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 RESOURCES
a) 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 Region
3.
Major stages in the integration movement
4.
Functions of the various organizations (OECS Secretariat,
CARICOM Secretariat, Conference of Heads of Government)
5.
Objectives of the various organizations: OECS, CARICOM, CSME
6.
Factors that promote regional integration
7.
Factors that hinder regional integration
8.
Benefits of regional integration
9.
The role of individuals, businesses and government in the
integration process
10. 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
• 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 selfcontained. 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 consider
1. 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 consider
4. 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 countries
1.
2.
3.
4.
5.
6.
With the opening up of world markets and free trade, how
can we be competitive and produce high quality goods at
cheap prices?
Should we finance development projects by taking loans
from international lending agencies or should we open our
doors to foreign investors?
How can we improve productivity in the workplace with the
existence of powerful trade unions which consistently seek
higher wages for members?
What can be done to train our nationals for jobs in an
environment which is highly technological?
What can be done by Caribbean countries to reduce the
food import bill and to be self-sufficient in food production?
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
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
No matter where you go in the world, certain
businesses will always have a presence.
number of others.
Copyright: mkeky, stock.xchng
Corporate Expansion
• Characteristics:
–
–
–
–
–
–
Controlling supplies may be one reason
for global expansion.
Copyright: rsvstks, stock.xchng
Expanding revenue
Lowering costs
Sourcing raw materials
Controlling key supplies
Control of processing
Global economies
of scale
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:
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
• Accountability
of Global businesses?
• Increased gap between
rich and poor fuels
potential terrorist reaction
• Ethical responsibility of
business?
• Efforts to remove trade
barriers
• Multinational Corporation - MNC
A 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, CocaCola, 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
CASE STUDY:
A MULTI-NATIONAL COMPANY - NIKE
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.
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 antidumping 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.
2.
3.
4.
5.
6.
Small size, small national markets
Lack of diversification
Unemployment and underemployment
Low levels of production and productivity
Differences in resource distribution
High levels of indebtedness (debt burden)
Major challenges facing
the Caribbean Region
7. High level and cost of imports
8. Shortage of skilled workers
9. Inadequate technology
10.Low value of exports
11.Difficulties accessing markets of foreign
countries
12.Shortage of capital
13.Vulnerability to natural disasters
Timeline of Regional Integration
1.
2.
3.
4.
5.
6.
A MULTI-LATERAL agreement is one which
involves more than two countries or states
e.g.:
West Indian Federation (1958-1962)
CARIFTA (1968-1973)
CARICOM (1973 …)
OECS: Organisation of Eastern Caribbean
States (1981…)
CSME: 1989
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. Antigua
2. Barbados
3. Dominica
4. Grenada
5. Jamaica
6. Montserrat
7. St. Kitts/Nevis/Anguilla
8. St. Vincent
9. St. Lucia
10.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
VOCABULARY
1. REFERENDUM: a direct vote by the electorate of a country
on a single political issue
2. INTERVENTION: the action of coming between people or
things
3. FEDERATION: a group of states with a central government
but independence in internal affairs
4. COOPERATE: to work helpfully with another person or with
other people
5. 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 Federation
Well they want to know
why Jamaica run away
From the Federation
Jamaica have a right to
speak she mind
That is my opinion
And if you believe in
democracy
You’ll agree with me
Chorus:
But if they know they
didn’t want Federation
And they know they don’t
want to unite as one
Independence was at the
door
Why 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 fight
When Sir Grantley Adams
took up his post
That even made things worse
They bawling “We ain’t want
no Bajan Premier!”
“Trinidad can’t be capital for
a year!”
So the grumbling went on
and on
To 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 shame
After so much efforts and
energy
Goodbye everybody
Right now it’s only a
memory
We fail miserably
Some may say we
shouldn’t help part it
But Jamaica start it.
Chorus:
But if they know they
didn’t want Federation
And they know they don’t
want to unite as one
Just tell the doctor you not
in favour
Don’t behave like a blasted
traitor
How 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.
Chorus:
But if they know they
didn’t want Federation
And they know they don’t
want to unite as one
Just tell the doctor you not
in favour
Don’t behave like a blasted
traitor
How 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.
2.
3.
4.
5.
Guyana
Trinidad and Tobago
Barbados
St. Vincent
St. Lucia
* Grenada not a member
6. Belize
7. Dominica
8. Montserrat
9. Antigua
10. St. Kitts/ Nevis/
Anguilla
11. Jamaica
AIMS AND OBJECTIVES
1. TO ENCOURAGE FREE TRADE
2. 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
CARICOM
CARIBBEAN COMMUNITY AND
COMMON MARKET
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.
2.
3.
4.
5.
6.
7.
8.
Antigua
Bahamas
Barbados
Belize
Dominica
Grenada
Guyana
Haiti
9. Jamaica
10. Montserrat
11. St. Kitts/Nevis
12. St. Lucia
13. St. Vincent and the
Grenadines
14. Suriname
15. 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 NONMEMBER 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 POLICIES
1. 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 CARICOM
1. 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)
CDB
1. 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 CARICOM
1.
2.
3.
4.
5.
6.
7.
8.
9.
Creates more employment for CARICOM nationals
Goods imported from member states cost less
Greater unity and friendliness among member states
Assistance to members States in times of natural and
national disasters
Crime fighting through the Regional Security Service
Culture boosted through CARIFESTA
Regional cooperation in sporting activities enhances
the skills and talents of our sportsmen and women
Greater cooperation among member states through
the Caribbean Media Corporation
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 Economy
1. 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 intraregional 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:
• 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 (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
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 bodies
2. Follows up on issues from meetings
3. Initiates, organizes and conducts studies on issues
related to the achievement of CARICOM objectives
4. Provides services and technical assistance to
member states to achieve CARICOM objectives
5. Assists in the implementation of proposals and
programmes
6. 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
• 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
OBJECTIVES OF THE OECS AND CARICOM
1. Functional cooperation
2. Integration of the economies of the member
states
3. Harmonization of foreign policy
Objectives of the CARICOM Single
Market
1.
2.
3.
4.
Free movement of goods and services
Right of establishment
Free movement of capital
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.
• 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
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 Integration
1.
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 development
Different 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 industries
Territorial 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 resources
the 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.
Factors that Hinder Regional Integration
8.
Influence of MNCs / TNCs
TNCs 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 coverage
Insufficient information about CARICOM countries in newspapers, on radio and cable
television
Benefits of Regional Integration
1. Reduction in unemployment and underemployment
2. Better response to globalization and trade
liberalization
3. Improvement in the quality of life
4. Reduction in the inequality of wealth distribution
5. Free movement of goods, labour and capital
6. Increased market size
7. Improved levels of international competitiveness
8. Expansion of trade
9. Increased cooperation among member states
10. Increased chances of achieving sustainable
development
The Role of Individual Citizens
in the Integration Process
Entrepreneurship
Supporting regional producers
Showing solidarity and mutual support
towards regional fellow citizens
Investing in local and regional businesses
Being informed
The Role of Businesses in the
Integration Process
Improving competitiveness
Increasing range and quality of goods
and services
Providing opportunities for investment
and employment
The Role of Government in the
Integration Process
Enacting enabling legislation
Harmonizing policies
Honouring protocols
Educating citizens about the objectives
and benefits of integration
• 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
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