bs_bs_banner Asia & the Pacific Policy Studies, vol. 2, no. 1, pp. 183–196 doi: 10.1002/app5.65 Policy Forum Article Caribbean Integration—Lessons for the Pacific? Robert Warner and Marlon Anatol* Abstract 1. Introduction The members of the Pacific Islands Forum In October 2013, the leaders of the Pacific have recently considered a quite critical Islands Forum received the report of a compre- review of the Pacific Plan for strengthening hensive review of the Pacific Plan for regional regional cooperation and integration. The cooperation and integration, which was Caribbean Community (CARICOM), another intended to be the master strategy for driving grouping encompassing a number of small Pacific regionalism. The review concludes that island developing states, has also been con- the regional project has stalled, and that con- templating highly critical assessments of the fidence in the Plan and its processes has ‘fallen nature of its approach to regionalism, and of to the point where the survival of the Plan itself the institutions that have been put in place to is in doubt’ (Pacific Plan Review 2013, p. 82). give effect to this approach. Are there lessons It argues for a paradigm shift in how regional for the Pacific from the Caribbean experience? integration and cooperation in the Pacific is This article looks at aspects of the approaches perceived and presented, along with compre- to regionalism and economic integration hensive reforms to the processes and structures adopted in the Caribbean, and considers par- that support implementation of the plan. allels with the situation in the Pacific. It sug- The diagnosis of the review is remarkably gests that the CARICOM experience puts similar to that of a recent assessment of the into question elements of the logic and overall regional integration project being pursued by approach to integration being pursued in the members of the Caribbean Community both regions (and being urged by external (CARICOM) (Stoneman et al. 2012). That partners). assessment pointed to frustration with a slow rate of progress and a serious weakening of Key words: Caribbean, Pacific, regional the structure and operations of the Community. integration, regional cooperation, trade Are there lessons for the Pacific from the agreements experiences of CARICOM, and how the Com- munity addressed its member states’ aspira- tions for regionalism? 2. The Caribbean Community * Warner: Crawford School of Public Policy, Aus- tralian National University, Canberra Australian CARICOM comprises 12 island and three Capital Territory 0200, Australia; Anatol: Anatol larger coastal states and territories that lie in or Institute of Research and Social Sciences, Port of border the Caribbean Sea (Figure 1). Although Spain, Trinidad and Tobago. Corresponding author: many CARICOM members share cultural and Warner, emailϽ[email protected]Ͼ. historical similarities, there is considerable © 2014 The Authors. Asia and the Pacific Policy Studies published by Crawford School of Public Policy at The Australian National University and Wiley Publishing Asia Pty Ltd. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes. 184 Asia & the Pacific Policy Studies January 2015 Figure 1 The Members of CARICOM Source: Olson and Roberts, 2012. diversity among them, reflecting a range of nental land masses. They are very open to African, Asian, European, and native influ- international trade and financial flows, and this ences. There are also differences in population, openness makes them more exposed to exter- land area and levels of economic development. nal shocks than larger economies, and limits CARICOM includes high and middle income the instruments available to deal with these countries with significant oil, gas and mineral shocks.1 resources or well-developed offshore banking Small populations and small domestic sectors, as well as some of the poorest coun- markets also mean that these states struggle to tries in the world, largely dependent on subsis- achieve economies of scale: many services, tence farming. It also includes some such as transport, energy and water supply are continental countries with relatively large land relatively high cost, exacerbating the chal- masses, as well as extremely small island lenges of isolation in supplying export states and territories. Table 1 gives a sense of markets. Small market size may also mean that the variation in size and wealth across CARICOM states and territories. It also shows 1. In a paper on the development challenges facing small how important trade in goods and services is to open economies, Chand argues that openness, together the economies of most CARICOM member with the use of fixed exchanges rates to reduce the vola- states. tility of domestic currencies given thin domestic financial markets, limits the effectiveness of monetary policy so The island members of CARICOM face governments are obliged to rely on fiscal policy as the some of the challenges usually associated with major tool for economic management and addressing the smallness and physical separation from conti- effects of external shocks (Chand 2004). © 2014 The Authors. Asia and the Pacific Policy Studies published by Crawford School of Public Policy at The Australian National University and Wiley Publishing Asia Pty Ltd Warner and Anatol: Lessons for the Pacific 185 Table 1 CARICOM Members—Key Indicators Population Population Per capita Trade share (2011) Area density GDP (2011)a GDP (2011)b of GDPc ‘000 Sq km No/Sq km US$ million US$ % Antigua and Barbuda 89.0 443 201 1,187 18,200 115.7 Bahamas 316.1 13,880 23 8,074 31,400 113.4 Barbados 287.7 430 669 4,478 23,700 125.2 Belize 327.7 22,966 14 1,474 8,400 132.1 Dominica 73.1 751 97 489 14,000 103.9 Grenada 109.0 344 317 822 14,100 83.5 Guyana 741.9 214,969 3 2,480 7,600 170.7 Haiti 9,801.7 27,750 353 7,388 1,300 58.1 Jamaica 2,889.2 10,991 263 14,810 9,100 88.0 Montserrat 5.2 102 51 na 8,500 na St Kitts and Nevis 50.7 261 194 715 15,800 103.9 St Lucia 162.2 616 263 1,239 12,800 118.3 St Vincent and the 103.5 389 266 695 11,600 105.5 Grenadines Suriname 560.2 163,820 3 3,790 9,600 76.3 Trinidad and Tobago 1,226.3 5,128 239 22,710 20,300 107.8 Notes: (a) Using official exchange rates (b) In purchasing power parity terms. (c) Imports and exports of goods and non-factor services as a share of GDP, for the latest available year. GDP, Gross Domestic product; na, not available. Source: CIA 2012, World Bank, 2012. some sectors are prone to monopolisation by a While exploitation of proximity to large single supplier. This can pose regulatory chal- markets and of the region’s natural resource lenges, especially when the supplier is a state- endowments has underpinned significant owned enterprise. increases in national incomes and standards Small populations also increase the chal- of living for some states, all countries face the lenges of building and maintaining institu- hard-to-mitigate risks of exposure to a narrow tions, particularly those whose functionality set of commodity and service markets. The is predicated on independence. This is an Global Financial Crisis (GFC) demonst- issue both in terms of the smaller pool of rated the full extent of these risks. Tourism, a qualified personnel to run the full range of major foreign exchange earner and source of institutions of a modern state, but also due employment for many Caribbean economies,2 to the greater difficulties encountered in sepa- has contracted sharply during the crisis, and rating political, personal and institutional has been slow to recover, given that the interests. Caribbean’s main markets for tourism are in While Caribbean states share these con- North America and Europe. Commodity pro- straints, they are much less affected by frag- ducers (such as Jamaica—bauxite and mentation and isolation than the Pacific alumina, Trinidad and Tobago—oil and gas) Islands. As Figure 2 shows, the member states also faced a shorter lived but quite severe drop of CARICOM are much closer to each other in income as demand and prices fell at the than the 14 developing country members of the onset of the crisis. The prognoses are that Pacific Island Forum: and they are on average much closer to a major metropolitan city. CARICOM members are also close to large 2. Tourism accounted for over 20 per cent of GDP for nine developing country market. CARICOM members in 2008 (Tsikata et al. 2009). © 2014 The Authors. Asia and the Pacific Policy Studies published by Crawford School of Public Policy at The Australian National University and Wiley Publishing Asia Pty Ltd 186 Asia & the Pacific Policy Studies January 2015 Figure 2 Characteristics of CARICOM Trade CARICOM, Caribbean Community; GDP, Gross Domestic Product (a) Trade as share of GDP AnƟgua and Barbuda Bahamas Barbados Belize Dominica Grenada Guyana HaiƟ Jamaica St KiƩs and Nevis St Lucia St. Vincent and the Grenadines Suriname Trinidad and Tobago CARICOM 0 50 100150 200 (b) Intra-regional trade AnƟgua and Barbuda Barbados Belize Dominica Grenada Guyana Jamaica Montserrat St KiƩs and Nevis St Lucia St. Vincent and the Grenadines Suriname Trinidad and Tobago CARICOM 0 20 40 60 80 Exports to region/total exports Imports from region/total imports Note: Trade share of GDP calculated using exports and imports of goods and factor services as share of GDP for latest available year, intraregional trade ratios calculated using merchandise export and import data for 2010.