McIntyre urges free movement of capital, labour in CARICOM
by Rickey Singh
BRIDGETOWN, Barbados, (CANA) --The Caribbean Community's private and public sectors have been sharply criticised for frustrating the free flow of labour and capital that is so essential in the region's march towards a single market and economy.
The criticisms came from one of CARICOM's outstanding economists and a former Secretary General of the Community, Sir Alister McIntyre, as he delivered the "Inaugural William
G.Demas Memorial Lecture" on Wednesday night at the Sherbourne Conference Centre in Barbados.
The lecture series was initiated by the Caribbean Development Bank (CDB) to perpetuate the memory of a Caribbean scholar and intellectual who had devoted most of his working years in the public service of his native Trinidad and Tobago and the Caribbean Community of which he was its first Secretary General.
Demas died at 69 in December 1998, and McIntyre, whose personal friendship and intellectual kinship with Demas span some 40 years, had delivered the eulogy. Now he was chosen to give the inaugural lecture in the "memorial series".
CARICOM, McIntyre feels, should put "firmly on its agenda" the negotiation and prompt implementation of a Protocol setting out arrangements for intra-regional migration of agreed categories of labour as part of the movement towards implementing the Caribbean Single
Market and Economy (SCME).
Steps should also be taken, he said, to "free-up the movement of capital in those member states where this is not the case". As McIntyre sees it, important sectors of opinion in this region still have "knee-jerk reactions"
against intra-regional movements of capital and labour. These are "unrealistic positions to adopt", he opined.
Currently Chief Technical Advisor to the Caribbean Regional Negotiating Machinery (RNM), McIntyre is the immediate past Vice-Chancellor of the University of the West Indies (UWI).
Speaking on the topic, "Changing Perceptions of Development - Their Implications for the Caribbean",
McIntyre, who had served on the 1992 West Indian Commission, presented an overview of the challenges facing the region in a highly competitive environment and warned against complacency.
In dealing with the coming challenge of "reciprocity" in international trade, he cited "as a major weakness" in the Caribbean "the indulgence of mediocrity and incompetence", and called on public and private sector leaders to "take a stand to eliminate it".
Articulating the implications for the Caribbean of emerging trade and economic arrangements with the European Union, the Free Trade Association of the Americas (FTAA) and in confronting the World Trade Organisation (WTO), McIntyre said that the region simply has to face up to the distinct possibility of according reciprocity in international trade.
"The reduction or removal of customs duties on our imports can have major consequences for government revenues," said McIntyre, pointing out that from data gathered on nine CARICOM states removal of import duties from the European Union could involve annual revenue losses of over EC$2 Billion (two billion ECdollars).
He also pointed out that European imports can displace higher local production in CARICOM states and intra-regional exports from those states, in what he called the "production effect of trade creation", that is positive if it leads to a better allocation of resources in the countries concerned.
In a "more dynamic context", according to McIntyre, Caribbean producers could also take advantage of scale of economies in the larger market area. It could also be the case, he explained, that import liberalisation would have a "locking in" effect on investment, both local and foreign.
In his focus on adjustments that may have to be made, McIntyre said that whatever results the region manages to secure by way of continuation of trade preferences and minimising any negative impact from reciprocity, "it has to face up to the inevitability of putting urgently in place a comprehensive, multi-faceted and integrated response to the adjustment challenge".
This would require targeting "promising areas" for achieving international competitiveness in the so-called "sunrise industries" and providing the so-called "soft landing" for "sunset industries".
And in identifying some area in which governments need to be "especially active", McIntyre pointed first to the strengthening of their fiscal capacity to provide "time-limited adjustment assistance".
This would involve, among other things, greater fiscal diversification as customs revenues decline, sustained macro-economic stability and policy reform credibility.
Secondly, there must be compensation mechanisms for governments to encourage efforts at diversification away from traditional crops such as sugar and bananas.
For instance, governments could organise acreage reduction programmes to provide financial support to farmers as they endeavour to move into other crops. He sees such a programme as being a good candidate to benefit from STABEX funds available through the European Union.
Thirdly, he noted, there should be sustained efforts to enhance supply capacities, explaining that this would involve reforms to increase competitiveness throughout the economy and to enforce high standards of performance both in the public and private sectors.
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