CSA

While the acronym CSME has been bandied about throughout the Caribbean region for some time, questions still persist:

* Why the CSME?

* Why me?

* Why now?

* Why bother?

For the maritime transport community, the questions seem more pertinent; after all, trade has been taking place globally for centuries without the shipping fraternity having to give much thought to the current catch phrases of "integration", "harmonization", "free movement". The Ansa McAls, the Grace Kennedys, the Goddard Industries are exemplary "Caribbean businesses", trading and expanding, circulating personnel, becoming household names region-wide, apparently with or without the facilitation of ambitious machinations like the CARICOM Single Market and Economy (CSME).

After all, shipping just happens naturally, doesn’t it? It is simply a question of supply-demand economics, right? Why don’t we just get on with the business of shipping as usual? It is easy to feel that shipping is to industry and commerce what water is to life, so why bother. It’s full speed ahead, right?

The CSME is important for us all – at the individual, corporate and industry levels. For the Caribbean Shipping Association (CSA), an appreciation of this is critical, if, as a body, it hopes to maintain its relevance.

With an uninspiring history of attempts at integration, the question of "Why the CSME" seems justified. The primary objectives of the CSME are, inter alia, the full employment of all the factors of production within the region with a cumulative population of some 6 million persons (with Haiti, 14 million); improved standards of living; accelerated, coordinated and sustained economic development for the entire region; increased intra-Caribbean trade; enhanced opportunities for businesses to penetrate third country markets; and increased economic leverage and effectiveness vis –à – vis third party States.

The Single Market, which began in 2005/2006, seeks to create a seamless economic space. This will be facilitated by the removal of restrictions (legislation or restrictive administrative practices), the free movement of goods and services, capital, labour and the right to establishment.

Proponents of the CSME believe the creation of a single market and economic space will enhance the region’s ability to face the obstacles of globalization and increasing trade liberalization. The CSME is expected to provide the region with a unique opportunity to prepare for more efficient and competitive production and trade within a wider global environment, while capitalizing on synergies for production and trade within our own commercial market. In many ways, it is the region’s dress rehearsal for globalization!

As lofty as these ideals may be, CARICOM has advanced in its implementation of the first component. Admittedly there are important outstanding issues, including the implementation of the Regional Development Fund which was instituted as a key element in complementing the establishment and implementation of the Single Market, by providing financial and technical assistance to Disadvantaged Countries, Sectors and Regions of the Community. Issues relating to electronic commerce, free circulation of third party goods, the treatment of goods in free zones and similar jurisdictions as well as contingent rights are outstanding, but form part of a built-in agenda for further negotiations.

The Single Economy, for its part, is scheduled for 2015, a change from the initial target date of 2008. Admittedly a more complex system to put in place, the Single Economy will involve the harmonization and coordination of various policies (including investment and incentives) and convergence in monetary, fiscal and economic policy. Among these will be the introduction of a single currency with a single currency authority. The Single Economy is expected to ultimately be the final stage of monetary union for CARICOM.

There is no denying that the geography and size of the Caribbean territories put us at a disadvantage in terms of global trade; handicaps such as trade imbalances; high distribution and transshipment charges; diseconomies of scale when negotiating freight rates with shipping conferences; lack of reliable and regular shipping services; and, general inefficiencies in port operations are well known. Our scattered geography places more emphasis on air and maritime transport in deepening our integration process and shipping remains our major mode of supply for international trade. In fact, ocean transportation is crucial for the competitiveness of Caribbean countries to enhance the economy and improve the standard of living and quality of life of our people.

Participation in the global economy is conditional upon a functioning maritime transport system as land transportation, based on our geographical layout. Inadequate transportation will undoubtedly reduce our piece of the global pie by thwarting our efforts to expand and diversify our trade as well as the competitiveness of our firms. While costs trend down globally, high cost of providing maritime services in the Caribbean inhibits growth and development of the sector. The cost of transportation services is of increasing importance to the competitiveness, development and economic integration of the Caribbean. Inefficient transportation hampers trade and the development of non-maritime industries and services.

The small value and volume of Caribbean trade renders it unattractive in terms of a reasonable return on investment, with most being small and relatively aged fleets. Where there is a capacity for vessel employment, particularly in the larger islands such as Jamaica and Trinidad and Tobago, it is in highly specialized sectors. Additionally, most economies continue to export traditional goods and raw materials for which world value continues to decline, creating an imbalance between import and export cargo in most territories.

CARICOM has recognized the importance of shipping and has made provision for the transportation sector and its role in the deepening economic integration process. Article 140 of the Revised Treaty provides for, among other things: the promotion of sustainable development within the shipping sector; the establishment of a regime of incentives to encourage the development of shipping services to the Community; improvements and rationalization of regional port facilities; the promotion of joint ventures among Community nationals and, with extra-regional shipping enterprises, to facilitate the transfer of technology; the harmonization of training programmes to strengthen the capabilities of regional training institutions; and the establishment of efficient port and cargo handling systems to reduce transport costs.

As if to reinforce its importance, Chapter VI of the Revised Treaty provides for a Community Transport Policy by providing the enabling environment for the orderly development of air and maritime transport sub-sectors as well as establishing a Community Transport Policy to provide adequate, safe and internationally competitive transportation services for the development and consolidation of the Single Market and Economy in CARICOM. Article 8 zooms in on maritime services specifically and makes special provisions for the sector.

Notwithstanding this obvious recognition of the importance of the maritime sector and the commitment of countries to removing restrictive practices and administrative regulations, region-wide restrictions in maritime and auxiliary services persist to varying degrees across the Member States. Among them are restrictions against the nationality of seamen, officers and pilots, e.g. in Barbados, Belize, Guyana, Jamaica, Suriname and Trinidad and Tobago. Others require work permits for vessel crews, shipping agency and customs brokerage services, e.g. in Belize, Guyana and Suriname. Dominica, St Lucia, and St Vincent and the Grenadines have discriminatory licensing requirements for foreign vessels, pilots and crews. Suriname continues to maintain a closed ship registry, while pilotage and berthing services exclude foreigners in Belize, Grenada, St. Lucia and Jamaica.

Legislative provisions such as the Alien Restrictions Act in Antigua and Barbuda speak to the nationality requirements of Masters of Ships in that country. Barbados’ Aliens Act restricts the nationality of those able to procure a pilotage licence. Jamaica under its Customs Act 1955 holds a residency and work permit requirement for Customs brokers.

It is clear that there is still work to be done in order to definitively remove some of the last vestiges of separation that exist in what is supposed to be a seamless maritime space. Notwithstanding the outstanding legislative action on the part of some Member States, CARICOM has renewed its thrust at advancing the issue of transport infrastructure development and it is indeed a propitious time for the maritime industry in the context of regional economic integration.

In May 2007, the Council for Trade and Economic Development (COTED) met to discuss the issue of regional transport. Among the decisions coming out of that deliberation were (1) the establishment of a Community Transport Policy (2) the establishment of a single market for maritime transport services, including the granting of cabotage rights to nationals of other Member States (3) the development and implementation of programmes to improve seaport efficiencies (4) the promotion and development of trans-Caribbean maritime routes as well as under-served routes within the Community through incentives.

The CSME facilitates an integrated maritime policy to explore opportunities in joint ventures in port development which will be facilitated by the freer movement of capital. More experienced countries can export their port management services under the free movement of labour and skills. With the rights and freedoms of establishment, CARICOM businesses are able to establish sub-hubs, feeder and ferry services, in less geographically competitive territories (e.g. the Organization of Eastern Caribbean States). Those territories disadvantaged in maritime services due to their landlocked locations (e.g. Belize, Guyana and Suriname) also have opportunities to capitalize on a good transportation infrastructure to offer their landlocked neighbours overland access to the sea.

With all the synergies afforded by the single economic space, the development of logistics and multi-modal transport, key determinants of competitiveness in international commerce, would also increase the speed of intra-Caribbean shipments and make sourcing within the Region more attractive for importers. It also enhances the ability of regional producers to more effectively and expeditiously meet rules of origin criteria for third party export markets. As mentioned above, one of the benefits of the CSME is the harnessing of the factors of production, not least of which is the supply of labour. The sustainable provision of labour to work the industry is crucial for shipping and will undoubtedly facilitate the movement of the skills pools necessary to the trade such as stevedoring and piloting.

The Caribbean ranks lowly (globally and among developing countries) in the supply of seafarers. As a region with a relatively high literacy level and the added advantage of being for the majority, English speaking (the language of trade and shipping), there is an untapped opportunity to supply manpower.

All these are opportunities, but are we ready as an industry to seize them? Unfortunately, there are several things the industry needs to "fast rack" now, if it is to catch the ship before it sails. Lobbying will be crucial for industry players like the Caribbean Shipping Association (CSA). Lobby for:

The shipping community must be at the table to advance these positions! Business persons must tell negotiators and Governments specifically what to negotiate on their behalf in order to foster the growth of the industry. We must engage the CARICOM Machinery and others, including our national government ministries. It is only with a spirit of cooperation and exchange that we can succeed; we must overcome the "enemy within" syndrome. We must see our Caribbean counterparts as partners. The CSA must gather, exchange and disseminate information for policy makers to garner relevant industry data and develop strategies for the sector, thereby raising the profile of the industry and its contribution to the region.

With all this lobbying and engaging, one may still ask: Can the CSME do us any good?

While the CSME is not a panacea for all the Region’s ills, we have several things to guide us in the consideration of this question. Firstly, our own assessment of markets; undoubtedly, a larger market benefits those who trade in it. Secondly, there is the experience of others, notably the European Union, which has provided immense benefits for Europeans (albeit not all). To give a balanced view one can look at the British, arguably the biggest naysayers on European integration.

"The EU has brought benefits in many areas, though certainly there are other areas where the UK government would like to see improvements…The market has created more competitive services, greater choice and lower prices, supporting wealth and job creation…It has lowered business costs and opened new opportunities…When the whole of Europe speaks with one voice, we have more clout on the world stage…We are stronger in trade negotiations if we negotiate as one economic bloc." (Source: www.fco.gov.uk)

According to the Irish Regional Office: "The European Union’s Regional policy through the Structural Funds, has played an important part in the transformation of the Irish economy, in particular by bringing about the rapid convergence of Irish living standards to EU levels during the 1990s. Ireland was poor in 1973. It had high unemployment, low levels of income and high levels of emigration. In statistical terms, it had an average income per head at 62% of the EU average. Ireland’s economic growth was the result of a combination of many factors: billions of euros of EU funding over 33 years; a single European market established between the EU members, the encouragement of free and fair competition between EU countries, unrestricted trade between EU member countries using common rules, a large and growing market of consumers as the EU enlarged and more countries joined…"

Not only is the CSME not the panacea, a wholesale superimposition of the EU approach to integration on our region is certainly not a cure-all either, however, there is much be learned from their experience.

While some countries have made strides, the Region as a whole has failed to anticipate the speed of the global production shift and neglected to build sufficient region-wide transportation infrastructure to cope. Collectively we have been left behind. Failure to recognise that transportation infrastructure is an important driver of future economic prosperity and social well-being will make the CSME and any other valiant efforts at integration meaningless.

"The History of civilization and of commerce cannot be separated from that of waterborne transportation" (The Community of European Shipyards Association’s Vision 2020). This statement though seemingly pedestrian is true. As we seek to create our own regional history with the implementation of the CSME, I contend that that this cannot and indeed should not be without the critical input and contribution of the maritime sector.

It is only through the engagement of industry players that this statement will hold true for our Caribbean future. We must ensure that our anchor holds firm and deep in the bellows of globalisation and increased trade liberalization to ensure a lasting and sustainable foothold into the global economy, carried by the maritime transport sector.