Time for US to Show Commitment to Caribbean

The economic interests of the United States and the Caribbean are closely tied.

A vibrant Caribbean economy favors low immigration levels to the US and a stalwart ally for America by its island neighbors. President Clinton shouldn't miss the opportunity to use this month's visit to Barbados, where he'll meet with the heads of government of the Caribbean Community (Caricom), to review aspects of economic relations between the the US and the Caribbean.

More important, the trip is an opportunity to clarify issues that have been clouding relations between the two for some time.

Mr. Clinton's May visit is the second such opportunity - the first was at the White House in August 1994. That discussion left Caribbean leaders feeling optimistic that the US would quickly and vigorously tackle problems vital to regional development. Yet there have been few results, despite the 1994 Miami summit, which spawned a Plan of Action for hemispheric cooperation.

The central feature of the Miami Plan was to create a Free Trade Area of the Americas (FTAA) by 2005. In developing this proposal, attention was to be paid to the special situation of the smaller and less-developed countries in the hemisphere.

To the contrary, there's been little evidence that the problems of the smaller countries have received significant attention. Without consideration of the Caribbean's special concerns, the work on the Miami plan is focused on trade and, to a certain extent, on financial flows.

Trade and investment

Since 1990, Caricom's merchandise trade balance with the US has declined from a deficit of approximately $426 million to $1.4 billion, and Caricom's imports now support more than an estimated 60,000 jobs in the US. While this imbalance is offset by earnings from US tourists and from the remittances of Caricom nationals living and working in the US, larger deficits may be forthcoming as a result of trading trends among NAFTA partners.

In particular, Caribbean apparel exports are under pressure from Mexican exports, which enter the US market freely. Already, Caribbean export earnings have slowed, and jobs have been cut. Because most apparel factories employ female heads of households, the result is economic hardship and social distress.

While a deficit in current transactions can be offset by a surplus in capital transactions from inflows of development assistance and private investment, US development assistance to the Caribbean has not been forthcoming. Instead, development assistance has dropped from $226 million in 1985 to $24 million in 1994, where it remains today. Similarly, US legislation for private investment incentives has been discontinued.

The US also is hampering trade relations with the Caribbean's European partners. For centuries, many Caribbean countries have had important trade relations with Europe, principally in bananas, sugar, and rum. The banana trade has been put at risk by the US challenge at the World Trade Organization of European preference for Caribbean bananas over supplies from Central and South America. The Caribbean argues that it represents less than 3 percent of the world's total banana production and that a majority of the region's producers are poor, small farmers laboring under difficult conditions. Despite the Caribbean's burden, it would appear that free trade holds greater importance than special accommodations to the poor and vulnerable.

Similarly, an agreement reached recently between the US and the European Union for free trade in white spirits poses a threat to Caribbean rum exports to Europe. The Caribbean anticipates that sugar will face similar difficulties, given the tendency of major players in the world market to fix trade rules to their mutual advantage, again without sufficient consideration of the plight of the small and poor.

To inject a new climate of dynamism in its relations with the Caribbean and to offset the damaging trend in trade relations, the US should take steps to show its commitment to the region. First, it should implement NAFTA parity so Caribbean apparel exports can compete on a level playing field. This issue has been languishing in Congress; the administration should show a determination to resolve it on Capitol Hill. The US also should agree on transitional periods for phasing out the banana and rum regimes to enable Caribbean producers to become competitive or to move into other forms of production.

The Clinton administration should create ways within the Miami Plan for the Caribbean to achieve greater international competitiveness. Human resource development is key. The president should give more support to US private investors interested in the Caribbean, and he should assist and encourage joint ventures, technology, and marketing agreements.

Special encouragement also should be extended for development of the Caribbean's services sector, where the potential for offshore financial services; data entry; and software, entertainment, sports, design, and other professional services is very good.

These measures would contribute to the development of a new base for Caribbean economic development with commensurate social benefits. Without this effort, there will be an insufficient foundation left to maintain political democracy and social stability. The Caribbean shouldn't be allowed to drift into instability and decay. The ramifications could prove staggering and costly to the US.

Caribbean's role

At the end of the day, Caribbean leaders recognize that the region's development is their responsibility. No amount of outside support and initiative can substitute for efforts at self improvement at every level of society. The Caribbean also realizes that competitiveness cannot be conferred, that it has to be earned. This involves taking full advantage of educational and skilled training opportunities and cultivating more than ever before an ethic of hard work, discipline, thrift, creativity, and enterprise.

The people of the region are only asking for adequate, enabling conditions. By the substantial flow of their remittances, Caribbean nationals in the US have demonstrated that they can succeed if given the opportunity to do so. Those at home are prepared to follow suit.

During the meeting in Barbados, both the Clinton administration and the leaders of Caricom should demonstrate their strong commitment to the future of the region and to its people who are anxious to meet the challenges of the 21st century. They should not be let down.

Caricom Members

Antigua and Barbuda

Bahamas

Barbados

Belize

Dominica

Grenada

Guyana

Jamaica

Montserrat

St. Kitts and Nevis

St. Lucia

St. Vincent and the Grenadines

Suriname

Trinidad and Tobago

* Sir Alister McIntyre is vice chancellor of the University of the West Indies in Kingston, Jamaica.