Reading the writing on the wall

In Havana on April 28, the Dominican Republic and Cuba agreed to explore the possibility of a partial scope trade agreement.

There Cuba's Deputy Minister of Foreign Trade and Investment, Ileana Nunez, and Cesar Dargan, the Dominican Republic Deputy Foreign Minister for Commercial Affairs and Trade Negotiations, agreed a joint study focused on strengthening economic and commercial relations, the conclusions of which they said will inform their governments on whether they should forge a strategic economic alliance and build much stronger trade ties.

The signing took place in the margins of a Cuba-Dominican business forum involving one of the largest business missions the Dominican Republic has ever taken abroad. It included 40 executives from leading Dominican companies as well as senior public sector officials. It was an initiative, Mr Dargan said, that reflected the desire by Dominican business to rapidly strengthen economic ties with Cuba.

Both countries also agreed to diversify bilateral trade in specific goods and services, and promote complementary investments. In addition, Rafael Canto Blanco, the President of the Dominican Republic's powerful National Business Council (CONEP), said that joint cooperation and investment in tourism could become an area from which both countries could mutually benefit.

The visit follows reports last month that work is progressing on studies on the creation of a new Caribbean economic block that might bring together Puerto Rico, the Dominican Republic and Cuba with objective of uniting the Spanish-speaking Caribbean and capitalising on new trade opportunities.

"We hope that in the not too distant future, we can be the Dominican Republic, Puerto Rico and Cuba working together as a productive economic block for each of our countries and to strengthen the region," Carlos Rivera Velez, the President of the Puerto Rico Association of Industries, was quoted by Diario Libre as saying.

What is apparent is that other initiatives are also being contemplated that might unify the economies of the northern, or more accurately western end of the Caribbean, causing for the first time since independence and CARICOM's creation, inter-regional relations to evolve based on economic realism rather than sentiment.

What appears to be happening is that some countries in the region are now prepared to consider abandoning the past for the future, in order to find new, strategic paths to economic opportunity.

In a number of speeches and in private, before his party won Jamaica's recent General Election, Andrew Holness, made clear that there was a need to forge much closer ties between the economies of the larger English and Spanish speaking nations of the Northern Caribbean, in a manner that might include the Cayman Islands, and possibly the Bahamas.

In the last week, in a practical step in this direction, Edmund Bartlett, Jamaica's Minister of Tourism, signed an agreement with Cuba that will lead to multi-destination tourism between Cuba, the Dominican Republic and Jamaica, once a similar agreement is signed with the Dominican Republic in June. Parallel trade and investment initiatives are expected to follow.

A few days earlier, Mr Holness had said that he wants to review the relationship with CARICOM. "I think the time has come for Jamaica to fully assess the benefits, opportunities and challenges of CARICOM and to assert ourselves in such a way that Jamaica gets the benefit of CARICOM," he said, in announcing the establishment of a CARICOM Review Commission.

These developments are taking place as the region has become less coherent, or as Trinidad's President, Antony Carmona put it speaking at the University of the West Indies on May 1, one where 'dysfunction and strife' now militates against the spirit of the Caribbean integration movement.

He was referring, in part, to Jamaica's concern over migration issues with Trinidad, and threats of trade retaliation, but it is clear that more generally the region's present economic approach is unsustainable.

Venezuela's economic, social and political stability is diminishing on an almost daily basis and with it the long term sustainability of its inter-regional PetroCaribe programme; Trinidad's economy is struggling with low oil prices, job losses and is weak; Suriname is about to enter a tough IMF programme; Haiti is increasingly in the grip of an electoral impasse, and political infighting threatens to destroy what little economic progress it had been making; and many OECS nations are only keeping their heads above water by selling on a one-off income basis their citizenship with potentially unpredictable consequences.

In addition, the region's foreign relations have fragmented, levels of crime continue to rise, most nations are only able to generate new employment through foreign investment, and a myriad of serious externally led problems are beginning to arise, such as the threat posed by the withdrawal of correspondent banking and the loss of offshore financial services activities to more opaque jurisdictions.

While most nations have turned inward in order to cope, others have begun to seek pragmatic new ways to address the inability of the Caribbean single market and economy to function in real time, or in a way that increases regional economic velocity. Guyana, the Dominican Republic, Jamaica, Puerto Rico and Cuba are all exploring new trade relationships that leap traditional linguistic and cultural boundaries to identify new opportunity with regional neighbours, and a deepening of economic ties with countries in Central and South America,

The effect is not to set aside CARICOM, but to further marginalise it.

Most serious politicians and members of the business community understand well the need to develop new markets, be less protectionist, develop hub and spoke relationships with larger economies, and to use the opportunity of new economic relationships and freer trade, to accelerate economic growth.

In a Caribbean context this is likely to mean coming to accept a more central regional role for the larger economies at the northern end of the Caribbean, and for nations with great potential like Guyana. It is therefore ironic that that country experiencing the highest level of growth in the Caribbean, the Dominican Republic, remains isolated and ostracised as a result of successive resolutions by CARICOM Heads of Government, and that Cariforum is virtually ignored

It is time for the English speaking Caribbean as a whole to develop new thinking about how best to incorporate a future open trade relationship with Cuba, the Dominican Republic, and Puerto Rico, in ways that that deepen in the longer term, trade with neighbours in Central and South America. It is time to read the writing on the wall.

David Jessop is a consultant to the Caribbean Council and can be contacted at
david.jessop@caribbean-council.org

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

May 6th, 2016