Martínez-Piva, Trade obstacles in the Greater Caribbean

Trade liberalization in the Greater Caribbean has translated into a renewed effort to deepen existing ties at all levels in the framework of both multilateral and regional schemes and also in the bilateral sphere.

Many of these efforts have gone hand in hand with the signing of trade agreements among countries, as is the case of the agreements between Central America and the Dominican Republic and between CARICOM and Costa Rica, to name a few. With the tightening of relations, gaps to be bridged have become evident and the need has been confirmed for formal liberalization to be accompanied by efforts toward facilitating business, measures aimed at reducing high transaction costs such as: improving logistic planning and transportation costs, providing knowledge on customs processes and their flexibility, addressing the difficulties of participation of small companies, as well as resolving the lack of information and knowledge on markets and among entrepreneurs themselves.

In a study prepared for the Association of Caribbean States (ACS) and presented in early October during the 14th Meeting of the Committee on Trade, these areas were identified as some of the obstacles to trade that persist in the intra-regional sphere.

In addition, the document reveals other troubling realities, on one hand, the persistence of the anti-export bias in our economies. The conditions in the country of origin, facilities to transport and to move goods, among others, favor import over export activities. This couples with the high import tendency of our economies, borne out of the attributes of consumption in the region, as well as the high import content of our products, to weaken our trade solvency. On the other hand, the exporters of the Greater Caribbean encounter greater difficulties when sending their products to other developing countries than to developed markets. In other words, it is more difficult to trade with our own neighbors. The study draws these conclusions having taken into account tariff levels, aspects associated with sanitary requirements and services available for managing goods in destination markets.

Another element that should be underscored is the fact that there is much work to be done in order to achieve greater rapprochement among the entrepreneurs of the Greater Caribbean. As a matter of fact, the study confirms the conclusions of a similar document prepared by the ACS in 1999 --- one of the major restrictions for regional trade is mutual ignorance among entrepreneurs, as well as the lack of knowledge on different business environments.

Overcoming these obstacles to regional trade would open up additional avenues for growth to regional entrepreneurs, thus allowing them to lean on neighboring markets in order to explore new and greater business opportunities, markets which, in the Greater Caribbean as a whole, represent a trade value of US$600 billion and whose full potential is yet to be explored. Today, ACS countries trade among themselves only 8% of their total trade. This warrants further consideration as a complementary element to the major liberalization initiatives such as the FTAA and the WTO, particularly in light of the uncertainty with respect to the duration of these negotiating processes and the benefits that would be derived from them.

Some ACS activities point in this direction, as is the case with the Business Forum of the Greater Caribbean, which, for four consecutive years has played a fundamental role in increasing contacts among the business people of the region. The implementation of a program to facilitate customs procedures, which promises to serve as a key support for regional trade, as well as other innovative initiatives like the creation of a Virtual Market of the Greater Caribbean, through which a trade forum would be established on the Internet and which could accomplish several objectives simultaneously: (a) provide knowledge on the Greater Caribbean market and among its business community, which promotes regional trade; (b) provide a mechanism for accessing technologies and with it, bridge the gap that separates us from the markets of developed countries; and, (c) reduce the difficulties encountered by its exporters, especially the small and medium companies.

Taking advantage of the opportunities presented by liberalization calls for the best application of official and private capabilities, in order to negotiate and to create bridges that enable us to overcome the gaps that formal liberalization is unable to close. This would require concerted efforts between the private and public sectors, as well as support for regional institutionality.

Juan Carlos Martínez-Piva is Trade Advisor of the Association of Caribbean States. The views expressed are not necessarily the official views of the ACS. Feedback can be sent to mail@acs- aec.org

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Obstacles to trade in the Greater Caribbean