By Kimberly Ramkhalawan
June 4, 2021
Coming on the heels of a Pandemic which continues to ravage the region despite a rollout of vaccines and attempts to get the economic ball rolling, is the latest CARICOM Commission on the Economy’s 47-page report.
The document which is said to be set apart from reports done by previous commissioners is described to not only be the shortest report ever done, but contains the answers to a ‘people centered CARICOM economy’.
The Central Bank of Barbados sought to explore the details of the report put forward by Professor Avinash Persaud, and Dr David King during its June edition of its Caribbean Economic Forum series.
Dubbed the ‘Caribbean 9.58’, which gives nod to Jamaican Sprinter Usain Bolt’s record-breaking time on the track, pushes the theme of getting regional governments and private sector firms to act quickly in taking steps that would aid in integration not only regionally but economically.
In his opening comments, Professor Persaud says while numerous reports have been done in the past, key to making this report stand out among the rest was to dive into why recommendations were ignored and examine what were the ‘impediments to progress’.
Listing three key things they found that needed debunking at a regional level included the notion that everything done in the region needed to be achieved in cohesion. Persaud instead suggested decision making changes be done at a subsidiarity level, limiting the number of things Caribbean nations do regionally and focus on the big-ticket items that required collective cooperation, such as creating regional markets, dealing with our international finance and trade relations and education.
He added that the idea that Caribbean economies were constantly squabbling with each other and never agreed was untrue, as in reality while there was a great deal of agreement, just not always in unanimity. He says many things get stuck at the CARICOM level, not because no one agreed, but that at a national level, political will might be obstructed by policy reform support, and duration in office. For this, he says they have put forward a notion called ‘Enhanced Cooperation’ which suggests that if a minimum of five countries agree to progress in a particular way, and the remainder of nations that disagree, the five that have signed on, their progress will not be negatively impacted by those who fail to join in the move forward. He says this move of subsidiarity gives focus, while enhanced cooperation allows member states to be unstuck and move ahead.
Another notion they said prevented CARICOM nations moving forward, was the argument of financial contributions. To this, the commissioners said they found that there might be four to five big area items that while don’t require money, will make a huge difference in the way we move as a region.
To this, Dr. Damien King says the report frames these things in way that removes all the obstacles and what ought to be the key actions, which he adds all boils down to looking at the free movement of people and goods.
He says ‘the difficulty of increasing trade in the Caribbean has not only been the artificial obstacles nations have put in place such as tariffs, but also includes the geography of small island states with small populations separated by sea’.
Dr. King suggests putting in place private sector investment into a fast ferry system, which would reduce the cost of transportation, while getting the regulatory changes in each participating island to take advantage of cooperation and accessing neighbouring islands in a fairly efficient manner.
As for the movement of labour, he says the CSME process has proven to be difficult bureaucratically. He says by lowering the skills requirement to just two CXCs and making it automatic once it can be proven electronically, such as a certificate on your device or something embedded in the passport, works to eliminate the bureaucratic process beyond that, making persons hirable almost immediately. And before anyone thinks their job might be at risk, Dr King assured this is making it fairly easy for those that do move around within the region for labour, a percentage he says remains minimal.
The report also looks at overcoming financial integration by focusing on regional financial certification, something Dr. King says can be best solved regionally. Presently, each financial institution within all CARICOM states, has to go through the same process of becoming certified and compliant to anti-money laundering and combating terrorism financing. He says this is proof that while each of these entities are able to duplicate their services, integrating this sector can be done at a regional level.
Also in the discussion was Dr. Jan Yves Remy, Deputy Director at the Shridath Ramphal Centre for International Trade Law, Policy and Services. And while not an economist herself, or a commissioner on the report, her role was to provide an external perspective on the report, one she describes as being people centered as it targets the private sector as a main player on coming on board and critical to an economically integrated region. Dr Remy says it is change that can be felt by the people once activated.
Professor Persaud says this change has already begun to take shape as telecommunication companies in the region will meet as early as the second week in June this year to discuss lowering roaming costs in the Caribbean, where there can be a flat data cost for any Caribbean citizen moving around region, or no data charge and they pay as if they were in their own country.
This he says this is necessary if digitization is to truly be part of the agenda, as for it to be fully effective, people must be able to enjoy the benefits of a digital connection, and access proper data communications.
Meanwhile, he added that drafts were currently being made as to what subsidiarity and enhanced cooperation means to be presented at a CARICOM heads of government meeting later this year, while discussions of a fast ferry moving among several small countries have already commenced which aims at allowing Caribbean nationals to move into neighbouring islands with their vehicles for at least a week.
But where is the money and investor confidence going to come from after economies have endured so much already during the COVID-19 Pandemic? Dr King says current spending on transport services has already been in a deficit to regional companies, while also being less efficient. He believes many investors are looking to cut their expenditure on transport and shipping will be looking at these avenues to aid them.
He says to solve regulatory issues, means to solve the income streams to invest in the fast ferry. Professor Persaud chiming in on trade movement in the region, said that apart from being people centered, there was a need to be cargo centric, as for too long travel in the region has been costly, making it one of the most expensive areas to move around in the world. Persaud sees the fast ferry being the panacea to this, as it reduces the cost to US$35. Dr King adds that by cutting this cost means reducing the price of food in the region, as well as manufacturing, and also eliminating the time it takes to fill a 40-foot container, the usual size often required for making shipments in the region, as things can now move on a much smaller scale.
As to whether this will create a demise for upcoming airlines and existing carriers in the region, Professor Persaud says this actually works at complementing one another, as seen happen between the inter-island route of Port of Spain, Trinidad and Scarborough, Tobago, when a ferry was introduced. He says this has often generated a greater demand for the service, as more activities are created between islands.
For Dr Remy, the report has very little focus on the health of its people as a region, something she says needed greater focus as it continues its battle against the spread of Non communicable diseases such as diabetes and hypertension.
In response to this, both commissioners, Dr King and Professor Persaud says intervention can be more effective at a national level, with support from the wider region if it is to be combatted.
While the report champions how mobility is sped up in the Caribbean, other things related to it includes leading in Climate change. Persaud says ‘the region lies at the frontline of the war at climate change and there is an urgent need to invest in resilience’. He says while this includes infrastructure such as roads and bridges, it also refers to resilience of livelihoods and people, healthcare and education systems.
As Commissioner of the report, Persaud says in the end, the key to the new economy the region intends on moving toward, the digital economy, is operating internationally and the position the region has on the global chain. His fears is if the Caribbean fails to do nothing, when the rest of the world is moving, regional wages will continue to fall. He says CARICOM must ensure its people are able to command higher incomes because of their skillsets in demand, their, certification as well as experience based around a regional market they share at home.