The Region

In the context of integration institutions in the developing world, the Caribbean Community has had a certain success in terms of the relative longevity of its existence as a progressively innovating institution. Some of this innovation has been propelled by external circumstances inducing change in both the substance (policies) and form of the institution. The decisive decision, signaled in 1989 in the Grande Anse Declaration, to move from a Common Market as described in the Treaty of Chaguaramas, to a Single Market and Economy as finally agreed in the Revised Treaty of Chaguaramas, indicated an early awareness of substantial changes occurring in our relevant international environments. These changes, it was recognized would necessitate a rethinking of the nature of our economic integration pro-cess and what might be required to permit adjustment to those environments.

As is well known, the Grande Anse Declaration proposed a review of possible policy and institutional responses to the challenges faced – a review undertaken by a number of West Indian technocrats and practiced diplomatists as The West Indian Commission, under the leadership of Sir Shridath Ramphal. The Commission undertook an elaborate consultation with various strands of opinion in the Region, among Caribbean people in the Diasporas, with officials and notables in the metropolitan centres, and with persons and officials in the wider Caribbean, including the Republic of Cuba.

It was well understood by the Commission that the adjustment of the Caricom economies, as well as the adjustment of the integration systems in which they functioned, needed to be considered within the context of new global integration trends. These included the globalization processes which had begun to produce regionalization trends in particular geographical spheres, including prominently the Hemisphere of which Caricom is a part.

The Commission was well aware too, that such trends in international and regional economic integration would necessitate a search for new institutional forms for managing these processes. These forms had to be appropriate to the character of the new integration trends, which were showing existing institutional frameworks to be inappropriate – inappropriate in our circumstances meaning not being able to respond, in terms of effective decision-making, to the influences to which our integration process was being subject.

This necessity for institutional innovation has continued, even in regions less troubled by economic difficulty at this time. We might note the active dialogue taking place on regional institutional arrangements in the ASEAN area; the discussions forced on MERCOSUR about its own future; Singapore’s continuing, active search for new modes of integration with the Malaysian economy forty years after her expulsion from the Federation; and the decision of the Central Americans and Caricom’s own near neighbour, the Dominican Republic, to change the geographic scope of its own formal integration process by acceptance of the offer of establishment of a Free Trade Area (FTA) with the United States, with all the difficulties of national ratification which that has entailed.

It is therefore, useful to remind ourselves that, as in so many other spheres, the Caricom area was one of the first to embark on such rethinking. Its stance was implicit in the title given to the initiative in 1984 to recognize, albeit under a certain amount of constraint, the link between national development and the imperatives of regionalism in the new environment of so-called economic liberalization – “The Nassau Understanding: Structural Adjustment for Accelerated Development and Integration in the Caribbean Community”.

This was a few years well before the momentous decision taken in our Hemis-phere – from within the Circum-Caribbean so to speak – by Mexico, to overturn a century’s insistence on the particular prerequisites of its sovereignty including the importance of non-interference in its internal affairs, by using that same sovereignty to enter into an FTA with the United States – with all the policy and institutional change which that has entailed.

The response to the West Indian Commission’s recommendations was, in respect of institutional changes proposed, a negative one. In the thinking of the Govern-ments, in October 1992, the institutional changes had the potential for being an imposition, moving aspects of final decision-making authority from the political leadership to what were perceived as a new breed of quasi-political authorities: the members of the Caricom Commission proposed for managing the integration system, somewhat along the lines of the European Community/ Union model.

In some measure, the West Indian Commission had sought to pre-empt such objections, and to meet the charge that their recommendation for a Commission was a form of “integration by stealth” (in the phrase of analysts of European integration) denuding member-states of their sovereign powers, as was claimed to be happening in Europe. The Caribbean Community would remain, it was asserted in response, a “Community of Sovereign States” in no way moving to a Federation or Union of states, by using a phrase that implicitly denied it. The Commission insisted that its institutional recommendation could not affect the sovereign status of Caricom member-states.

In later years, therefore, as new initiatives were taken to modernize the integration system, an particularly after the finalization of arrangements for a Caricom Single Market and Economy, it was claimed that the mandate to strengthen the integration system would necessarily included the mantra, or code phrase, that the Community constituted a “Community of Sovereign States”; and that that must remain the litmus test for assessing the limits of integration pursued. We must, de facto, have economic integration without what is called political integration, the particular definition of the reorganized Community being canonized in the Rose Hall Declaration made by Govern-ments.

In effect, we had created a charge – that of increasing political unification – which not even many Europeans accepted as relevant to their own integration experiment. They have continuously gone through difficult negotiations attempting to match continuing economic integration with appropriate governance institutions. Thus, for example, fifty years after the signing of the Treaty of Rome, the President of the Deutsche Bank of Germany could remark that “Europe is an unprecedented structure for joint policy-making and joint policy execution”; going on to note that such activity is being undertaken by “sovereign nations”. This deliberate enunciation of an inextricable linkage between “joint policy making” and “joint policy execution” as part of the exercise of the sovereignty of participating nations in order, as Ackerman put it, to “storm cross-border financial barriers”, emphasized that in the contemporary world of economic liberalization at least, appropriate management institutions for the collective implementation of agreed policies is a necessary part of any integration process. (Joseph Ackermann, “Europe has to storm cross-border barriers”, Financial Times (London) 25/1/07).

In our Caribbean the attempt to shield the reality of the need for “joint policy execution” through the use of the concept of the “Community of Sovereign States” has not worked. And that is partly because there is, on our part, an assumption that the permissible limits of collectivizing sovereign power is substantially within our national discretion, and not a function of the progressive of the necessity to ensure the efficiency of cross-border transactions. We therefore perceive the use of sovereign power as a zero-sum game: we either use it, or we lose it if we blend it with others.

The fact of the matter is that, in holding fast to the mantra, we have been unwilling to accept that, in the process of “open economic regionalism” characterizing today’s world, how we institutionalize the
use of our sovereignty through “joint policy execution” is in large part being determined by the strength of the systems that we have to encounter. The extent of the cohesion necessary to ensure effective decision-making and decision-implementation in international economic arrangements in particular, must influence the extent of the national policy discretion that actually exists. And where that discretion proves insufficient, acceptance of “joint policy execution” becomes necessary.

In that context the use of sovereign power for joint policy execution is, as the Europeans themselves have found, not a philosophical matter, where all is held or all is lost. But it is, rather, a matter of working in the interstices of actual mutual penetration of economic systems in today’s international economic relations, and of finding new institutional formulas to cope with that penetration and the linkages that it brings into existence.

The nature of the relations that we have had with Europe itself, and the extent to which these have determined the character, and fluctuations, in the revenue that we earn has, over the last twenty years or so been well demonstrated by the fate of the banana industry, particularly in islands that have had relatively little economic diversification; and it is being demonstrated today as we make calculations about the effects of the Economic Partnership Agreements that we have recently signed. In the case of the OECS states, when this situation has been coupled with the effects of natural hazards, the inclination to regional cohesion for national protection has become more and more of a priority – thus the continuing search for “economic union” among those states; and through that, a “variable geometry” in the wider Caricom system. Today in Europe, acceptance of differing levels of institutional cohesion within the same Community is accepted as a valid operational principle

Similarly, events now including the negotiations of the REPA with Europe, have indicated that the discretion (sovereign power) that we assumed ourselves to have, to decide by ourselves, the issue of “deepening before widening” in the wider Caribbean Basin, has proven to be illusory. The resistance of the Europeans to negotiating a multiplicity of agreements in what is considered a relatively small arena, has broken the back of this presumed area of choice.

Pressures such as these lead us now in the direction of examining the potential for differing “arenas of cohesion” within our geographical zone, which must now be broadly described as the Circum-Caribbean, even while that arena is being segmented by initiatives towards diverse forms of integration being proposed from within and without.

We have been faced with the implications of the signing of the US-DR-CAFTA agreement, even while Caricom has simultaneously sought to operationalise the inclusion of the CARIFORUM state, the Dominican Republic, into the REPA; and as the European Union which itself proposed the entry of the DR into a relationship with us through Cariforum, has found itself threatening to separate the DR from us in its complex of free trade relationships evolving in this area, on grounds of our “recalcitrance” in coming to terms. All these varying patterns indicate the challenge to our assumptions of a Caricom organized integration system with defined relationships to other systems and states in the Circum-Caribbean.

This situation of fluidity in this arena is today made more visible by the de-freezing of the Cold War configurations largely defined by the United States. First, the American definition of an area subject to the Caribbean Basin Initiative has itself been superseded by the other American initiative to create a Free Trade Area of the Americas, as a holistic entity, or as a set of piece-meal-created bilateral arrangements sustained by the power/attraction of the US economy itself.

Secondly, it has become obvious, certainly within the Caricom arena, that the countries on the extremities of the Community, but within the broad Circum-Caribbean – Venezuela, Brazil, Mexico – will, through their own political and financial capabilities, play a substantial role in the future determination of the design of the decision-making and policy space in which Caricom functions.

Thirdly, it is now accepted that the Caricom arena has no special priority in the evolving perspectives about the Circum-Caribbean of either the United States or the European Union. This, for example, is surely the lesson, to which we have referred, of the Dominican Republic’s virtual foreclosure of the potential scope of our decision-making, as a result of her decision to join the US-CAFTA Agreement, and then to use the renegotiation of the Lome-Cotonou Convention to force the EU to insist on an arrangement with Caricom that would also include herself, while not compromising her adherence to US-DR-CAFTA.

Fourthly, the economic direction that Cuba takes in the not too distant future will have a substantial influence on the economies of the Northern Antilles, in much the same manner that exclusion of Cuba from the acceptable tourism zone for United States citizens had a significant influence. Today, the potential of Cuba for a range of diversified economic activities, expands its potential for playing a major role in the evolution of those countries. Caricom has recognized this in its insistence that, over the medium term, Cuba should have its place in the arrangements made within the Caribbean – whether by way of indigenous arrangements, or in the course of the negotiations with extra-Circum Caribbean powers.

These factors can be summed up in the observations, first, that the prescribed (economic in particular) policy space in the Circum-Caribbean is fast changing – an indeed partly because of well-known geopolitical changes. In that context, whether the distinctions between Caricom on the one hand, and “the other” Caribbean can today be conceptually accepted, or can have long term validity, is now a proper subject for discussion, from both diplomatic and economic development perspectives.

Secondly, that as the definitions of appropriate policy spaces change, so to will the institutional arrangements for managing these policy spaces. And whether the Caricom arena, as presently organized, will find itself in competition these emerging policy spaces, and whether it will be able to sustain itself in such competition if it should arise, will surely be dependent on the extent to which Caricom itself has been able to elaborate an institutionally viable economic/ policy-making space.

So, whatever its other previous rationales, in the current turbulent Circum-Caribbean environment (turbulent in the sense of being an arena deemed ripe for revision of existing political and economic relationships), these situations would seem to substantiate a prime case for “making haste quickly” in determining the extent of the institutional cohesion which the Caricom zone can now sustain. And this we take to have been the prime reason for the decision of Heads of States/ Governments to revisit the issue of more effective decision-making/implementation processes through, first, the Prime Ministerial Expert Group, and secondly, the establishment of the Technical Working Group on Governance of Caricom.

The need for greater cohesion in Caricom at this time, stems from the movement from free trade integration with its emphasis on changing the conditions of trade through reduction of tariffs – the so-called “negative integration” to establishing rules, in the context of the Single Economy that would harmonise the conditions of production in an identified economic space – the so-called “positive integration”

This positive integration implies policies that require active intervention in the economic systems of national states in respect of the identified economic space, so as to facilitate movement of the factors of production by private or public agents. The possibilities (scope) for such movement must have a predictable basis, which
is another way of saying that they must be underpinned by legal arrangements.

Without the automaticity of implementation and adjudication, and thus the predictability that a legal system gives – that is the assurance of continuous rule-making, to underpin private and public policy decisions – investors would be loathe to undertake activities in respect of identified economic spaces. And equally importantly, governments themselves would be loathe to commit to joint policies that leave open the possibly of inequitable treatment because of the hesitation or tardiness of partners in passing necessary laws. Successful “positive integration” presupposes this approach. And it necessarily reduces the scope for ad hoc and contingent responses to decisions to be taken (which, frankly, is another way of saying that it reduces the scope for the unilateral use of sovereign power to reject the implementation decisions collectively made).

We need to note, of course, that by comparison, the European Economic Commu-nity’s system started off on a reverse footing from the evolution of our own integration process. The breaking point for those discussing the required processes and institutions for European integration came with the distinction between those whose concern was with the mere removal of barriers to trade, and those who were in pursuit of structural integration – the creation of new production bases through joint organization and decision-making in addition to the freeing of trade. Thus, having originally commenced with the establishment of the Coal and Steel Community, the EEC in effect proceeded with a form of positive integration requiring deep involvement in specific areas of the national economies of participating states, coupled with the necessary collective legal apparatus to ensure enforcement.

The evolution of the discussions on whether the United Kingdom itself should join the EC , and Britain’s decision not to initially do so, but to participate in the “negative integration” approach of EFTA, has this distinction between the positive and the negative as the core of the still differing approaches to integration between Britain and continental Europe. It has, I believe, also been the intellectual/ideological influence on our own approach to integration, and our belief in a philosophy of sequential so-called “stages of integration”, with positive integration and its necessary collective legal processes as the last of the stages.

The depth and continuity of this influence in the United Kingdom is indicated in a statement made in early 2007 by Lord Norman Blackwell, head of the Prime Minister’s Policy Unit between 1995 and 1997 (the last years of Conservative administration) and now Chairman of the United Kingdom Centre for Policy Studies. He observed:

“The ideal 21st century solution might be a ‘European Commonwealth’ where we continue as part of a European free trade area and continue to cooperate on a wide range of individual common programmes where we have a mutual interest with out neighbours – but with participation based on intergovernmental agreement rather than imposed through EU legislation [my emphasis]


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