The Limits of Economic Integration

• 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: 147-174

The Limits of Economic Integration | 147

We must make clear immediately that for all its preoccupation with

matters of economics the Caribbean Community was not set up as a

Caribbean Economic Community. The economic integration of the

member states was the first and the overriding objective of the

Community, but it was initially provided for by a Common Market

regime, the details of which were set out in an annex to the Community

Treaty.1 The use of the phrase ‘Common Market’ can, however, itself be

misleading. The conventional understanding of economic integration

among developed countries usually distinguishes between a number of

different forms that represent varying degrees of integration. Balassa,

for example, lists five escalating stages:

(a) a free trade area, in which tariffs and other trade barriers between

participating countries are abolished, but each country retains

its own tariffs against non-members;

(b) a customs union, which involves in addition the equalisation of

tariffs in trade with non-member countries;

(c) a common market, where not only trade restrictions but also

restrictions on factor movements are abolished;

(d) an economic union, which combines the suppression of

restrictions on commodity and factor movements with some

degree of harmonisation of national economic, financial and

monetary policies in order to remove discrimination that was

due to disparities in these policies;

(e) total economic integration, which presupposes the unification

of the policies listed above and requires the setting up of a

CHAPTER six

The Limits of Economic

Integration

148 | The Political History of CARICOM

supranational authority whose decisions are binding for the

member states.2

This kind of textbook classification is not so relevant to new states, among

which an integration grouping that goes beyond a free trade area is generally

either called a common market or an economic community without

necessarily implying any specific economic structure. This was the case

with CARICOM. In view of the Secretariat’s claim that the Common

Market represented the successful ‘deepening’ of the Caribbean integration

movement, the question we must ask is simply: how deep a form of

economic integration did the Caribbean Common Market represent?

We need, therefore, to examine thoroughly the various constituent parts

of the Common Market arrangements. They embraced altogether five

spheres of activity.

Trade Liberalisation

Trade liberalisation was very much the cornerstone of Caribbean

economic integration, even though CARIFTA formally disappeared with

the inauguration of CARICOM. Chapter III of the Common Market

Annex3 re-established the free trade regime much as it stood between

1968 and 1973 — preserving the arrangement by which pre-CARIFTA

undertakings to impose import duties or quantitative restrictions on

certain listed products were respected and, in general, setting out the

rules of free and fair competition. The only significant changes concerned

the extra concessions made to the LDCs: the extension of the period

afforded them for removing duties on the items on the Reserve List; the

right to use government aids to subsidise their exports to the MDCs,

with the exception of Barbados, and to purchase supplies from their own

producers on other than strictly commercial grounds; the reduction of

the percentage of local ‘value added’ required to qualify a product for free

trade; and the considerable protective opportunity represented by Article

56, which was the strengthened version of Article 39 of the CARIFTA

agreement.

Nevertheless, the great bulk of intra-regional trade was liberalised,

and was indeed so from the inauguration of CARIFTA.4 In this respect