De-globalisation through inertia?

In these last weeks, a new word has entered the English language. It is one that is on the lips of the leaders of some of the world’s most developed economies, yet it is not one that appears in any dictionary.

It is ‘de-globalisation,’ which seems to mean the reversal of the post cold war consensus that growth through the removal of trade barriers and global economic integration will create prosperity and stability.  The expression reflects an emerging fear that new forms of protectionism and nationalism could become a response to the international financial crisis.

The alarm on the part of the developed world, as well as the emerging economies of India, China and Brazil, is that economically less resilient nations and more importantly their electorates will, as unemployment rises, regard open markets and globalisation to have caused everyone to become vulnerable to those with wealth who manipulate markets.

For many in the Caribbean, the idea of de-globalisation will have real appeal as the idea of the region opening its small and fragile markets remains  philosophical and political anathema.

Until very recently, global economic integration has been the approach endorsed by all Cariforum heads of government.  They have argued that by completing the Caribbean Single Market and Economy (CSME), by increasing the size of the regional market and through integrating its economies and economic governance, the region as a whole should be able to compete internationally and resist the darker forces of globalisation.

This approach meshed well with a deeper cultural and social desire for oneness that can be traced back through the thinking of those who took the region to independence to others in the nineteenth century who saw a single Caribbean as creating a cultural space in the world that was uniquely its own and reflected the region’s common experience.

Unfortunately for the Caribbean, the world’s appetite for economic globalisation moved far faster than the region’s ability to create a viable integration process. So much so that as the pressure of a global recession becomes apparent, the response is to default to national rather than regional solutions and in so doing act without reference to how the region as a whole will move forward when global recovery occurs.

All of this is understandable in a region where the historic sentiment of a single Caribbean has never adequately been related to the practicalities of regional integration or focused on the creation of modern, viable governance mechanisms that might weaken the hold of the petty nationalisms and inter-regional enmities that still prevail.

However, it portends problems yet to come which are best demonstrated by what is happening in relation to the Economic Partnership Agreement (EPA) with Europe.

Despite the EPA’s signing last October, the continuing level of dissension and inter-regional animosity persists between institutions, individuals and governments and reaches to the highest levels. Indeed so toxic has this become and so unlikely is it to go away soon that it is one of a number of issues that are making it ever more difficult for Caricom to meet and more importantly implement policy, irrespective of the pressures of the global economic crisis.

This and governments’ growing desire to create national consensus-based solutions to respond to the recession is pushing the EPA and its implementation aside and ceding all responsibility to a regional system that seems ever less relevant to the world in which the Caribbean finds itself (which should not be taken as a criticism of the many hard-working and thoughtful individuals who under difficult circumstances work for the region).

Last November the Dominican Republic, through its Brussels based Ambassador, questioned how the EPA was to be implemented. He did so in the context of a meeting of the Cariforum Council of Ministers on External Trade Negotiations.

In his remarks − which I will return to in detail in a future column − he suggested a number of institutional options to implement the EPA; these were the Caricom Secretariat; a new Cariforum implementation authority; the Caribbean Regional Negotiating Machinery; and the Caribbean Export Development Agency.

His comments were reviewed selectively in December by some of the media in the English-speaking Caribbean and portrayed as an attempt by the Dominican Republic to hijack the EPA process to its own benefit. In these articles old suspicions about the Dominican Republic’s intentions in relation to the anglophone Caribbean – which the Dominican Republic still has not done enough to allay – surfaced.

What was notably lacking then and ever since was any realistic public discussion of the implementation options that the Ambassador suggested. That this has not taken place and the shortcomings or the institutional impossibility of some of what was suggested is indicative of the fact that implementing the EPA and what has been agreed is so contentious between Caricom states as to be likely to cause deep stress to the existing fault lines of the regional integration process.

The silence also suggests that any practical decisions on EPA implementation will now move at such a slow pace that the whole three year moratorium may pass before the Caribbean tariff reduction process begins and any of the practical support measures to enable the necessary changes in governments and the private sector are introduced.

This is a process that is unlikely to be helped by the European Commission’s appalling track record in delivering rapidly programmes associated with finite economic transition processes brought about by trade liberalisation such as those for sugar, bananas, rum and rice.

The EPA and trade liberalisation more generally are predicated on investment and a vibrant Caribbean private sector, two factors looking more improbable as each day passes. It is therefore hard to imagine a worse time or more alarming background for nations locked into a weak − some beyond the region say ‘failing’ − economic integration process, to have to try to develop an asymmetrical free trade agreement with Europe. That is, one that depends on the enthusiasm, growth and competitiveness of the region’s private sector and government’s ability to attract external investors and the diminishing availability of global credit and development flows.

In Jamaica, Barbados and the Dominican Republic, EPA implementing committees have been set up, and development support integrated into their national European aid programmes. However, this still leaves whole industries such as tourism that urgently require implementation of what has been agreed, not knowing how to begin to implement what the EPA offers them.

What all of this suggests is that before de-globalisation through inertia becomes the new Caribbean reality, individual governments should be trying to spell out politically what their thinking is, not just about how the EPA is to be implemented, but on the future of globalisation and by extension their approach to further  trade liberalisation.

Previous columns can be found at www.caribbean-council.org