Clash over CARICOM - Let's fix it!

Densil A. Williams, Guest Columnist

Forty years is not a long time in the life of an organisation. However, it is sufficient time to make an assessment of its performance towards achieving its mission, vision and strategic goals.

CARICOM, which was formed by former colonies in the British West Indies in their quest to promote regional integration, has come under serious scrutiny about its performance as a regional integration movement over the last four decades.

In this 40th year of the movement's anniversary, Ronald Mason, in his column in The Sunday Gleaner on May 5, 2013, turned the spotlight fully on the efficacy of the CARICOM project. He questioned openly whether or not the project benefits Jamaica, one of the founding members of the movement.

Having questioned the efficacy of the movement, he concluded in his May 19, 2013 piece, that Jamaica should leave the movement and "deal with the world as it is and forge our way therein as best we can". He further stated: "We should forge links with the larger markets of Haiti, Cuba, Dominican Republic, North America and Latin America where the business community of traders can enjoy economies of scale."

Mason is not alone, as a number of bright minds, including Senator Christopher Tufton, who are of the view that Jamaica should take temporary leave from CARICOM. The disdain for CARICOM is understandable from a Jamaican perspective, especially when one travels to the Eastern Caribbean. Those of us who travel throughout the region can attest to the negative sentiments toward Jamaicans when we enter certain territories.

However, I strongly submit that despite the emotional scars and the CARICOM trade imbalance in which Jamaica finds itself, these are not sufficient reasons to disengage from the regional alliance. The sentiment that Jamaica should take a recess from CARICOM is not only wrong but also dangerous, especially in an inhospitable global capitalist economy where smallness can render you irrelevant.

INTEGRATION CRUCIAL

There is great value in a regional integration movement, especially at this time when the forces of global capitalism are deepening and individual sovereignty is coming under serious threat. Today, almost all groups of countries in the world are moving towards some form of integration scheme, whether it be trade or economic integration.

The rationale is simple: With greater numbers of people in one economic space, it provides a stronger opportunity for intraregional trade and for traders to enjoy economies of scope and scale in their operations.

The irony of Mason's argument is that he did admit that some form of integration is necessary for Jamaica, as it will generate economies of scale for traders. However, he thinks this integration should not be in the form of CARICOM, but with larger markets. So, Mason agrees that Jamaica cannot afford to take on the world by itself, but he seems to be saying CARICOM is not the vehicle to be used to do this.

There is no doubt that the corporations that are leading the global capitalist agenda are not rushing to set up shops in small and micro states; they go for size. Regional integration in CARICOM will no doubt help the small and micro states of the Caribbean to overcome their liability of size. This is true for Jamaica, as it is for Antigua and Barbuda. So, CARICOM can serve as a first step towards the type of open regionalism to which Mason is more amenable.

The major criticism levelled at CARICOM,
especially from the Jamaican perspective, has to do with its trade
imbalance with the region. Trying to explain the low level of
intraregional trade in the movement is a bit more sophisticated than the
issue of Trinidad having cheap oil and subsidising their firms for them
to flood the markets of the other countries in the movement with their
manufactured goods.

The fundamental problem with
CARICOM being designed as a trading bloc has to do with what UWI
professor of international business, Alvin Wint, refers to as the
dilemma of difference, or what other scholars refer to as lack of
complementarity.

What this simply means is that as a
region, we all produce the same things. As such, it is difficult to
trade with someone who already produces what you are offering them. For
trade to be healthy, one party should have something the other party
requires to complete a transaction. In this way, we will both exchange
what we have and each party will get a higher utility from trading, as
it is difficult for them to do without each other.

For
CARICOM to survive as a trading bloc, it will have to find the sources
of complementarity and then design systems so that traders can exploit
business opportunities.

MOVING CARICOM
FORWARD

So, CARICOM has greater value to add to the
micro states of the West Indies if they are to compete in the global
economy. Competing in an inhospitable global economy as one single
economic space will help them to overcome the size limitation and be
more attractive to large corporations that are seeking international
business opportunities.

Besides the trade aspect of
CARICOM which has not really achieved its full potential over the past
40 years, the movement has had some significant achievements in other
areas such as disaster management, health care, sports and education,
democracy, to name a few.

Jamaica, like many of the
other member states, have benefited significantly from these areas. In
the area of education, for example, the CXC has outdone all local
Jamaican examinations such as the JSCE. Regional engagement does have
its benefits. What has made these areas successful, however, is
functional cooperation.

Functional cooperation merely
refers to the sharing of services and the undertaking of joint
activities in order to reduce costs and achieve synergies. This is an
important aspect of the regional project because it has the advantage
that it does not require countries to give up their sovereign powers on
any issue. Indeed, one of the factors that have prevented deeper
integration in CARICOM is the fear of giving up national
sovereignty.

If we are serious about the movement,
member countries will also have to revisit the concept of shared
sovereignty as espoused by former Prime Minister P.J. Patterson. This
will help countries deal with the fears of deepening the movement to
become an economic union.

In fixing CARICOM,
therefore, greater attention has to be paid to the area of functional
cooperation, especially in the economic sphere, as this has the
potential to substantially increase intraregional
trade.

Importantly, also, there needs to be a greater
oversight from the secretariat in looking at areas of complementarity
and position the movement along this line so that traders can better
exploit the benefits from being part of a regional trading
bloc.

Dr Densil A. Williams is a senior lecturer of
international business at the Mona School of Business and Management,
UWI. Email feedback to columns@gleanerjm.com and
densilw@yahoo.com.