Saturday, January 21, 2006
Can Guyana benefit from a Caricom Single Market Economy?
As 2006 ushered in the Caricom Single Market Economy (CSME), the debate has centred on the readiness of national economies to move to the path of convergence for a sounder and viable regional economy. More than 40 years ago, the Carifta experiment proved fatal in terms of ambitions for a regional economic union. Of course, the political federation that preceded that also failed after four years in 1962. The question is, how can Guyana, which is considered a low to middle-income economy globally speaking, benefit from a regional market economy such as the CSME? What are the challenges and prospects, and what affect this new reality will be for various sectors of the economy? In 2002, Dr. David Lewis, Chief of Party Caribbean Policy Project, published a paper on preparations necessary to facilitate free trade in the Americas. He argued that Caricom should make rapid progress in deepening integration even while seeking to broaden membership of the Free Trade Area. Yet, it was this punch line by Dr. Lewis that reflected the gravity of a real economic convergence necessary to facilitate a dynamic regional market economy in the Caribbean. According to him, “Herein lies the importance of making progress towards the Caricom Single Market & Economy (CSM&E) as a foundation upon which to then enter into extra-regional Free Trade Agreements (FTA'S). Similarly, the regional private sector can only really contribute to such FTA negotiations when it has successfully been able to effectively negotiate an intra-regional CSM&E based on a set of private sector interests. To the degree that the regional private sector is able to engage the public sector and social partners in this process, both domestic/regional and extra-regional, then to that degree the role of the private sector in FTA negotiations will be important to Caribbean economic Development and integration.” The fact, is Guyana, like Trinidad and Tobago, Barbados and Jamaica, has been in the forefront of campaigning for a one-tier regional economy with national economies working towards a gradual conversion of currency, stocks and shares, traditional goods and services, as well as the wider commodities market sector. The drawback here, is that the narrower the economic base, the more difficult it is for developing economies such as Guyana, to benefit adequately from the CSME instrument. It was interesting to observe the cautionary note by Grenada on the timing of `joining’ the CSME. Her case is understandable judging from the recovery of Hurricane Ivan, which devastated more than 90 percent of that country’s infrastructure. It was the way Prime Minister Dr. Keith Mitchell put his country’s point over that made interesting reading. “While we are committed to the CSME we will not do so until sometime in 2006. We believe that this is necessary to allow us the time to finalise a number of outstanding legal matters, in addition to providing a much-needed window to complete our public education programme,” Mitchell said in a radio and television broadcast recently. Six member states have signalled their readiness to be part of the CSME, which will allow for the free movement of goods, services, capital and labour across the region. Guyana has been working with other Caricom states, to work out the modalities for a freer movement of people through the region. However, there are challenges for Guyana in her quest to be an active participant in a regional market economy, as there are prospects or opportunities. Challenges for the CSME Reading from the economic indicators so far, Guyana has enjoyed appreciable growth in agriculture, bauxite, rice and sugar, along with timber exports in the past five years, but this alone cannot guarantee economic stability, nationally. Guyana’s trade with Caricom neighbours is yet to reach levels of 30-40 percent - this is vital to generate greater confidence among national producers and a strong boost for consumer confidence. In the 1980s, Guyana, out of economic necessity, pursued a partial import replacement policy as rising cost of production for goods and services took their toll on the economy, allied to an ever-increasing foreign debt situation. The need to stimulate greater production in manufactured goods via the cottage industry and the traditional three-some (bauxite, rice and sugar) is vital if Guyana is to benefit from a Caricom Single Market Economy. The fluctuating Guyana Dollar remains a problem for the country’s Exchange Rate Mechanism, and while Guyanese benefit from attractive rates of exchange from foreign currencies, traded through formal and informal channels, the economy suffers since the return on traditional exports is not sustainable for real economic growth per capita. The need to strengthen national currencies is an acid test for Guyana and Jamaica, but more so, the former. Jamaica enjoys a relatively strong stock exchange change market and tourism has propelled economic growth on the island. The manufacturing sector in Guyana needs technology improvement in areas such as materials, equipment and information. Quality skills in technical supervision, project management and corporate leadership at the level of international corporate culture, are essential ingredients for a more vibrant private sector. Having a competitive advantage is a powerful instrument for Guyana to bargain in the regional trading space in her quest to improve market advantage both inter-regionally and extra-regionally. Negotiating her way though, will demand a high degree of sophistication borne of market intelligence and the cultural understanding such as language, values, customs and related social contexts of other Caribbean states. Another perceived challenge is that of political will. Would a lack of this strategic input place Guyana in a quandary? Can the country really challenge its collective might to achieve this objective? Can it use its history and present set of circumstances to be what is commonly described as the `Best of the Best’? Undoubtedly, the CSME will test Guyana’s pride in its ethnic and cultural mix, a somewhat great advantage if utilised effectively, and in the process, help shed its skin of the racial impurities that has dogged the Republic for nearly 50 years. Guyana has the ideological experience and political maturity to help shape a Caricom Single Market Economy, but all political parties will have to examine their own position in the wider context of a progressive agenda and this will be the real crunch. Interesting ProspectsFrom the above challenges, there seems to varying prospects in which Guyana can truly benefit from the CSME in 2006 and beyond. The current administration, along with the opposition and other political organizations, will need to institutionalize the importance of a CSME, showing its value to a future strong and vibrant economy. The importance of increased regional co-operation should also be stressed, since this will cement links with Guyana and her counterparts in the smaller Caricom or Eastern Caribbean states whose economies, though varied in type, can relatively converge because of the ties that has been fostered by the OECS since 1981. Guyana stands to benefit from a regional single market by maximising production in goods and services, as well its overall commodities market. Through bilateral ventures – commercially and industrially – this aim could be realised. Twin energy projects involving Guyana and Trinidad are possible, and so are similar projects involving Barbados and Jamaica in the area of tourism, even tough eco-tourism for Guyana, may have greater economic and financial spin-offs than cruiser-line tourism for instance. Other joint ventures with Eastern Caribbean states such as the Bahamas, the Virgin Islands and St. Croix in the area of stock market (exchange) support, among other financial sector ventures, are equally crucial, as Guyana endeavours to have an impact on the opportunities afforded by the CSME. The prospect of a greater social benefit should not be ruled out. As a multi-racial country, Guyana has blended a range of cultures with the history of various civilisations the world over. This can be shared and commercialised in the form of national and regional artistic and cultural events such as Carifesta and possibly an extra-regional extravaganza, linking the cultures of the Americas where similarities and differences reside alongside each other. The fusion of culture and sports can create innumerable economic benefits and other trade-offs for Guyana and her Caribbean counterparts. Since the CSME is not only about economics, but is also about the social value system of each nation-state in the Caribbean and its role in the modern world, Guyana’s best chance of benefiting from this machinery, will hinge on its desire to fix what needs fixing and open the floodgates of opportunity so that the nation can not only see sparks of regionalisation, but also breathe the fire of true globalisation, with a healing effect of course! Next time, I will examine the role of the private sector in the Free Trade of the Americas (FTA) from a Guyana-Caribbean perspective.
(The author is a Guyanese- Caribbean business management consultant who is currently writing the first ever history of British-based Caribbean businesses. He has been campaigning for Caribbean communities overseas to be actively involved and engaged in the various mechanisms behind the creation of a Caricom Single Market Economy (CSME) Email: firstname.lastname@example.org or http://guycaribbean.blogspot.com and click on The Equivalent to see more features by this author)