PORT OF SPAIN, Trinidad, Tuesday May 31, 2011 (By Peter Richards) – In his first address to the board of governors of the Barbados-based Caribbean Development Bank (CDB), Dr. Warren Smith, the new president of the region’s premier lending financial institution, warned of insecurities engulfing Caribbean economies.
He told the governors meeting here last week that the situation has been worsened by structural weaknesses and extreme vulnerability linked to Caribbean countries’ small size, openness, narrowness of the production base and proneness to potentially devastating natural disasters.
“The economic structure has been further undermined and industry competitiveness challenged by volatile oil prices since the 1970s and the deeper integration of Caribbean economies into the international financial and economic systems through globalisation,” he said.
Into this mix, Smith adds the Economic Partnership Agreement (EPA) that was signed in 2008 between the European Union (EU) and the Caribbean Forum (CARIFORUM) countries, consisting of the 15-member Caribbean Community (CARICOM) grouping and the Dominican Republic.
He said the EPA signaled the end of unreciprocated preferential access by Caribbean exports into the EU market, resulting in new insecurities being created as agriculture production, farm incomes and employment declined. Small farmers, especially in banana and sugar producing countries, have become displaced and poverty levels rose dramatically, more so in rural communities.
“If you look at countries in the Eastern Caribbean like St. Lucia, Dominica, their banana industries have been adversely affected so that there is, if you will, a first round fallout from that (EPA) development,” Smith told IPS.
He believes that the region should not sit idly by, “but what we should do is to recognise that even in the face of those sets backs what the EPA has done is to open up a whole new world of opportunities”.
He wants the region to focus on being much more innovative while recognising that accords, such as the EPA, are an irreversible process in a changing global environment.
“It is Europe tomorrow, it is going to be another region the next day and so on, so that we have to become accustomed to that reality and position ourselves to deal with it,” Smith told IPS, adding that as the 2008 global economic and financial recession unfolded, and the Caribbean experienced its impact, vulnerability increased.
Jamaica’s Finance Minister Audley Shaw said the EPA is “a sort of indication of what trading is likely to be in the future” and “what this must signal to us is that we have to prepare ourselves for significantly higher levels of productivity and higher levels of product differentiation… so that we can benefit from comparative advantage in the arena of trading with Europe and ultimately in the arena of global trade.”
He told IPS that most of the measures contained in the EPA are consistent with the new policies being pursued in Jamaica, where productivity has been in decline and where economic growth levels – “marginal at best” – has been at less than one percent for the last 14 years.
“We just have to go and recognise that for EPA to be successful all of us in terms of our ability to export…must understand that we have to build capacity, build output levels and productivity and efficiency levels,” he said, adding “we have signed the agreement already, the horse kind of gone through the gate already”.
Trinidad and Tobago’s new economic and planning minister, Dr. Bhoendradatt Tewarie, has also endorsed the need for more innovation as a means of enhancing competitiveness leading to improved productivity.
“A major factor in productivity is the skills and competencies of the workforce. Human capital, therefore, is the essence of productivity, competitiveness, innovation, diversification, the migration of industries upward in the value chain, entrepreneurship, new business creation, wealth generation and sustainable development,” he said.
Tewarie said that the EPA would be useless to CARICOM countries “unless we have industries that can take advantage of the EPA to access the markets of Europe”.
“So what it demands of us is industries that have export capability on a competitive enough basis to penetrate the market,” he told IPS.
“If you see the EPA as a challenge or a difficulty it will always be so, but if you see Europe as a market made possible by the EPA then there are requirements that are necessary to be met in order to access that market and a lot of this has to do with how you see things, view the world and how you view your own requirement and responsibilities in the world.”
The CDB has received a 10 million pound (16.5-million-dollar) grant from the British government which it has out into a trust fund that Smith says operates along the line of “aid for trade”.
“We use those funds to help Caribbean institutions and Caribbean companies to position themselves better to be able to access the European market and we are in discussions with CARIFORUM to get another round of similar resources to do a similar type of thing,” he said.
Tewarie notes that it has been two years since the signing of the EPA, and with only eight more years before the region has to allow for duty-free access of European goods into the Caribbean, it is necessary for initiatives such as the CARICOM Single Market and Economy (CSME) to be far advanced.
“What is required of us is really diligent and highly focus preparation and in that regard the pace of achievement of the CSME which is really a single economic space needs to be quicken,” he said, noting “notwithstanding that there is nothing that prevents a particular company or a cluster of companies across the region in cooperation from accessing the European markets”.
CARICOM leaders who met in Guyana for a two-day retreat last weekend noted that the move towards the single economy, first mooted for 2015, would “longer than anticipated” and “it may be best to pause and consolidate the gains of the single market before taking any further action on certain specific elements” of the initiative. (IPS)
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