DOHA, QATAR, 19 APRIL 2012 THE SERVICES REGIME OF THE CARICOM SINGLE MARKET AND ECONOMY (CSME) A BRIEF ASSESSMENT OF ITS ACHILLES HEEL W. Baldwin Spencer* Prime Minister Antigua and Barbuda * Delivered on behalf of Mr. Spencer by H.E. Mr. Anthony Liverpool, Ambassador, Ministry of Foreign Affairs, Antigua and Barbuda
THE SERVICES REGIME OF THE CARICOM SINGLE MARKET AND ECONOMY (CSME) A BRIEF ASSESSMENT OF ITS ACHILLES HEEL As Prime Minister of Antigua and Barbuda and Lead Head of Government with Responsibility for Services in the CARICOM Quasi Cabinet, I am more than pleased to speak to you on this subject. However, before dealing with the subject at hand I think that it is only fitting that I provide a brief overview of the regional integration movement called the Caribbean Community, including the CARICOM Single Market and Economy (CSME). The CSME CARICOM is one of the oldest regional integration blocks in the world. Next year -2013, it will be forty years old. Its members are all small, vulnerable and highly opened economies comprising my country Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, St. Kitts and Nevis, Saint Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago. The total population of the Community is approximately 16 million with Haiti accounting for more than ten million or 62.5 percent. Total annual output averages US$35 billion and the services sector accounts for roughly 70 percent of this total. Service sector employment is also high accounting for more than 66 percent of total employment 1. The establishment of the CSME is the most ambitious initiative undertaken by the Community. This decision to deepen the integration process was taken at the Tenth Meeting of the Conference of the Heads of Government at Grand Anse, Grenada in 1989, in response to the increasingly liberalised international 1 These figures do not include Haiti. 1
environment and the threatening loss of our preferential arrangements especially in the market of the European Union (EU). Added to this were falling growth rates in the Region, a continuing loss of skills and recognition that the Region s production had not been adequate and competitive enough to exploit market opportunities. Bold initiatives therefore needed to be taken, bearing in mind the Community goals of, inter alia, improved standards of living and work, and increased levels of employment and development. The CARICOM Single Market was formally established on Monday, 30 January 2006. On that occasion six Member States Barbados, Belize, Guyana, Jamaica, Suriname and Trinidad and Tobago signed the Declaration marking their Single Market compliance in a ceremony witnessed by the Region. The six remaining States all Members of the OECS, namely Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, Saint Lucia and St. Vincent and the Grenadines joined the Single Market on 30 June 2006. The CSME brings a number of benefits to CARICOM nationals including (i) (ii) (iii) (iv) (v) Optimal allocation and utilisation of the Region s resources; Access for national producers to the entire CARICOM market in the first instance and then to market opportunities further afield; Increased opportunities for CARICOM nationals for investment, production, provision of services and for employment in a new CSME environment; Enhanced competitiveness of regionally produced goods and services; and Better quality regional goods and services for consumers. 2
Labour Market Integration The participating Member States of the CSME have also agreed to integrate their labour markets. All barriers in the labour markets have been removed including work permit requirements and there are provisions for the Free Movement of Skilled Community Nationals. The implementation of the free movement commitment has its challenges and is to be implemented progressively. At present, we the Heads of Government have approved ten categories of persons who can exercise rights under this regime. These are: (1) University Graduates; (2) Media Workers; (3) Sportspersons (4) Artistes (5) Musicians (6) Non-graduate Nurses; (7) Non-graduate Teachers; (8) Holders of Associate degrees; (9) Artisans with the CARICOM Vocational Qualification(CVQ); and (10) Household Domestics with the CARICOM Vocational Qualifications (CVQ). This list is not exhaustive and other categories will be added as recommendations are made to and approved by my colleague Heads. It should be noted that currently, action is being taken by CARICOM Member States to implement a decision that CARICOM nationals travelling to other Member States be granted a definite entry of six months, subject to the right of Member States to reject undesirable persons and to prevent persons from becoming a charge on public funds. 3
There are other initiatives being taken to support and strengthen the development of the CSME. These include the development of a Single Development Vision and the Role of the Single Economy, and a Strategic Plan for Regional Development. The vision constitutes a strategic framework for the sustainable development of the Community and serves as a basis for decisionmaking on a road-map for the further implementation of the CSME. The Vision also encompasses economic, social, environmental and governance dimensions; grouped into six broad elements, namely: (i) Self-sustaining economic growth based on strong international competitiveness, innovation, productivity, and flexibility of resource use; (ii) A full-employment economy that provides a decent standard of living and quality of life for all citizens; elimination of poverty; and provision of adequate opportunities for young people, constituting an alternative to emigration; (iii) Spatially equitable economic growth within the Community, having regard to the high growth potential of Member States with relatively low per capita incomes and large resources of under-utilised land and labour; (iv) Social equity, social justice, social cohesion and personal security; (v) Environmental protection and ecological sustainability; and (vi) Democratic, transparent and participatory governance. 4
The CARICOM Services Regime Notwithstanding the fact that the Services sector is the largest sector of the CSME, there is yet no comprehensive regional strategy or plan for this sector. We have started work to address this defect in 2009 and there will soon be a regional strategic plan for all services. To date we have identified eleven broad elements that would inform the strategy for each sector. These are:- (i) External environment; (ii) Constraints; (iii) Goal (iv) Policy Framework; (v) Legislative Framework; (vi) Incentives; (vii) Human Resource Requirements; (viii) Financing Requirements; (ix) Technological Needs; (x) Cross- sectoral linkages; (xi) Other. Given the enormity of the task, we have given priority to the following seven sectors on which to start work:- (i) Financial Services; (ii) ICT; (iii) Professional Services; (iv) Tourism Services; (v) Education Services; (vi) Health and Wellness Services; and (vii) Recreational, Cultural and Sporting Services. 5
There is also the full recognition that unless this work engages all stakeholders and that there is both a bottom-up and a top-down approach, it will not be worth the paper. As a result, we have established the appropriate administrative arrangements. These are (a) a Regional Project Steering Committee consisting of a high level representative from each Member State along with the relevant experts from regional institutions; (b) the identification of focal point ministries/agencies; and (c) a national coordinating committee in each Member States to ensure full participation of all relevant stakeholders. The full participation of the private sector is anticipated. By now, many of you would have heard of the unique brand of private-public partnerships created for the Services sector of the CSME. Specifically we are creating national services coalitions and a regional services coalition. These coalitions are umbrella bodies for professional associations as well as firms and non-organised individual service providers. The coalitions function as a single private sector interface through which the public sector collaborates. They are partners in the development of the Services sector. To date we have eleven such coalitions. The remaining four coalitions are expected to be established during this year. These coalitions confront many challenges, but, I must add, there is the political will that they succeed and make the intended impact with respect to the development of the Services sector of the CSME. The Achilles Heel of the CSME Many persons would expect that the Achilles Heel of the CSME is internally derived. I posit that it is externally derived. Here are my reasons for this position. As mentioned earlier, the Services sector is the largest sector of the CSME. It receives the largest share of investment ( telecommunications, hotel construction 6
and refurbishment, public infrastructure roads, bridges, etc). It employs the most persons. It produces the most of total output. It accounts for almost total trade in most Member States ( tourism and related travel services). A careful analysis of the trade performance of CARICOM Member States reveals that it is the expansion of the domestic consumer base through tourism and related travel services that drives their economic growth and development. Each year, the local consumer base of most Member States doubles, in some cases triples, through tourism. This provides the much needed foreign exchange to pay for goods and other services purchased from the rest of the world. Some Member States have even diversified their products for foreign consumers into areas such as offshore medical education, health, offshore financial services, and gaming. In this period of economic recession it is these diversified products that are keeping economies within the CSME afloat. I am concern that there are now attempts by developed countries to restrict the consumption base of CARICOM Member States in these areas. They are doing this through the Air Passenger Duty (ADP), through blacklisting of our countries as tax haven, through penalising corporations that engage in corporate tax planning, through loosing disputes at the WTO and not fulfilling their obligation to compensate. If these measures are not halted or removed, untold damage will be inflicted on the economies of the CSME and all the gains that we have made through trade in services in terms of foreign consumption will dissipate overnight. This will cause a falling off in our living standards, increased brain drain, increase crime and violence and more emigration. I am of the view that a poor conceptual framework and the concomitant weak international rules and disciplines for consumption abroad fosters the reemergence and development of these measures which adversely affect our trade in these services. 7
IT IS THE CONSUMER AND NOT THE SERVICE PROVIDER THAT OUGHT TO BE THE FOCUS OF ATTENTION IN THE MODE OF SUPPLY CALLED CONSUMPTION ABROAD. The consumer has to move under this mode of supply. All barriers to this movement should be removed. I am of the view that if these barriers are removed there will be a revitalisation of the world economy. That both developed and developing countries will benefit. There is more that can be said on this matter. research, analyse, report and advise. I now leave it to the academics to I thank you. 8