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Caribbean Community Regional Aid For Trade Strategy 2013–2015
The ever evolving, intensely competitive and crisis-ridden global economy has compelled the Member States of the Caribbean Community (CARICOM) to take a hard look at how they can achieve a safe, viable, prosperous and above all sustainable and resilient path to development.
The Caribbean Community (CARICOM) Regional Aid for Trade Strategy is a tool for harnessing consensus between CARICOM Member States and its Secretariat on the priorities for ensuring a growing, more diversified regional economy. Once completed, the ultimate goal of the Strategy is to outline a coherent approach to resource mobilisation, one that sends a strong signal to donors, investors, and international development partners that the region has a clear sense of how it can best utilise existing and future resources.
Despite regional efforts to deepen integration through the CARICOM Single Market and Economy and strengthen trade relations with existing and non-traditional partners, the Region’s competitiveness remains constrained by poor infrastructure and connectivity, weak institutions, undiversified export markets, and low private sector innovation. According to a recent study, CARICOM is operating on average 46 percent below its trade potential. In addition, intra-regional trade in the Caribbean is relatively low, at 13 percent of total trade, increasing to just over 20 percent if exports to Latin America are included.
CARICOM’s ability to meet its trade potential and coherently redress these capacity constraints has invariably been limited by the lack of financial resources, particularly since many Member States are carrying debt-to-GDP ratios in excess of 100 percent and have economies that are struggling to recover from the spill-over effects of the 2008 global economic and financial crisis. Increasing trade and investment through collaboration can raise potential GDP, thereby lowering debt-to-GDP ratios, and help realise economies of scale. More broadly, the expansion of the Panama Canal will change the global trade landscape as larger ships will displace smaller ones and new shipping routes and patterns will emerge. The Caribbean needs to re-position itself in this new economic geography.
With a view towards capturing a share of new, dynamic sources of demand, the Twenty-Seventh Meeting of the CARICOM Council for Trade and Economic Development held on 14-15 May 2009 mandated that “as a matter of urgency, the Region should craft a Caribbean Aid for Trade Strategy, which includes a holistic and comprehensive approach towards competitiveness, adjustment and trade development.”
The resulting goals and priorities identified in the Regional Strategy are the product of extensive stakeholder consultations, across public and private sectors, civil society, and non-governmental organizations within CARICOM. While CARICOM Heads of Government clearly identified Maritime Transport and Information and Communication Technology (ICT) as the two key areas for the development of transformational Aid for Trade project proposals, the goals and priorities in this Strategy were also guided by emerging areas of consensus from the broad-based national consultations and the results of the analyses undertaken.
CARICOM Member States agree that to increase their competitiveness, reduce inefficiencies and deepen global and regional economic integration, three (3) strategic goals would guide the development of remedial programs and projects: (i) Upgrading Key Economic Infrastructure; (ii) Enhancing Competitiveness and Facilitating Trade Expansion and Diversification; and (iii) Deepening Regional Integration and Maximising the Gains from External Trade Agreements.
In order to achieve these goals, the Strategy proposes remedial activities in the following key areas: (1) Goal 1: Maritime Transport, ICT and Energy; (2) Goal 2: Trade Facilitation, Sanitary and Phytosanitary Measures, Quality Infrastructure, Services and Private Sector Development and; (3) Goal 3: Strengthening regional integration and the capacity of regional institutions; increasing transparency and reliability of Aid for Trade flows; increasing negotiation and implementation of trade agreements; and increasing knowledge of the impact of trade liberalization. These areas were chosen because the needs expressed and validated by Member States are considered the most critical for realising the goals set out in the Strategy.
Stakeholders identified remedial activities which were: 1) regional serving a regional objective; 2) national serving a regional objective; and 3) national serving a national objective. The activities range from legal drafting and training to information technology software and infrastructure investment, thereby providing a menu of options for donors, investors, and development partners. Further, these activities necessitate different types of investments, whether it be through sovereign or non-sovereign lending, public-private partnerships, or grants.
Importantly, the Strategy highlights five anchor projects for early harvest. These relatively large, ‘bankable’ and implementable projects in the areas of Maritime Transport, ICT, Energy and Private Sector Development, respond to both the mandate set by the Heads and the consensus by Member States.
In order to ensure successful implementation of the Strategy at the regional and national level, the Council for Trade and Economic Development will provide oversight and responsibility for providing policy guidance for implementation of the Strategy. The CARICOM Secretariat, in collaboration with the OECS Secretariat, the Caribbean Export Development Agency and the Caribbean Development Bank, would be charged with implementing and monitoring at the project and activity level.
While the Caribbean Community Aid for Trade Strategy reflects the current priorities identified by Heads of Government and Member States, the Strategy will be periodically updated to reflect new mandates, points of intervention and the changing trade landscape. The dialogue between international development partners, investors, and the region is constantly evolving; the Strategy is a dynamic document.