Ar8gua and Bartwda 4 Aruba •tamalea # UN EC IAC/CDCC & Monttanw Nalhartanda Ardias PtiartD Rleo Br.Vbgbi Wanda 8aM KMt and Navfa Cuba Sldnl Luda.: ivVtawilnd : .Cbanadna*: rtapww}ftASwAMfa ■' * ^> *"«• * wvm * Vbsfn Wand* ^ ** ’•flf"» *■*»» "TUI ¡ / 5r, -Ld ■■ - ■ ; .-..líí.-wkiv w -*"V ^ "" / ~ tjr - v ~ .JL>’ts GENERAL LC/CAR/G.478 IMay 1996 ORIGINAL. ENGLISH INTRA-ACS TRADE: An overview of CDCC trade with nott-CDCC groupings UNITED NATIONS ECONOMIC COMMISSION FOR LATIN AMERICA AND THE CARIBBEAN J Subregional Headquarters for foe Caribbean ^ CARIBBEAN DEVELOPMENT AND COOPERATION COMMITTEE TABLE OF CONTENTS EXECUTIVE SUMMARY...................................................................................................................i Introduction ......................................... 1 I. TRADE BETWEEN CDCC COUNTRIES AND CENTRAL AMERICAN COUNTRIES .................................................. 3 II. TRADE BETWEEN CDCC AND THE GROUP OF THREE ........................................... 7 III. TRADE BETWEEN CENTRAL AMERICA AND THE GROUP OF THREE , : ; 12 IV. STRUCTURE OF INTRA-ACS TRADE ....................................................... .16 V. SOME ASPECTS OF ACS MEMBERS’ TRADE POLICIES AND OTHER FACTORS AFFECTING INTRA-ACS TRADE ................................................................................... 18 CONCLUSIONS AND POLICY PROPOSALS .............................................. 21 EXECUTIVE SUMMARY The objective of this paper is to present apreliminary and partial review of the patterns of trade in goods among the member countries of the Association of Caribbean States (ACS) using the available data. In undertaking this exercise, the paper examines only trade flows between the various cooperation and integration groupings whose members are all members of the ACS, namely the Caribbean Development and Cooperation Committee (CDCC), the Central American Common Market (C ACM) and The Group of Three. The paper also examines the trade policies and other factors affecting intra-ACS trade, draws some conclusions and makes some policy proposals which may assist in the promotion of intra-ACS trade. The trade flows between some ACS member countries increased in 1994. The implementation of the conclurions of the Uruguay Round of trade talks, the continuation of the trade liberalization process inside the several integration arrangements, the unilateral trade liberalization policies of many ACS countries and the recovery in the world economy are some of the main factors which have contributed to these increases in trade, which seem to be a long-term, sustainable trend. ACS countries’ trade takes place mainly with developed countries. Intra-ACS trade is generally of reduced importance and is concentrated among a few countries and in a few products. Despite their geographical proximity, these countries do not have any strong traditional trading relations and most of its members belong to other integration groupings whose members are not all members of the Association. In addition, members of the Association are parties to vari ous bilateral and multilateral trade agreements with both members and non-members of the Association, which may harm the total of intra-ACS trade. Exports of the CDCC member countries to Central America, a very low proportion of their total exports, decreased substantially from 1990 to 1994, and were mainly from the Netherlands Antilles and Trinidad and Tobago. The destination of these exports was mainly Panama, with some exports going to Costa Rica and Honduras. Central American exports to CDCC countries, also an almost residual part of their exports, but nevertheless a figure that increased substantially during the same period, originated mainly from Costa Rica and Guatemala and their main destinations were the Dominican Republic and Jamaica, but some went to the Netherlands Antilles and Belize. Exports from CDCC countries to the Group of Three, which decreased substantially from 1990 to 1994 and represented a low proportion of their total exports, came mainly from the Netherlands Antilles and Trinidad and Tobago, and went primarily to Mexico and Venezuela. Mexico and Venezuela were also the members of the Group of Three with most exports to CDCC countries - also an almost residual part of the Group’s exports, the sharp fall in Venezuelan exports being responsible for the substantial decrease in the Group’s exports during the same period. They went mainly to the Dominican Republic, Trinidad and Tobago, Jamaica and the Netherlands Antilles. The Colombian exports to CDCC countries were somewhat less concentrated in 1994 (they went to the Bahamas, the Netherlands Antilles, Trinidad and Tobago and the Dominican Republic). The Group of Three exports to Central America remained virtually unchanged between 1990 and 1994, being of reduced significance when compared to their total exports. The exports of Mexico and Venezuela went mainly to Guatemala, Panama and El Salvador, while those of Colombia went mainly to Panama and Costa Rica. On the other hand, Central American exports to the Group of Three grew substantially during the same period (over 100 per cent), but remained a low proportion o f their total exports. Guatemala, Nicaragua and Costa Rica were the main Central American exporters to the Group of Three and the main recipient of these countries’ exports was Mexico. On the product level, most exports of El Salvador, Guatemala and Honduras to the ACS were in the category of manufactured goods (with an important proportion of chemicals), while Nicaragua’s were concentrated on food and live animals. Venezuela’s exports were concentrated on fuels and minerals and food and live animals; Mexico’s on crude materials and miscellaneous manufactured equipment. CDCC’s exports were concentrated in mineral fuels and some chemical products and manufactured goods. The development of trade requires not just the implementation of trade liberalization programmes, but also a host of other mechanisms which include: constantly updated trade information systems, active trade promotion programmes, well-established export financing and insurance schemes, adequate transportation networks and mechanisms to facilitate trade between the various trading groups - which tend to be discriminatory toward non-members - and between trading groups and individual countries. These may be some of the factors which are influencing both the level and the direction of trade in the ACS region, where, in spite of all the liberalization efforts, there are still barriers of various kinds to be overcome. ACS member countries should continue the implementation of appropriate trade, fiscal and exchange rate policies. These policies should be accompanied by the establishment/strengthening of institutional systems of export finance and insurance. The development of adequate transport infrastructures and networks in the ACS area is also an important factor in trade development. Some of the following initiatives may also assist in the development o f trade among its members: (a) improve the liberalization of trade among its member countries in collaboration with the secretariats of the various trade groupings through: i) the promotion of the establishment of trade linkages between the various trading arrangements whose members include at least one of its members; and ii) the promotion of trade linkages among those countries which do not belong to any grouping and the various groupings as well as among individual member countries belonging to different groupings; (b) undertake a survey in the ACS area to determine the existence of trade information centres both at the national and the groupings levels as well as the type and details of the information available and promote the dissemination of such information among all ACS members; (c) prepare on a yearly basis a programme of trade fairs and exhibitions in the ACS area and distribute it to the public and private sectors of its member countries and encourage their participation. The subregional and national business organizations should be closely involved in this exercise; (d) promote jointly with national public and/or private sector organizations or subregional export promotion organizations, such as the Caribbean Export Development Agency (CEDA), the organization of trade missions within the ACS area and promote other linkages and joint activities between the national and subregional business organizations in operation in the ACS area. INTRA-ACS TRADE: An overview o f CDCC trade with non-CDCC groupings Introduction World trade grew rapidly in 1994, although growth in 1995 was not quite as fait1. Trade in some countries of the Association of Caribbean States (ACS)2 also increased in 1994 compared to 1993. It increased in Mexico by 20 per cent, in Cuba by 13.1 per cent, by 15 per cent in Guatemala, 4 per cent in Jamaica and 2.5 per cent in Gratada3. Within the integration arrangements, trade is also on the increase. For example, it increased by 18.1 per cent within the Central American Common Market (CACM) in 1994 compared to 1993. The implementation of the conclurions of the Uruguay Round of trade talks, the continuation of trade liberalization in integration arrangements and the unilateral trade liberalization policies of many ACS countries are some of the factors which have contributed to these increases in trade. It is these same factors which seem to be firmly on thç policy agenda of many of the member countries of the ACS which are likely to lead to further increases in both