, melting of the ice-caps, rising sea levels, deforestation and pollution. All are responsible for preservation of the environment.

3. Transnational Corporations: These operate throughout the globe exploiting host country resources and sending profits to their own home countries.

Issues to consider4. People from many countries eat the same foods

and watch the same TV programmes.5. Tourism has grown into a globalised industry as a

result of international travel (negative impact on environment and societal values etc)

6. Barriers to international trade are being removed: ↑ competition, ↑ unemployment

7. A war or disaster in one country may have worldwide impact (refugees, interruption of supply, disruption of air-travel etc)

8. Production is increasingly international (↑ unemployment in some countries, ↑ exploitation of workers in underdeveloped and developing countries where labour is cheaper)

Challenges facing Caribbean countries1. With the opening up of world markets and free trade, how

can we be competitive and produce high quality goods at cheap prices?

2. Should we finance development projects by taking loans from international lending agencies or should we open our doors to foreign investors?

3. How can we improve productivity in the workplace with the existence of powerful trade unions which consistently seek higher wages for members?

4. What can be done to train our nationals for jobs in an environment which is highly technological?

5. What can be done by Caribbean countries to reduce the food import bill and to be self-sufficient in food production?

6. What can be done to combat the effects on consumer tastes and spending of television programmes and other media (internet, books, magazines, newspapers etc) with a heavy foreign content?

Globalisation

• Definition:– An economic phenomenon?– A social phenomenon?– A cultural phenomenon?

• The movement towards the expansion of economic and social ties between countries through the spread of corporate institutions and the capitalist philosophy that leads to the shrinking of the world in economic terms.

Globalisation

Globalisation could involve all these things!

Integration of Economies• The increasing reliance of

economies on each other• The opportunities to be able to

buy and sell in any country in the world

• The opportunities for labour and capital to locate anywhere in the world

• The growth of global markets in finance

Stock Markets are now accessible from anywhere in the world!Copyright: edrod, stock.xchng

http://www.sxc.hu/browse.phtml?f=download&id=45339

Integration of Economies

• Made possible by:– Technology– Communication networks– Internet access– Growth of economic cooperation – trading blocs

(EU, NAFTA, etc.)– Collapse of ‘communism’– Movement to free trade

Trade versus Aid?

• Benefits of Trade:– Increased choice– Greater potential for

growth– Increase international

economies of scale– Greater employment

opportunities

Trade has led to massive increases in wealth for many countries.Copyright: budgetstock, stock.xchng


Trade versus Aid?

• Disadvantages of trade:– Increase in gap between

the rich and the poor– Dominance of global trade

by the rich, northern hemisphere countries

– Lack of opportunities for the poor to be able to have access to markets

– Exploitation of workers and growers How far does trade help children like

these?Copyright: clesio, stock.xchng

Corporate Expansion

• Multi-national or trans-national corporations (MNCs or TNCs) – businesses with a headquarters in one country but with business operations in a number of others.

No matter where you go in the world, certain businesses will always have a presence.

Copyright: mkeky, stock.xchng

Corporate Expansion

• Characteristics:– Expanding revenue– Lowering costs– Sourcing raw materials– Controlling key supplies– Control of processing– Global economies

of scale

Controlling supplies may be one reason for global expansion.

Copyright: rsvstks, stock.xchng


Corporate Domination

• Key Issues:– Damage to the

environment?– Exploitation of labour? – Monopoly power– Economic degradation– Non-renewable resources– Damage to cultures

Shell and Nike’s activities have come under severe criticism in some quarters.Copyright: Homsel, stock.xchng


Other Issues:

• Accountability of Global businesses?

• Increased gap between rich and poor fuels potential terrorist reaction

• Ethical responsibility of business?

• Efforts to remove trade barriers

There are plenty of people who believe that globalisation is a negative development, protests at the G8 summits, pollution, poverty and concern over GM crops are just some of the issues.

Copyright: stock.xchng

• Multinational Corporation - MNCA corporation that has its facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management. Very large multinationals have budgets that exceed those of many small countries. Sometimes referred to as a "transnational corporation".

• Nearly all major multinationals are either American, Japanese or Western European, such as Nike, Coca-Cola, Wal-Mart, AOL, Toshiba, Honda and BMW.

• Advocates of multinationals say they create jobs and wealth and improve technology in countries that are in need of such development. Critics say multinationals can have undue political influence over governments, can exploit developing nations as well as create job losses in their own home countries.

MNCs

• ADVOCATES:– Create employment and use local labour– Provide foreign training for local staff– Sometimes pay high salaries– Transfer technology to developing countries

• CRITICS:– Exert undue political influence over governments– exploit developing nations e.g. by paying minimum

wages or utilizing child labour– create job losses in their own home countries

TRANSNATIONAL CORPORATIONS (TNCs)

Multinational Corporations (MNCs)

• Transnational corporations, or multinational companies, are very large businesses that have offices and factories in several different countries.

• The headquarters and main factory are usually located in developed countries, particularly the USA and Japan.

• Smaller offices and factories tend to be in the developing countries where labour is cheap and production costs are low.

• In the past 30 years, transnationals have grown in size and influence. Some of the largest ones make more money in a year than all of the African countries put together.

• The world’s 500 largest companies now control at least 70% of world trade and produce more than half of the world’s manufactured goods.

• Being so large, they also influence consumer tastes and lifestyles and are responsible for many of today’s scientific and technological breakthroughs.

• Many people are concerned about the effects of transnationals. They argue that they locate in poorer countries just to make a profit, and pay low wages, particularly to women and young children.

• Others say that without transnationals the poorer countries would simply not be able to develop their own industries. People would have no jobs and their future would be very bleak.

• The diagram on the next slide shows some of the advantages and disadvantages that transnational companies may bring to developing countries.

Advantages and Disadvantages of Transnationals

A MULTI-NATIONAL COMPANY - NIKECASE STUDY:

Nike

• Nike trainers are sold and worn throughout the world. Nike is a typical transnational corporation (TNC). Its headquarters are in the USA, where all the major decisions and research take place, yet its sports shoes are manufactured in many countries around the world.

• Like many TNCs, Nike subcontracts or uses independently owned factories in different countries to produce its trainers. Often this takes place in less economically developed countries (LEDCs) where labour costs are low. Nike say they are in the business of "marketing" shoes, not making them. However, Nike dictates the terms to the contractor: the design, the materials, the price it will pay.

• Nike’s main activities are in South-East Asia, and up until recently it manufactured many of its trainers in South Korea.

• In the late 1980s labour costs in South Korea rose, so Nike decided to move production to Indonesia where costs were lower.

• China boasts the largest number of Nike contract factories - 124 in total.

Problems Nike workers face:-

• Many of the workers in the Indonesian factories come from the surrounding countryside where they live in poverty. The conditions they move to are better, but not much. Some of the problems they face are:– Low wages and long hours– Industrial accidents– No workers’ rights – trade unions are illegal in

Indonesia

Problems Nike workers face:-• Where workers do complain or protest they can lose

their jobs. The contractors say they cannot afford to pay the workers more and Nike says that it is difficult to control what is happening in individual factories. This means that in a nation where unemployment is high and employees can be easily replaced, workers will continue to be open to exploitation.

• Human rights and aid groups have for years criticized Nike for not doing enough to tackle poor working conditions in its supply chain, particularly in developing countries.

• Chairman Phil Knight admitted that the company had been slow to respond to evidence of poor conditions in the past but said that the company was making progress in this area.

• About 620,000 people currently work in contract factories around the world producing Nike branded footwear, apparel and clothing, the majority of which are women under the age of 25. More than 75% of these work in Asia, predominantly in China, Thailand, Indonesia, Vietnam, Korea and Malaysia.

• Nike said it faced a number of "ongoing challenges" in its supply chain, including unsatisfactory levels of compliance in key areas such as poor pay, long working hours, staff harassment and lack of trade union representation. However, Nike said instances of the illegal use of child labour were extremely rare, with only five cases discovered in the past two years.

• Although 60% of factories monitored met the required standards, a quarter of factories were found to present more serious problems which ranged from a lack of basic terms of employment and excessive hours of work to unauthorised sub-contracting, confirmed physical or sexual abuse and the existence of conditions which could lead to death or serious injury.

• Workers at nine Nike plants in Indonesia (including Jakarta) have been found to suffer from sexual and verbal abuse, lack of medical attention and compulsory overtime.

• Female workers have been found to have gained jobs through sexual "favours".

• During the 1970's, most Nike shoes were made in South Korea and Taiwan but when wages began to rise, Nike looked for "greener pastures." It found them in Indonesia, China, and most recently Vietnam--countries where cheap labour is abundant. Also in China and Vietnam, the law prohibits workers from forming independent trade unions.

• If Nike doubled the salaries of its 30,000 employees in Indonesia the annual payroll would be roughly equivalent to what Michael Jordan is paid in one year to advertise the product.

• Nike said it would set up a taskforce to improve compliance with its code of conduct on working hours.

• Regionalism: e.g.The European Union – increased regional identity: as a region

becomes more economically integrated, it will necessarily become politically integrated as well.

• predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors.

http://en.wikipedia.org/wiki/Market

http://en.wikipedia.org/wiki/Barriers_to_entry

Trading bloc: • a group of countries with a common

interest in improving trade relations with each other by closer cooperation and integration

• Nations belonging to a mutual trade pact agreeing to give each other reduced trade tariffs and other accommodations while imposing trade barriers and restrictions to non-member nations. E.g. the European Economic Community (EEC) and NAFTA

• A tariff is a tax levied on imported or exported goods

• Non-tariff barriers to trade are trade barriers that restrict imports but are not in the usual form of a tariff. Some common examples are anti-dumping measures and countervailing duties

• "dumping" can refer to any kind of predatory pricing. It refers to the act of a manufacturer in one country exporting a product to another country at a price which is either below the price it charges in its home market or is below its costs of production.

• Fiscal policy: refers to the expenditure a government undertakes to provide goods and services and to the way in which the government finances these expenditures.

• There are two methods of financing: taxation and borrowing. Taxation takes many forms in the developed countries including taxation of personal and corporate income, so-called value added taxation and the collection of royalties or taxes on specific sets of goods.

• FISCAL POLICY: Measures employed by governments to stabilize the economy, specifically by adjusting the levels and allocations of government borrowing, taxes and expenditures.

• When the economy is sluggish, the government may cut taxes, leaving taxpayers with extra cash to spend and thereby increasing levels of consumption. An increase in public-works spending may likewise pump cash into the economy, having an expansionary effect.

• Conversely, a decrease in government spending or an increase in taxes tends to cause the economy to contract.

Taxation takes many forms in the developed countries including:

• personal income tax• corporate tax • value added tax (VAT)• royalties or taxes on specific sets of goods

• Monetary policy is the process a government, central bank, or monetary authority of a country uses to control the money supply and the cost of money or rate of interest to attain a set of objectives oriented towards the growth and stability of the economy.

• Monetary policy is referred to as either being an expansionary policy, or a contractionary policy, where an expansionary policy increases the total supply of money in the economy, and a contractionary policy decreases the total money supply.

• Expansionary policy is traditionally used to combat unemployment in a recession by lowering interest rates, while contractionary policy involves raising interest rates to combat inflation.

• Define the following terms and concepts related to regional integration:– Bilateral agreement, multilateral agreement, common market, single

market, single economy, economic integration, independent state, underdeveloped country, developing country, developed country, trade liberalization, globalization, multinational corporation, regionalism, trading bloc, fiscal policy, monetary policy

• Major challenges facing the Caribbean Region• Major stages in the integration movement• Functions of the various organizations (OECS Secretariat, CARICOM

Secretariat, Conference of Heads of Government)• Objectives of the various organizations: OECS, CARICOM, CSME• Factors that promote regional integration• Factors that hinder regional integration• Benefits of regional integration• The role of individuals, businesses and government in the

integration process• The role of regional agencies in the integration process

Major challenges facing the Caribbean Region

1. Small size, small national markets2. Lack of diversification3. Unemployment and underemployment4. Low levels of production and productivity5. Differences in resource distribution6. High levels of indebtedness (debt burden)

Major challenges facing the Caribbean Region

7. High level and cost of imports8. Shortage of skilled workers9. Inadequate technology10.Low value of exports11.Difficulties accessing markets of foreign

countries12.Shortage of capital13.Vulnerability to natural disasters

Timeline of Regional Integration

A MULTI-LATERAL agreement is one which involves more than two countries or states e.g.:

1. West Indian Federation (1958-1962)2. CARIFTA (1968-1973)3. CARICOM (1973 …)4. OECS: Organisation of Eastern Caribbean

States (1981…)5. CSME: 19896. ACS: Association of Caribbean States (1995…)

The West Indian Federation

1958-1962

The West Indian Federation was one of the first major attempts at regional integration in the Caribbean (1958-1962)

10 Member States

1. Antigua2. Barbados3. Dominica4. Grenada5. Jamaica6. Montserrat7. St. Kitts/Nevis/Anguilla8. St. Vincent9. St. Lucia10. Trinidad and Tobago

AIMS AND OBJECTIVES OF THE WEST INDIAN FEDERATION

1. To generate ideas to solve their social and economic problems– Sugar industry in decline (unprofitable)– Shortages of goods & high prices after WW2– Low wages– High unemployment– Poor social facilities (hospitals, schools,

utilities)

2. To increase their bargaining power – thereby securing cheaper prices for imports

and better prices for exports through a united voice

3. To safeguard the democratic system of government– resist the US intervention in the affairs of the

Caribbean (Monroe Doctrine)

4. To reduce foreign control over their economies – (foreigners controlled most of the fertile land)

5. To strengthen the movement towards independence and self-government

Achievements

• Facilitated the move from colonialism to independence through a united voice

• Increased effectiveness in dealing with international bodies such as the UN

VOCABULARY1. REFERENDUM: a direct vote by the electorate of a country

on a single political issue2. INTERVENTION: the action of coming between people or

things3. FEDERATION: a group of states with a central government

but independence in internal affairs4. COOPERATE: to work helpfully with another person or with

other people5. DEMOCRACY: a form of government in which the people

have a voice in the exercise of power typically through elected representatives

6. COMPETENT: having the necessary skills and knowledge to do something successfully

7. STATUS: the situation at a particular time

“FEDERATION” BY THE MIGHTY SPARROW

People want to know why Jamaica run

From the FederationWell they want to know

why Jamaica run awayFrom the FederationJamaica have a right to

speak she mindThat is my opinionAnd if you believe in

democracyYou’ll agree with me

Chorus: But if they know they

didn’t want FederationAnd they know they don’t

want to unite as oneIndependence was at the

doorWhy didn’t they speak

before?This is no time to say you

ain’t Federating no more!

When they didn’t get the capital site

That nearly cause big fightWhen Sir Grantley Adams

took up his postThat even made things worseThey bawling “We ain’t want

no Bajan Premier!”“Trinidad can’t be capital for

a year!”So the grumbling went on

and onTo ah big referendum

Chorus:But if they know they

didn’t want Federation

And they know they don’t want to unite as one and only one

Ah say to tell the doctor you not in favour

Don’t behave like ah blasted traitor

How you mean you ain’t Federating no more?

Sorry but no Federation again

I think it’s a big shameAfter so much efforts and

energyGoodbye everybodyRight now it’s only a

memoryWe fail miserablySome may say we

shouldn’t help part itBut Jamaica start it.



want to unite as oneJust tell the doctor you not

in favourDon’t behave like a blasted

traitorHow you mean you ain’t

Federating no more?

Federation boil down to simply this

Is dog eat dog and survival of the fittest

Everybody fighting for independence

Singularly, Trinidad for instance

We go get it too, so don’t bother

But I find we should all be together

Not separated as we are because of Jamaica.



want to unite as oneJust tell the doctor you not

in favourDon’t behave like a blasted

traitorHow de devil you mean

you ain’t Federating no more?

Factors leading to the Collapse of the Federation in 1962

1. Trinidad and Jamaica thought it unjust that they were expected to provide 82% of the funding for running the Federation.

2. Smaller states distrusted the larger states– Felt Jamaica and Trinidad would

change the constitution of the Federation in their own interest

3. Conflict over choice of the Prime Minister of the Federation

– (Sir Grantly Adams, Premier of Barbados)

4. Conflict over choice of the capital site, Chaguaramas, Trinidad

– Jamaica wanted to be the site of the headquarters of the Federation

– Others felt it was unsuitable because the US had a military base there

5. Selfish Goals– Islands at various stages of political development

and the more advanced countries felt that Federation might stifle their political progress i.e. their move towards independence

– The most competent people to act as federal Prime Minister refused the role (Dr. Williams and Mr. Manley both preferred to remain as heads of their own countries)

6. Envy and jealousy among member states stemming from their varying levels of economic prosperity

7. Inefficient communication between the islands

– (inadequate shipping, telephone and postal services)

8. Masses uneducated on the importance of the Federation:– Jamaica held a referendum in 1961 in

which the majority of the population voted against Federation. Thus Jamaica withdrew from the Federation

– Dr. Eric Williams “One from ten leaves naught” – so Trinidad and Tobago also withdrew from the Federation

CAFIFTA stands for:-

CARIBBEAN FREE TRADE ASSOCIATION

CARIBBEAN FREE TRADE ASSOCIATION(1968-1973)

11 member states

1. Guyana2. Trinidad and Tobago3. Barbados4. St. Vincent5. St. Lucia

* Grenada not a member

6. Belize7. Dominica8. Montserrat9. Antigua10. St. Kitts/ Nevis/

Anguilla11. Jamaica

AIMS AND OBJECTIVES

1. TO ENCOURAGE FREE TRADE2. TO FOSTER ECONOMIC DEVELOPMENT– To foster economic and social development by

encouraging free trade among member states through the removal of customs duties, taxes and licensing arrangements which previously stifled trade among the islands

– To encourage member states to increase their production and expand their manufacturing sector, thus creating new jobs and boosting their economies

• CARIFTA was a success so the members decided to enlarge and deepen cooperation by forming CARICOM in 1973

CARICOMCARIBBEAN COMMUNITY AND COMMON

MARKET

http://www.caricom.org/index.jsp

AGREEMENT BY WHICH CARICOM WAS FORMED

• THE TREATY OF CHAGUARAMAS, July 4, 1973• INITIAL 4 SIGNATORIES:– TRINIDAD AND TOBAGO– JAMAICA– BARBADOS– GUYANA

• CARICOM became operational on August 1, 1973.

MEMBER STATES TO DATE:

1. Antigua2. Bahamas3. Barbados4. Belize5. Dominica6. Grenada7. Guyana8. Haiti

9. Jamaica10. Montserrat11. St. Kitts/Nevis12. St. Lucia13. St. Vincent and the

Grenadines14. Suriname15. Trinidad and Tobago

MAIN OBJECTIVES OF CARICOM

1. ECONOMIC INTEGRATION: TRADE LIBERALISATION (CARIBBEAN COMMON MARKET)

2. FUNCTIONAL COOPERATION

3. POLITICAL INTEGRATION: COMMON POLICIES FOR DEALING WITH NON-MEMBER STATES AND TRANS-NATIONAL CORPORATIONS

• TRADE LIBERALISATION–Removal of barriers to trade (customs

duties, quotas, taxes, licenses):• Increased volume of trade• Increased economic development

• FUNCTIONAL COOPERATION–Shipping–Air transport–Meteorological services–Health–Education and training–Broadcasting–Culture–Intra-regional technical assistance

• COMMON POLICIES FOR DEALING WITH NON-MEMBER STATES AND TRANS-NATIONAL CORPORATIONS such as Hilton, Nestle, Unilever–CET: Common External Tariff–Common Foreign Investment Policy

(Harmonization of fiscal incentives)–Common Tourism Policy

• CARICOM member states depend heavily on foreign investments for purposes of royalties, taxes, job creation. A common policy for attracting investment is necessary to prevent one country from offering greater incentives (tax-free holidays, preferential rates on energy etc than another)

BENEFITS OF TRADE LIBERALISATION

FREE TRADE

CHEAPER GOODS AND SERVICES

GREATER DEMAND FOR CARICOM GOODS

GREATER PRODUCTION TO MEET DEMAND

MORE JOBS CREATED

SAVINGS IN FOREIGN

EXCHANGE

BENEFITS OF COMMON POLICIES1. Greater bargaining power through a united voice – better price for extra-regional exports– Cheaper prices for imports

2. Preferential Rates and Special Quotas can be arranged for CARICOM goods entering the European Union (EU) and the United States (US) (especially agricultural goods such as bananas, sugar, rum)

3. Reduced competition in attracting foreign investment leading to better deals with foreign investors

BENEFITS OF FUNCTIONAL COOPERATION

1. METEOROLOGY: Caribbean Meteorology Organisation located in T&T collects weather information and transmits it to the other CARICOM states

2. HEALTH: CAREC (1975) – Caribbean Epidemiology Centre: conducts research into certain communicable diseases e.g. polio, typhoid, cholera, AIDS

3. ENVIRONMENTAL HEALTH: CEHI (1988) – Caribbean Environmental Health Institute– Preservation and protection of the environment (air,

land, water)– Solutions for disposal of toxic waste– Coastal and marine pollution– Testing quality of drinking water– Collection and treatment of waste water

4. NATIONAL DISASTERS: CDERA – Caribbean Disaster Emergency Response Agency (1991)– Hurricanes, earthquakes, flooding, volcanic eruptions– Coordinates relief in response to natural disasters– Provides assistance rebuilding after a disaster

5. AGRICULTURE: CARDI (1975): Caribbean Agricultural Research Development Institute (UWI, St. Augustine)– Develop systems to improve productivity in

agriculture– Establish farming techniques to meet the needs of

small farmers– Lower production costs in agriculture– Undertake research to find solutions for plant

diseases– CARDI is funded by CARICOM governments, the CDB

and other international lending agencies* The Caribbean region depends heavily on

agriculture for export and local consumption but various problems have stifled the sector resulting in a high food import bill.

Achievements of CARDI

• Developed a special variety of tomato suited to local conditions (CALYPSO)

• Provided solutions for brown spot disease which affects yams

• Established systems to increase peanut production in St. Vincent

• Developed feeds/rations for animals using locally available by-products

• Developed pesticides for the sugar-cane moth borer, the sugar cane mealy bug and the diamond back moth which attacks cabbage

Some Institutions of CARICOM1. CARDI: Caribbean

Research and Development Institute

2. CXC: Caribbean Examinations Council

3. CAREC: Caribbean Epidemiology Centre

4. RSS: Regional Security System

5. CFNI: Caribbean Food and Nutrition Institute

7. CEHI: Caribbean Environmental Health Institute

8. CDEMA: Caribbean Disaster Emergency Management Agency

9. CCJ: Caribbean Court of Justice

10. CMO: Caribbean Meterological Organisation

ASSOCIATE INSTITUTIONS OF CARICOM

1. Organisation of Eastern Caribbean States (OECS)2. Caribbean Development Bank (CDB)– Located in Barbados.

3. Caribbean Law Institute (CLI)– Located in Barbados. Promotes law reform in the

Commonwealth Caribbean.4. University of the West Indies (UWI)– 1948, Mona, Jamaica– 1960, St. Augustine, Trinidad and Tobago– 1963, Cave Hill, Barbados

5. University of Guyana (UG)

CDB1. Provides assistance to CARICOM sates affected by disasters

2. Stimulates and encourages the development of capital markets

3. Promotes public and private investment in development projects

4. Provides aid to financial institutions in the region

5. Finances projects and programmes to foster development

6. Provides technical assistance such as pre-investment surveys, project proposals and preparation

7. Mobilizes additional financial resources for regional development

BENEFITS OF CARICOM1. Creates more employment for CARICOM nationals2. Goods imported from member states cost less3. Greater unity and friendliness among member states4. Assistance to members States in times of natural and

national disasters5. Crime fighting through the Regional Security Service6. Culture boosted through CARIFESTA7. Regional cooperation in sporting activities enhances

the skills and talents of our sportsmen and women8. Greater cooperation among member states through

the Caribbean Media Corporation9. Exploitation by transnational corporations is reduced

CARICOM SINGLE MARKET AND ECONOMY (CSME)

1989…

Main objectives of the CSME

The main objectives of the CSME are:

• full use of labour (full employment) and • full exploitation of the other factors of

production (natural resources and capital); • competitive production leading to greater

variety and quantity of products and services to trade with other countries.

Key elements of the Single Market and Economy

1) Right of Establishment

2) A Common trade policy

3) A Common External Tariff

4) Free circulation

5) Free movement of goods and services

6) Free movement of capital

7) Free movement of labour

8) Harmonisation of Laws and common economic, monetary and fiscal measures

Key elements of the Single Market and Economy1. Right of Establishment - to permit

the establishment of CARICOM owned businesses in any Member State without restrictions;

2. A Common trade policy - agreement among the members on matters related to internal and international trade and a coordinated external trade policy negotiated on a joint basis;

3. A Common External Tariff - a rate of duty applied by all Members of the Market to a product imported from a country which is not a member of the market;

4. Free circulation - free movement of goods imported from extra regional sources which would require collection of taxes at first point of entry into the Region and the provision for sharing of collected customs revenue;

5. Free movement of goods and services - through measures such as eliminating all barriers to intra-regional movement and harmonising standards to ensure acceptability of goods and services traded;

6. Free movement of Capital - through measures such as eliminating foreign exchange controls, convertibility of currencies (or a common currency) and integrated capital market, such as a regional stock exchange;

7. Free movement of labour - through measures such as removing all obstacles to intra-regional movement of skills, labour and travel, harmonising social services (education, health, etc.), providing for the transfer of social security benefits and establishing common standards and measures for accreditation and equivalency.

• The CARICOM Single Market and Economy (CSME) is operating at about sixty-four percent (64%) overall level of compliance.

• There are 15 CARICOM Member States. Thirteen are currently actively participating in the CARICOM Single Market & Economy:



• Major challenges facing the Caribbean Region• Major stages in the integration movement• Functions of the various organizations (CARICOM Secretariat,

Conference of Heads of Government)• Objectives of the various organizations: OECS, CARICOM, CSME• Factors that promote regional integration• Factors that hinder regional integration• Benefits of regional integration• The role of individuals, businesses and government in the


FUNCTIONS OF THE CARICOM SECRETARIAT

• The CARICOM Secretariat is located in Guyana and is headed by a secretary general.

• The staff of the Secretariat take instructions from the Community and not from individual member states.

Functions of the CARICOM Secretariat

1. Services meetings of organs and bodies2. Follows up on issues from meetings3. Initiates, organizes and conducts studies on issues

related to the achievement of CARICOM objectives4. Provides services and technical assistance to

member states to achieve CARICOM objectives5. Assists in the implementation of proposals and

programmes6. Prepares draft budgets and conducts fact-finding

assignments in member states

FUNCTIONS OF THE CONFERENCE OF HEADS OF GOVERNMENT

This is the principal organ of CARICOM. It:-

1. Provides policy direction to the Community

2. Concludes treaties on behalf of the Community

3. Considers and resolves disputes among member states

4. Initiates proposals for development and approval

5. Monitors the implementation of Community decisions at the regional or local level

OBJECTIVES OF THE OECS AND CARICOM

1. Functional cooperation2. Integration of the economies of the member

states3. Harmonization of foreign policy

Objectives of the CARICOM Single Market

1. Free movement of goods and services2. Right of establishment3. Free movement of capital4. Free movement of skilled labour

Objectives of the CARICOM Single Economy

Harmonization of:-• Fiscal (tax) policies• Monetary policies (including a single

CARICOM currency)• External trade policy• Legislation (custom, companies)• Sectoral policies in agriculture,

manufacturing and fisheries

Objectives of the Regional Development Fund

• CARICOM is divided with a group of smaller states belonging to the Organization of Easter Caribbean States. The OECS countries have called for the establishment of the Regional Development Fund to assist them to overcome any economic difficulties that their participation in the Caribbean Single Market and Economy may have on their individual economies.

Factors that promote regional integration• Common history–Colonialism, slavery and indentureship

• Common cultural heritage– Language, dress, cuisine, music, general

lifestyle• Close proximity• Common economic and social issues• Effects of globalization, trade liberalization and

trading blocs• Vulnerability to economic shocks and natural

disasters

Factors that Hinder Regional Integration1. Geography of the region

Caribbean countries are separated by water and inter-island transport is not always easy.

2. Absence of a common strategy for developmentDifferent emphases on strategies for growth: one depends on petroleum, some on tourism, others on agriculture (common policies difficult to achieve)

3. Differences in stages of growth and development

4. Competition for location of industriesTerritorial interests often supercede regional ones eg the countries compete among themselves to attract foreign investors

5. Absence of common currency and non-acceptance of each other’s currency

6. Fear of political integration

7. Unequal distribution of resourcesthe more developed member states that are fortunate to have mineral resources often utilize income gained from this wealth only for their country’s benefit rather than shared regional benefit.

8. Influence of MNCs / TNCsTNCs still bargain with individual governments for tax-free holidays, duty free import of raw materials, repatriation of profits etc in contravention of CARICOM objectives

9. Lack of diversification in production and duplication of effort Since member states produce similar products (sugarcane, bananas, cocoa, coffee, ground provisions) intra-regional trade is stifled.Each country has its own factories rather than there being different types of factories in several CARICOM countries to produce items for the entire region and for export.

10. Insularity

11. Delayed implementation of policies agreed on at meetings of regional heads

12. Citizens know little about CARICOM organizations and what they do

13. Poor information dissemination, slow implementation and ratification of plans

14. Poor media coverageInsufficient information about CARICOM countries in newspapers, on radio and cable television

Factors that Hinder Regional Integration

Benefits of Regional Integration1. Reduction in unemployment and underemployment2. Better response to globalization and trade

liberalization3. Improvement in the quality of life4. Reduction in the inequality of wealth distribution5. Free movement of goods, labour and capital6. Increased market size7. Improved levels of international competitiveness8. Expansion of trade9. Increased cooperation among member states10. Increased chances of achieving sustainable

development

The Role of Individual Citizensin the Integration Process

EntrepreneurshipSupporting regional producersShowing solidarity and mutual support

towards regional fellow citizensInvesting in local and regional businessesBeing informed

The Role of Businesses in the Integration Process

Improving competitivenessIncreasing range and quality of goods

and servicesProviding opportunities for investment

and employment

The Role of Government in the Integration Process

Enacting enabling legislationHarmonizing policiesHonouring protocolsEducating citizens about the objectives

and benefits of integration

OTHER FACETS OF INTEGRATION• WEST INDIES CRICKET BOARD (WICB)

– One of the oldest examples of regional cooperation• CARIBBEAN NEWS AGENCY (CANA)

– A regional agency that provides news on regional issues and events and buys foreign news from international sources like Reuters and Associated Press

– News releases are distributed to members throughout the commonwealth Caribbean• Reduces cost of obtaining foreign news, promotes local

Caribbean culture, keeps region informed on national and international events, enhances communication among Caribbean States, fosters regional unity

• CARIBBEAN BROADCASTING UNION (CBU)– A non-profit private regional organisation formed in 1970 to

facilitate radio and TV broadcasts among its members

CARIFESTA

• Pg 283• Social Studies Essentials for CSEC - Sandy

regional integration. region: an area of a country or the world having definable characteristics but...

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