The Establishment of CARIFTA

• Author: Anthony J. Payne
• Profession: Professor of Politics, University of Sheffield, UK. He is the author of several books on Caribbean politics and international relations
• Pages: 67-89

The Establishment of CARIFTA | 67

The only weakness which advocates of a laissez-faire strategy of

Caribbean economic integration were prepared to admit concerned the

manner of the distribution of the gains and losses to be derived from

integration. Already, by the mid-1960s, it was a recognised feature of

the doctrine that where an economic union is formed between countries

at different stages of development economically, and where market forces

are left to operate without restraint, the result is to increase the advantage

that the more developed states have over their poorer partners.1 Not

only do they already possess industries better capable of taking immediate

advantage of the enlarged market but, because they have various,

important ‘external economies’ (including such factors as a wide range

of public utility services, a skilled or semi-skilled labour force and the

presence of banks and finance houses), they also prove more attractive

to the location of new investment. In Myrdal’s terms, ‘backwash’ effects,

representing a self-reinforcing agglomeration of the gains in the more

developed territories, tend to prevail over ‘spread’ effects, by which the

benefits of the growth in the real income of the dynamic areas filter

through the union as a whole via an increase in demand for the products

of the less developed territories.2 As a result, ‘poles of growth’ develop,

which drain the development potential of the more backward countries

of the union, thereby creating, in turn, ‘poles of stagnation’. In the

normal course of trade diversion the less developed countries have to

suffer both the costs of paying higher prices for goods produced by

regional industries, which are rarely competitive in world market terms,

and the loss of customs revenue involved whenever goods are bought in

CHAPTER THREE

The Establishment of

CARIFTA

68 | The Political History of CARICOM

the tariff-free regional market rather than from extra-regional sources.

Far from receiving benefits from an increase in intra-regional trade, as

the more developed countries are likely to do, it seems that they are

more likely to retrogress in terms of industrialisation.

The problem of polarisation, therefore, is not simply one of unequal

growth, where benefits may be accuring to the union as a whole and to

each of the member units, albeit at an unequal rate, but rather the

possibility that, without effective compensatory measures, some members

will actually incur a net loss as a result of economic integration. Well

might Demas observe that it was the ‘fly in the ointment’ as far as the

market theory of integration was concerned.3 As he fully realised,

polarisation was the main obstacle to be overcome in the planning of a

free trade area or customs union in the West Indies. From the outset it

served to politicise the issue of comparative gains and losses from

integration and reduced the debate about regional economic integration

to the question of whether or not appropriate positive mechanisms

designed to make the concept acceptable to the poorer territories could

be negotiated between the various governments. The next phase of the

integration movement, during which attention turned to the practical

problem of implementing the broad strategy agreed upon by their

officials in Georgetown, has therefore to be explained more by reference

to the politics than the economics of integration. For in the period

following the Georgetown conference the central actors in the integration

drama were no longer the civil servants, the businessmen or the

academics, but the politicians themselves.

The task of forging an intergovernmental coalition which would

make economic integration politically viable began at the Fourth Heads

of Government conference, held in Bridgetown, Barbados, in October

1967, the first in the series to be attended by the leaders of all the

Commonwealth Caribbean territories. It was, in consequence, the largest

and most prestigious gathering of West Indian leaders since the days of

the Federation, and was taken with great seriousness by all the participant

governments. Their deliberations centred on three main themes. The

first was naturally the question of free trade. Barbados, according to

reports, still favoured the initial implementation of CARIFTA on a