Caricom single market report card

Sandra Ann Baptiste,
Trade Writer

A comprehensive appraisal of the state of implementation of the CARICOM Single Market (CSM) has found that all five core regimes - movement of goods, movement of skills, the right of establishment, movement of capital and the provision of services - are functioning.

At the same time, the appraisal, which will be discussed by the region's heads of government at their March 11-12 inter-sessional meeting in Dominica, says legislative actions taken so far do not mean there is full legislative compliance by all member states.

"The CSM is accessible but not always at the level of effectiveness, in respect of the treatment to which CARICOM nationals are entitled," stated the nine-month review conducted by the CARICOM Secretariat.

Nevertheless, the report dispelled a widely held view that the single market is not functioning or is at a standstill.

"There are still several actions which are required to be taken in all areas of the CSM Project, each with varying degrees of emphasis, but this does not subtract from the fact that CARICOM nationals can and have been accessing the CSM," it says.

The study noted that two of the 12 single market member states have not yet taken legislative steps to bring the revised CARICOM Treaty of Chaguaramas into force.

The single-market element of the CARICOM Single Market and Economy (CSME) came into effect in 2006, while the single economy is scheduled to come on stream in 2015.

On the sensitive issue of the movement of skilled persons, the audit team observed that there are constraints to the capacity of member states to absorb potential incoming workers and to provide for them. But it emphasised that the evidence is not strong that CSM countries cannot cope with the volume of CARICOM nationals who have moved to date.

The Barbados-based CSME unit played a key role in the appraisal, which also found a need for policies to be developed on government procurement, contingent rights, e-commerce, and free circulation and movement of goods involving free zones.

Competing goods

A key issue under the Customs Tariff Regime is the non-application of the Common External Tariff (CET) to extraregional imports of goods that compete with similar CSME originating goods.

Concern was also voiced during audit about the mechanism for suspending the CET and derogation from the rules of origin.

CARICOM officials suggested that the process be redesigned and restructured to make it more transparent. At the same time, they noted that countries have a right to appeal rulings of the Caribbean Court of Justice on disputes in this area.

Member states have complained that national standards are being used as technical barriers to trade.

Not all of them have enacted the agreement establishing the Caribbean Regional Organisation for Standards and Quality.

Fifty-four mandatory and voluntary regional standards have been developed but investigations found that regional cooperation to implement and enforce these standards "appear to be weak" and very few of the regional standards are enforceable by law.

CSME officials found that several countries are implementing international standards as national standards, which leads to CARICOM goods that adhere to the regional standards being denied entry at some Caribbean ports.

There is also insufficient progress towards regional harmonisation of sanitary and phyto-sanitary (SPS) legal regimes, another obstacle to the movement of goods within the CSM.

Issues include "the capabilities of available, scientific, technical and institutional capacity and skilled personnel to operate the SPS systems."

While the soon-to-be-established Caribbean Agricultural Health and Food Safety Agency will address some of the key issues, the agency has no enforcement powers.

The report also noted that the CSM's free-movement-of-skills regime "has borne a disproportionate share of the blame for imported competition in national labour markets and for every manner of social, cultural and other difficulties alleged to have been experience in member states."

The audit found that the number of CARICOM nationals who acquired the Skilled National Certificate between 1996 and 2009 averaged less than 700 per year.

While all single market countries have passed legislation to facilitate the movement of the original five categories of workers designated for free movement of skills - university graduates, artistes, musicians, media workers and sports persons - only four member states have taken legislative action to enable the movement of teachers and nurses.

Unaware of requirements

None of the countries have taken the required legislative steps to accommodate holders of associate degrees and artisans, who have a certificate of Caribbean Vocational Qualification.

Artisans are high on the list of CARICOM nationals who are unaware of the requirements for free movement of skills within the region.

There were complaints in many member countries about the efficiency of the CARICOM line at ports.

Widespread feedback is that it is not achieving the intended purpose because of the attitude of immigration personnel towards CARICOM nationals, compared to non-CARICOM entrants.

CARICOM citizens are entitled to a six-month entry, irrespective of the purpose of travel. However, unlike the European Union where holders of EU passports can simply 'swipe and go', Caribbean visitors are subjected, in most cases, to more scrutiny by immigration officers than non-Caribbean tourists.

The appraisal also confirmed that there is general compliance by member states with the programme for the removal of restrictions on the right of establishment and that no specific restrictions under the Companies and Registration of Business Names Act exist.

But it also identified other connected collateral issues, relating to work permits, relevant subsidiary laws and factors connected to the process of establishment, immigration entry procedures and treatment of managerial, technical and supervisory personnel.

In addition to the practice of granting exemptions from work permits, instead of amending their Immigration Acts, there are challenges with access to incentives and land, especially state-owned property.

Guyana, Jamaica and St Lucia have incorporated the Movement of Factors Act into their domestic law, while Barbados and Trinidad and Tobago have variations of the law in place.

The abolition of exchange controls "is a fact" in all member states, except Barbados and Belize.

The report noted that there are significant policy considerations that impact the rate of progress in these two countries.

Convertibility an issue

And, it commented that convertibility of currencies has not succeeded, except in the case of the Eastern Caribbean dollar.

"However, CARICOM nationals continue to express interest in and ask why full convertibility of all currencies is not happening. The interest is understandable because of the potential impact of convertibility on transactions by ordinary people and business."

On liberalisation of services, this has succeeded, according to the CSM audit, which noted that restrictions that remain are specific.

"Restrictions have been identified which discriminate on grounds of nationality, citizenship, or residency, but these are not in the majority, in comparison to the overall level of implementation and compliance which has been achieved."

On another key issue, the report disclosed that only three member states - Guyana, Barbados and Jamaica - have established a national competition commission and only the latter two countries have strong consumer-protection regimes.

Noting that each of the five single market regimes required creating new institutions or strengthening existing ones, the report acknowledged that for the majority of countries there are capacity issues at the levels of governmental operations and technical capacity.

In addition, a large body of regulations is required to operate the CSM effectively and much of this has not been done.

Donor assistance has been provided to address this gap.

Another constraint cited is that the national CSME focal point is often not a unit but one person with many other portfolios, so there is no dedicated focus on the single market.

The audit highlighted the unfamiliarity of public officials with the CSM agenda and found that the CSME is often not viewed as an integral part of domestic economies.

To address this, more CSME public education programmes are in the pipeline.

Despite the gaps identified, the appraisal emphasised that the single market is "open for business" and in no case was there condemnation of the CSM "as a whole or any of its core components".

While recognising that there are genuine capacity constraints, member countries were urged to "go the extra mile" to realise the full potential of the CSME.

Sandra Ann Baptiste is a business consultant and specialist in Caribbean affairs.business@gleanerjm.com