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Tuesday, December 23, 2008

We want more CSME...perhaps!!

I wrote an article on the EPA (European Partnership Agreement) with the ACP (African, Caribbean and Pacific) countries, shortly before the Christmas and it was in response to some questions, a colleague of mine posed in regards to the possible impact on the Caribbean countries. In fact, her letter was asking about the CSME (Caribbean Single Market and Economy) as well. Also, she wanted to know what about her country, the Bahamas?

Well, while I won't narrow the view to one particular country--it wouldn't be fair-- I can, however, discuss the merits of the CSME as a response to the second half of her queries, about my outlook on international trade issues.

We want more CSME!! (maybe)

As short as an answer as I can give her, which would explain in no fuzzy language, about my desire for a functioning CSME throughout the entire Caribbean--inclusive of Cuba, Venezuela and the Netherlands Antilles (the latter, should have joined, despite their sovereign dependency) and truly, my guarded optimism for a fully functioning market for the future---way, WAY, into the future I'm afraid.

I guess one must be thinking, Cuba, Venezuela and NA!?!?! You must be thinking of oil and the capacity to produce energy? Certainly. Energy producing countries, have a very valuable commodity (obviously). Securing energy, in any way shape or form, should be a priority of any government, or, in this case, region. Affordable and sustainable energy, should be top priority for any country. In addition to affordable energy, oil producing countries, produce oil worker's and bi-products of oil, with a pecuniary economy that aids and complements it. This means that they, on average--as with most functioning natural resources countries that are not afflicted by dictatorships and rogue governments-- spending on the economy is constant, due to the demand of product. Basically, it's as stable as the civil service.

This means, by any average stretch of the imagination, subsidizing production, during a rough market period for their commodity and because of their rational self interest to keep high production going. The loss of their base for other services or trade related activity, will not be hit with sharp declines, compared to other countries that have no natural resources or commodities of distinguishable and preferential status. While at some points, oil would come at a greater cost, due to subsidization, but, an agreement for affordable energy, does not, or, should not exclude any country from seeking cheaper energy from elsewhere--at least, I would hope not.

So, yes, let Venezuela, Cuba and NA join as of today. While there are implications for two of the Spanish speaking countries, the obvious fact is that one of them, is a huge trading partner with the US. And, the other, while it is not an oil producing country, should have never have been left out of our consideration as a Caribbean country, to whom we should be involved with in the first place.

If we all stand together and move together, as well as support the region totally, we can get out from under the thumb of political regional activists, who are hell bent on keeping things status quo. In fact, I feel democracy and freer markets, can be aided with consistent cooperation overall. Any embargo, endangers the likelihood of the seeds of democracy, to take root under the impression of free markets. There will simply be no exchange of best practices and current practice, will be accepted as the norm. While we must be cognizant of reinforcing the wrong type of behaviour, not getting in and expressing the right types of behavior at any point and time, leaves us with keeping that behaviour normal and people, adjust to the normality to which many feel as abnormal.

Without the existence of an alternative, the status quo is kept constant.

But, back to the base of this article. The total reasoning behind my position, now, however, is not for the affinity for a unified Caribbean economy--even though it is an added plus. In fact, the simplicity of that position is an expected output--not that we in the Caribbean would ever be fully coordinated as the EU and ASEAN countries "are", relatively speaking. But, it would create certain opportunities to grow our potential in the region, through shared experiences and solidifying best practice measures for the Caribbean, which may be more user friendly--so to speak!

Let's face it; we in the Caribbean, are drowning in a cesspool of stagnation and lack of sensitive, fast tracked development, which has been exacerbated by our conservatism, acting in the parameters of an outdated economic model, which does, at best, serve the few and not responsive to the many. We need opportunities for the many--as inverse as it sounds. Democracy in the region, can almost be called pseudo-democracy. Not that the CSME will export democracy by any stretch of the imagination. But, it will combat the pervasiveness of these realities and strengthen the pool of resources, based on similar experiences and Caribbean attitudes towards doing business, which we, as a people, worked on the fringes of (at minimal successes for comprehensive progress) to try to at least cope with the realities of the current global framework, which we are in--and in fact, a framework which is failing at the present time.

But, onto the nuts and bolts of this article...

Aside from my personal pledge to- through my writing and expertise- nudge more thinkers into thinking CSME like, there are, unfortunately, only minimal short term benefits for the major players and marginal losses, for the free-riders and no guaranteed short term winners, for the mid-range players. But, for the overall long term, there can be better prices and greater purchasing power, en masse, for average consumers in the region, if worked correctly, can cut out third and fourth party export partners--like the US and the EU-- and build a regional trade structure of our own, for our benefit and our sole purpose. It won't be easy, but it would be optimal.

Who are the major players in the CSME?

As it stands now, Trinidad and Jamaica. Trinidad, moreso than Jamaica. In fact, Jamaica is considered a key player, in more of a beneficiary capacity, exporting their voluminous population of varying levels of skilled labour, to various parts of the Caribbean. It almost seems to be a downsizing attempt of the Jamaican economy. Also, the stabilization and the bringing the Jamaican economy, on par per value of most other Caribbean states, with greater economic solvency, would be a desirable knock on effect for Jamaica.

Trinidad, on the other hand, has oil it would like to export, on a sustained and arbitrarily qualified basis. The CSME provides for that and provides for enhanced discussions on the facilitation of that export, on those facts. With no agreement to preferential treatment, Trinidad is left with its head in its hand, depending on the mercy of the folks who are supposed to be supporting the market functioning of an integrated Caribbean economy--the CARICOM member states. Not that Trinidad can't do without, but, it would do better with a concentrated and attentive, growing, Caribbean market. They can't lose.

As for a statistical database for the CARICOM and with particular relevance to the CSME, the trade growth on key data, are non existent. The need to show folks and businesses actionable, comparative trend flows of growth and strength in partners, is critical to making the CSME work faster. While we would have to depend on individual member states for the information on their trade partners from their relevant statistical agencies, there is enough possibilities to go on despite the lack of that centralized framework. It's about time, I feel, the region graduated from ad-hoc regional policies and work harder in shaping demand.

Another big issue, is the free-movement of labour. Xenophobia is a key concern, but, truthfully, who would want an influx of foreigners into their jurisdictions? Also, an influx of, possibly, lower skilled migrants? I don't know how lower skilled migrants do it. They have the least money, per average, yet, they are the highest number of migrants per average. Where do they get the money? It's a conundrum to be dealt with at another time. With that, we don't even have a naturalized visa for the region, let alone relaxed standards on leisure travel. That in itself is an issue to be worked on, before we are talked into accepting immigrants, like the Mariel boat lift.

Lastly, the single currency is a non-starter-- at this present time. It would be better if we concentrated on facilitating, free and cheaper trade in goods, rather than a single currency at this time. Not that it is not an option to be discussed, ever. But, it is not in sync with a proper development plan, which would be optimal and progressive, considering the factors which must come with any sort of economic union. The EU is grappling with the same issues with their rules and regulations of acceptance into the Euro-zone, where the rules are not in realistic favour with the countries, looking for accession to the union.

But, for the Caribbean single currency, now, the way I see it, it would not be superior to the pegged exchange rates to the US dollar individually. Integrating into a single currency, is a mammoth undertaking which, I am afraid, would be an undertaking that would have no formal, positive impact on quality of life. While it may make regional and international trade, more favourable and easier. The actuality that it would devalue the way of life for many, with the Caribbean being a strong international player that can affect global outcomes, is a risk not to be taken with the single currency by any country that enjoys the current, best choice option of a fixed exchange with the EU or the US dollar, respectively.

Currently, the OECS currency, is typical example of a currency, with well thought out integrative intentions, but little or no value to the currency, as it stands now. It has less comparative value than that of the Bahamian or Cayman dollar, because its participants have little or no economic 'commodifying' value to underpin the currency. There has been little or no solidification of a strengthened market, yet, to give it that kind of clout as a currency of 'tradeable' value on the foreign exchange market. While a single currency should, in theory, reduce cost in trade--the fact of the matter is, what "will" you trade, if you have a weak base to begin with?

Why should any country that enjoys a more valuable exchange rate, give that up for a lower denominated currency at the onset, where gains are projected in the future, with no relevant power to base current projections on, with still no realistic expectations to base growth on down the line?

In these stream of thoughts on that possible action and outcome, individually, we are strong. To reiterate, binding us to a single currency, is a move that has no value for individual countries with more to lose, with no sight of a gain--especially when major commodity and manufacturing countries, like the three countries mentioned as possible additions to the CSME, are left out of the picture due to non economic reasons.

While I dream one day of the Caribbean region, being a solely cohesive unit--because, really, and truly, we are all one. I don't see the full gambit of the CSME in my lifetime, although considerable gains are possible right now, which would change my thinking on the entire matter--the political will, however, is not as progressive and aggressive as this author's.

Not that we would not or will not try, but the realities of the world that is around us, limits that approach and scope of the relevant power of such a grand Caribbean coalition of the willing.
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