Bilateral / Bi-regional Trading Arrangements

• Author: Edwin Laurent
• Pages: 11-29

11

Bilateral/ Bi-Regional Trading Arrangements

Economic integration in the Caribbean at both the OECS and CARICOM

levels has been achieved against a backdrop of a deep-rooted sense of a

distinct Caribbean identity and long-standing aspirations for closer unity,

which were driven by the desire to reap the benefits of the pooling of resources

and markets. The regional experience from WISA/ECCM to OECS and from

the West Indies Federation to CARICOM and now the CSME can be understood

in terms of these factors. Beyond the region, however, trade and economic

relations are instead generally motivated by the desire to secure and advance

national interests. In interacting with the rest of the world, the questions

facing the member states of, CARICOM and other small developing countries

like themselves are: What route to follow? Should they deal selectively with

other countries or groupings, and seek to develop trade and remove barriers

exclusively among themselves, i.e., bilaterally? Or, should they pursue the

multilateral route, as required under the WTO, and remove restrictions on

imports from all sources?

Although OECS countries have not yet opened up their markets to other

countries beyond CARICOM, they are involved in negotiations to do so. The

More Developed Countries (MDCs)1 however, have already done so in several

cases. This chapter reviews those negotiations and their implications. The

multilateral alternative is explored later on. The choice of which approach

or combination of the two should be followed will have to be based not on

individual ideological considerations or outside political pressure, but rather

on the sovereign decisions taken by the countries themselves as to what is in

their best interests.

The following chart illustrates the position of CARICOM within the

global system. It shows the grouping trading arrangements that are currently

BILATERAL / BI-REGIONAL

TRADING ARRANGEMENTS

22

22

2

12 Understanding International Trade

non-reciprocal with the EU (Cotonou) that are set to be replaced by an

Economic Partnership Agreement (EPA) by 1st January 2008. It also indicates

their relations with the USA through the Caribbean Basin Initiative (CBI),

and with Canada, via Caribcan, and various bilateral arrangements with

neighbouring countries that are to become reciprocal arrangements over time.

With the exception of arrangements with Cuba, all of these bilateral initiatives

can be expected to be superseded by the Free Trade Area of the Americas

(FTAA) if and when successfully concluded. The chart shows CARICOM

falling within that designated FTAA zone. All of the countries operate within

the WTO regulated multilateral trading system; hence their relations are

subject to its regulations. Then there is the rest of the world, with countries

that do not belong to the WTO, such as Russia, Seychelles, and many islands

in the Pacific like Vanuatu and the Cook Islands. In the Caribbean, only The

Bahamas is not yet a Member of the WTO though that country is a member

of the Caribbean Community. The British Dependent Territories2 apply WTO

rules and enjoy its benefits by virtue of the UK’s Membership.

Figure 2.1

The CARICOM in the Global Trading System

EUROPEAN

COMMUNITIES

25

OECS

EUROPEAN

COMMUNITIES

25 Members

WTO

150 Members

Cuba

Venezuela

Colombia

Costa Rica

REST OF THE

WORLD

Proposed

FTAA zone

CBI

C

ARIB

C

A

N

COTONOU

USA

Canada

Dominican

Republic

CBI

Legend

Proposed FTAA zone

WTO Members

Duty-free export

Duty paid trade