Economic integration is the process by which different countries agree to remove trade barriers between them. Trade barriers can be tariffs (taxes imposed on imports to a country), quotas (a limit to the amount of a product that can be imported) and border restrictions.
Regional integration usually begins with economic integration and as it continues, comes to include political integration. We can describe integration as a scale, with 0 representing no integration at all between two or more countries. Ten would represent complete integration between two or more countries. This means that the integrating states would actually become a new country — in other words, total integration. We could also say that on the table below, 1-4 represents economic integration while 6-10 represents political integration. The halfway stage, 5, represents the single market, or the completion of economic integration.
For example, Canada, Mexico and the United States have formed the North American Free Trade Agreement (NAFTA), which reduces trade barriers between the three countries. On the integration scale NAFTA, would be at about 2 since Canada, the U.S. and Mexico are still free to set their own trade barriers on goods from other countries.
The single market is the midpoint of the integration scale between political and economic integration. It is the point at which the economies of the co-operating states become so integrated that all barriers to the movements of labour, goods and capital are removed. At this stage the integrating states set a common external tariff on goods from other countries–this is called a customs union. A further step in the process of economic integration might be adoption of a common currency, with monetary policy regulated by a single central bank.
Overview of CARICOM Single Market and Economy (CSME)
The decision, in 1989, to establish the CSME was a move to deepen the integration movement to better respond to the challenges and opportunities presented by globalisation.
Preparations for the establishment of the CSME included the negotiation of nine Protocols to amend the Treaty. These nine Protocols were later combined to create a new version of the Treaty, called formally, The Revised Treaty of Chaguaramas Establishing the Caribbean Community, including the CARICOM Single Market and Economy which was signed in 2001.
The main objectives of the CSME are: full use of labour; full exploitation of the other factors of production; competitive production leading to greater variety; quality and quantity of goods and services, thereby providing greater capacity to trade with other countries.
On 1 January 2006, the Single Market component of the CSME came into being, involving Barbados, Belize, Guyana, Jamaica, Suriname, and Trinidad and Tobago. The other Member States except The Bahamas and Haiti, which had not signified their intention to participate in the CSME, and Montserrat – a British Dependency, which must await the necessary instrument of entrustment from the United Kingdom - became part of the Single Market in July 2006. The framework for the Single Economy component of the CSME is expected to be in place by 2008.
Key Elements of CSME
Key elements of the Single Market and Economy include:
Free movement of goods and services - through measures such as eliminating all barriers to intra-regional movement and harmonising standards to ensure acceptability of goods and services traded;
Right of Establishment - to permit the establishment of CARICOM owned businesses in any Member State without restrictions;
A Common External Tariff - a rate of duty applied by all Members of the Market to a product imported from a country which is not a member of the market;
Free circulation - free movement of goods imported from extra regional sources which would require collection of taxes at first point of entry into the Region and the provision for sharing of collected customs revenue;
Free movement of Capital - through measures such as eliminating foreign exchange controls, convertibility of currencies (or a common currency) and integrated capital market, such as a regional stock exchange;
A Common trade policy - agreement among the members on matters related to internal and international trade and a coordinated external trade policy negotiated on a joint basis;
Free movement of labour - through measures such as removing all obstacles to intra-regional movement of skills, labour and travel, harmonising social services (education, health, etc.), providing for the transfer of social security benefits and establishing common standards and measures for accreditation and equivalency.
Harmonisation of Laws: such as the harmonisation of company, intellectual property and other laws.
There are also a number of economic, fiscal and monetary measures and policies which are also important to support the proper functioning of the CSME.
- Economic Policy measure: coordinating and converging macro-economic policies and performance; harmonising foreign investment policy and adopting measures to acquire, develop and transfer appropriate technology;
- Monetary Policy measures: coordinating exchange rate and interest rate policies as well as the commercial banking market;
- Fiscal Policy measures: including coordinating indirect taxes and national budget deficits.
CSME Member States
There are 15 CARICOM Member States. Thirteen are currently actively participating in the CARICOM Single Market & Economy:
- Antigua and Barbuda
- The Bahamas
- Saint Kitts and Nevis
- Saint Lucia
- Saint Vincent and the Grenadines
- Trinidad and Tobago
The CARICOM Passport
Heads of Government agreed to the issuance of a CARICOM passport by Member States as a defining symbol of regionalism. The introduction of the CARICOM passport is also part of the measures to promote hassle-free travel for CARICOM nationals. The CARICOM passport also creates awareness that CARICOM Nationals are Nationals of the Community, as well as a specific country.
A CARICOM passport is a National passport which is being issued in accordance with an agreed format for intra-regional and extra-regional travel.
On the cover it will have the logo of CARICOM and the words "Caribbean Community". The Coat of Arms and the name of the Member State are also featured on the cover.
The passports of all members have the same colour scheme:
- Dark blue for civilians
- Green for government officials
- Red for diplomats
In 2005, Suriname was the first Member State to have issued the CARICOM Passport (7 January 2005), followed by the other member states as follows:
- St Vincent and the Grenadines - 20 June 2005
- St Kitts and Nevis - 25 October 2005
- Dominica - 14 December 2005
- Antigua and Barbuda - 16 January 2006
- Saint Lucia - 16 January 2007
- Republic of Trinidad and Tobago - 24 January 2007
- Grenada - 29 January 2007
- Guyana - 13 July 2007
- Barbados - 1 October 2007
- Jamaica - 2 January 2009
- Belize - 16 March 2009
As a result, all twelve Member States participating in the CARICOM Single Market and Economy (CSME) are now issuing the CARICOM passport.