Caribbean Challenges and Opportunities: the Diplomacy of Market Access

By Kenneth Hall and Myrtle Chuck-A-Sang

Four decades ago the Caribbean Community, then virtually in its infancy, faced many serious challenges that threatened its survival. Emerging out of the chaos of a just concluded World War II, were regional leaders imbued with a deep feeling for liberation and freedom and a determination to rid their respective countries of the shackles of colonialism. However, newly independent countries soon found themselves caught up in the manoeuvrings of a bipolar world and faced with the imperative either to make choices or to devise some independent path to political and economic independence.

• Language: English
• Publisher: Trafford Publishing
• Release date: Feb 13, 2013
• ISBN: 9781466941496

Kenneth Hall

Professor Sir Kenneth Hall is a statesman, academic, prolific writer and advocate of the Caribbean Integration Movement. He served as Pro-Chancellor and Principal of the University of the West Indies, Mona, and earlier as Deputy Secretary-General of the Caribbean Community Secretariat. During the 10 years, he spent at UWI (1996-2006) He has been credited for the implementation of several policies which lead to a significant transformation in academic programmes, physical infrastructure and student relations on the Campus. As a prolific writer, Professor Sir Kenneth Hall has authored and edited a plethora of works including. The Caribbean Community in Transition, Maritime and Border Issues in CARICOM, Production Integration in CARICOM: From Theory to Action. He was appointed Governor-General of Jamaica in 2016 where he used his office to build a national consensus on issues such as youth and education. Myrtle Veronica Chuck-A-Sang is the Managing Director of the INTEGRATIONIST. she served as Director of the National Accreditation Council, Guyana. Formerly the Project Director of the UWI-CARICOM she has produced a Skills Assessment study of key human resources available within the partner institutions. Myrtle Chuck-A-sang has co-edited with Professor Sir Kenneth Hall, more than forty books on a range of issues of regional significance and is one of the executive producers of a defining documentary on Caribbean Integration as well as the editor of the Integration Quarterly. She served for several decades with the CARICOM Secretariat in various capacities and was responsible for establishing and managing the Conference Support Services and later the Administrative Services Programme. Mrs. Myrtle Chuck-A-Sang is the Managing Director of the Integrationist established in Georgetown, Guyana in 2011. In 2000 she was appointed to manage the UWI-CARICOM Institutional Relations Project. Over the ten years of its existence, quite apart from discharging the responsibilities of managing this Project including the preparation of a Skills Assessment Report, Mrs. Chuck-A-Sang collaborated with Professor Sir Kenneth Hall to edit more than forty books on a wide range of issues of significance to the Governments, private sector organisations, trade unions, tertiary institutions, secondary schools, commentators, and the ordinary people of the Caribbean region. These publications include Caribbean Challenges and Opportunities: The Diplomacy of Market Access, The CSME: Genesis and Prognosis, Coping with the Collapse of the Old Order: CARICOM’s New External Agenda, The Caribbean Community in Transition: Functional Cooperation a Catalyst for Change and more recently, Caribbean Integration: From Crisis to Transformation and Repositioning and Economic Transformation and Job Creation: The Caribbean Experience, together with papers published by the UWI-CARICOM Project, have been utilized by scholars and other prominent officials in their writings and analyses of the politics of regional integration to make a significant contribution to reviving and reshaping the debate on the direction and purpose of the Caribbean Integration process. Mrs. Chuck-A-Sang served for almost four decades at various levels of the Caribbean Community Secretariat, testimony to her personal as well as professional commitment to the principle of integration generally and Caribbean integration in particular. During this time, she was responsible for establishing and managing the Conference Support services, and, later, the Administrative Services programme, the largest programme area in the Secretariat. Before she served at CARICOM, Mrs. Chuck-A-Sang held administrative and strategic positions at the government and private sector levels, which afforded her invaluable insights into, and understanding of arbitration procedures, labour negotiations, governance arrangements, parliamentary affairs and diplomacy, an experience which stood her in good stead as she became more immersed in the world of work. Mrs. Chuck-A-Sang is one of the Executive producers of a defining documentary on Caribbean Integration entitled “Integrate or Perish” and the only known dictionary of Caribbean Acronyms and Abbreviations. She created the Caribbean Fellowship Inc. as the patron company of the first and only visit by the highly acclaimed University Singers to Guyana and the CARICOM Secretariat, in 2002, a visit which is still a source of fond reminiscence to this day. So, to her credit is the “The Integrationist Quarterly”, a journal especially designed to showcase the creative writings of the youth of the Caribbean, and more recently a Caribbean Research Hub with the capacity to meet the expectations of committed researchers, policymakers and academics. Before service with the CARICOM Secretariat, Mrs. Chuck-A-Sang held administrative and strategic positions with the Government and private sectors of Guyana positions which afforded her invaluable insights into and understanding of arbitration procedures, labour negotiations, governance arrangements, parliamentary affairs and diplomatic experience which stood her in good stead as she became more immersed in the world of work. Mrs. Myrtle Chuck-A-Sang, a Guyanese, holds a BA degree (Hons) in Political Science and Communications from New York State University (SUNY) Oswego and an MA degree in Organisational Communications from the State University of New York SUNY at ALBANY.

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CARIBBEAN CHALLENGES AND OPPORTUNITIES:

THE DIPLOMACY OF MARKET ACCESS

KENNETH HALL

AND

MYRTLE CHUCK-A-SANG

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First published as Confronting Challenges Maximizing Opportunities: A New Diplomacy For Market Access in 2007 by Ian Randle Publishers, Kingston, Jamaica

© Copyright 2013 The Integrationist.

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CONTENTS

Foreword

Preface

Introduction

Acronyms And Abbreviations

Chapter 1 The Shaping Of Diplomacy As The Caribbean Faces The 21St Century

Chapter 2 Issues In Mineral, Natural Resource And Commodity Diplomacy

Chapter 3 Services-Related Issues

Chapter 4 Conditionalities Of Market Access

Chapter 5 Multilateral Diplomacy

Chapter 6 Conditions For Effective Negotiating Capacity

Chapter 7 Future Focus

Bibliography

Presentations/Documents

FOREWORD

Four decades ago the Caribbean Community, then virtually in its infancy, faced many serious challenges that threatened its survival. Emerging out of the chaos of a just concluded World War II, were regional leaders imbued with a deep feeling for liberation and freedom and a determination to rid their respective countries of the shackles of colonialism. However, newly independent countries soon found themselves caught up in the manoeuvrings of a bipolar world and faced with the imperative either to make choices or to devise some independent path to political and economic independence.

For many of our Leaders political independence was a meaningless concept without economic independence or as close to that condition as was possible at the time. As the Marshall Plan, supported by the newly created World Bank and International Monetary Fund, sought to fulfil its mandate for the reconstruction of a Europe devastated by the previous war, the newly independent States sought the assurance of relative economic security in the creation of a New International Economic Order that would ensure a level playing field with equity and justice for all developing countries. Through the formation of the ACP for example, they settled for a system of preferences and guaranteed markets against the day when they would themselves become internationally competitive and when the New International Economic Order would be adjusted to permit fair and equitable terms of trade for all.

Vain hope indeed! The challenges to political stability and economic development have been enormous in the context of an unforgiving global environment in which all the advantages and options for decisive action resided in the hands of the developed countries. Virtually every single serious published work, every major World Summit, every analysis of the state of the world for the past 50 years has referred to the growing gap between the developed and the developing world, between the North and the South, the rich and the poor. All of the annually produced United Nations Human Development Reports exhaustively chronicle this ongoing, often deteriorating situation.

The newly independent States of the Caribbean Community have had to face the many challenges to their survival, imposed on them by an international economic system founded on a development paradigm which remains premised on the conviction that the accumulation of wealth is the sole route to prosperity, and that creating the conditions for more wealth accumulation is the preferred pathway to sustainable development globally. There have been few fundamental changes to this scenario over the years. The ending of the Cold War merely served to introduce new developmental challenges. It had no impact on the dominant development paradigm. The insidious growth and spread of globalization has created yet another set of challenges not least of which is its impact on the sovereign capacity of the State to determine and regulate its own affairs. This too has had little impact on the dominant development paradigm.

The Study: Caribbean Challenges and Opportunities: The Diplomacy of Market Access, traces the region’s responses to many of these challenges as they appeared to our respective countries in the years since becoming independent nations. Indeed, what the Study has done is not merely to acknowledge the existence of these challenges, but it addresses their changing faces as well. The essential point that it seeks to make is that the development paradigm which governs both inter-State and intra-State relations has remained unchanged over the years. The challenges are appearing in forms different from the traditional guises, clothed as they now are in new and ever changing sets of conditionalities.

The Study is not a criticism of Caribbean Diplomacy and how such diplomacy has sought to address specific challenges or groups of challenges. Caribbean diplomatic initiatives over these years can claim a fair degree of success in coping with them. What the Study does is to paint the picture of the imperatives for economic and social development on a broad canvas so that the inter-relationships between the challenges can be more readily seen and appreciated. This interrelationship it seeks to argue, demands that there should be both national and regional acknowledgement of its relevance, that the cross-cutting nature of development is fully understood, that the approach to such development must now be less vertical and that a broader range of sector actors must be involved in the process, if there is to be any hope of success in addressing the challenges of the 21st Century.

Caribbean Challenges and Opportunities: The Diplomacy of Market Access uses the issue of market access to highlight some specific challenges facing the region. This approach opens the way for a more informed study of each of these challenges and their attendant conditionalities. This itself, is a challenge which regional scholars and others need to take on if only to generate, through an informed information base, a more pro-active response to the many subtle and some times not so subtle conditionalities inherent in the many market access negotiations engaged in by our leaders, in the interest of national and regional development.

Forty years ago, the struggle for a New International Economic Order failed for a variety of reasons. Professor Denis Benn in his seminal work Multilateral Diplomacy and the Economics of Change has, with great scholarship, traced the global response to what was an eminently rational plea for equality and justice. The world since then has changed. Increasingly North/South and Developed/Developing divisions are giving way to new constituencies where the poor and the disadvantaged are now to be found in escalating numbers in the rich and developed North. Are the changes today brought about by the process of globalization and the attendant developments in Information Technology, the dramatic increase in influence and relevance of civil society to the process of development, in the spread of influence and power of multinational corporations and institutions, and in the gradual erosion of the sovereignty of States—are these changes sufficiently powerful to effect a global recognition, appreciation and acceptance that human development as opposed to wealth accumulation is perhaps the better way to sustainable development nationally, regionally and globally? The time indeed may be not too far away when the call by Guyana for a New Global Human Order will find resonance and action among us all as our means for survival in the 21st Century.

PREFACE

This study responds to an awareness of the need to bring together information that broadly presents a picture of, and examines, the diplomatic initiatives and responses of CARICOM States, to the challenges faced by the Region during the period 1972 to mid 2006. These challenges have been engendered by the changed economic environment resulting from the pursuit of market fundamentalism and global trade liberalisation, and some might add the global spread of terrorism in response to the advance of Western values and Western political and military might. One of the main concerns of the study, and perhaps its originality, is the bringing together and highlighting of the wide array of conditionalities used to restrict the sovereign authority of states in areas of economic and social development. At the same time, as developing countries are being pressed to pursue success in the outward-orientation of their economies by way of greater efforts at export promotion and market access, they are met with imposed obstacles that seek to limit their opportunities for aid, investment and trade. Developing countries face these conditionalities over and above anti-dumping measures and farm subsidies and escalating tariffs based on the level of processing of a product.

The study therefore, examines many of the proposals, counter proposals, and approaches to solutions in the diplomacy of Caribbean states among themselves and vis-à-vis the outside world. It also takes a look at the negative economic impact, in terms of investment promotion and stability, of the weakening of national cohesion in some states and addresses the consequences of a failure to negotiate national boundaries on land and offshore. To illustrate and highlight the issues, many references are made to Guyana. The simple explanation is that by its internal debate on the issues facing its ethnic cohesion and sustainable development, Guyana exemplifies, more than any other CARICOM Country, the widest range of challenges and conditionalities that have to be addressed. Yet the problems are not peculiar to Guyana and their description is certainly not meant to suggest pessimism as the best approach to the treatment of the challenges.

The study comprises several sections which deal with such issues as seaspace, sovereignty and commodity diplomacy; multilateral and bilateral relations; conditionalities restricting policy autonomy and market access; and elements for building diplomatic capacity. The final section attempts to prioritize areas for forward-looking approaches and challenges the Caribbean Community to focus on the way forward.

INTRODUCTION

In the late 1980s, H. Michael Erisman examined post-colonial dependency in the Caribbean. He focused on prospects for what he termed controlled dependency and explored the scope for assertive bargaining with a view to enlarging a developing country’s policy space. That enlargement of the space for assertive diplomacy, as he argued in his publication in 1992, depended essentially on two factors, namely, capacity for diversification of relations and the assertive use of bargaining power.¹

After thirty years of independence, in some cases over forty years, it is probably timely to review the region’s experience, especially to examine the extent to which countries have been able to put themselves in positions where third parties have committed themselves to providing market access for CARICOM goods, services and business, and secondly, the extent to which they have made themselves capable, by diversification of relations, of walking away from prospective agreements or offers by traditional powers, that are against their national interests. The latter especially depends on the extent to which states have broadened their relations to create networks of contacts and alliances that would enable the development of a capacity to make alternative arrangements².

As Erisman argues, the assertive exercise of bargaining power depends on a conducive environment in order to control the outcome of specific events. It also involves reducing vulnerabilities so that a country is in a position to produce at least mutually beneficial results in its interstate relations. But the edifice of diplomacy requires both a domestic foundation of skills primarily at the level of the government bureaucracy and the commercial elite and capacity to secure acceptance of unpopular but necessary domestic policies which, if required to meet adjustment and capital accumulation needs, must inevitably impact on important social sectors.

It is perhaps the work of Dani Rodrick³ which best clarifies the importance of conflict management institutions and processes, to the strengthening of the position of a state. Rodrik’s work draws attention to the importance of effective institutions to manage internal conflict over distribution issues in countries with deep social cleavages that have to undergo adjustment. As he argues, these institutions are critical, because the absence of a domestic consensus, delays timely economic adjustments, thereby increasing susceptibility to further deterioration as well as to divide-and-rule tactics by external forces. Some key countries in the Caribbean, whose party and ethnic cleavages have recently been exacerbated, have witnessed economic deterioration and significant lessening of external influence. They have been made more aware that their leverage depends on domestic cohesion, as well as the capability to use power and influence externally in alliances aimed at establishing the governing rules for international bargaining processes. It is such rules that help determine the choices, opportunities and payoffs available to States.

During the early 1970s, CARICOM Member States, despite the pressure of the first oil crisis of 1973, played an active role in determining international, economic and political relations, helping to shape the proposed new governing rules. The windfalls from the boom in commodity prices helped considerably in providing the necessary fiscal surpluses to boost state confidence in pursuing this effort. Joining with other developing countries, they formed the ACP Group platform and they helped galvanise the operation of the Non-Aligned Movement.⁴ Collectively, they managed, in the first case, to renovate an existing EEC/Africa association agreement and extend it into what became a body of principles and practices forming a model development partnership under the Lomé Convention among three regions (the African, the Caribbean and Pacific) and the EEC, then comprising twelve members. In the second case, Jamaica and Guyana in particular, played a key role in the adoption of a number of UN General Assembly Resolutions based on the Group of 77 proposals—which formed a bedrock of principles directed at the creation of a New International Economic Order (NIEO).⁵

It may be recalled that the assertiveness⁶ of the Caribbean, notably the advocacy of Guyana and Jamaica, was particularly significant in the 1970s. Jamaica was influential as the leading developing country, according to the UNDP Human Development Index and the largest exporter of bauxite/ alumina. Guyana was a leading exporter of sugar as well as calcined bauxite. However, between the early 1970s and 1992, these countries had massive slippages in their economic performances and international rankings—Jamaica dropping from first among developing countries to 88 and Guyana to 102 on a list of developing countries. Weak or negative economic growth played a key part in this decline.⁷

The success of the coalitions and alliances with which they were involved triggered a major backlash against the central principles of the NIEO process. The three revolutions of 1979—the Iranian, Grenadian and Nicaraguan—provided an incentive for the Western countries to recover ground. Led by the United States, an attack was directed against the UN-centred multilateral system in the 1980s which was manifested in efforts to reverse the role and programmes of the United Nations (UN), especially UNCTAD in trade and investment, and UNESCO in regard to the proposed New Information Order. A second prong of attack was levelled at the geopolitical realm. Efforts were deployed in low intensity conflict or direct invasion to reverse the spread of communism (starting with the invasion of Grenada in 1983). The fall of the Berlin Wall in 1989 encouraged Western triumphalism in promoting a one-size-fits all approach to development.

A third prong of the attack was directed at the state-led economic management model, then broadly applied by developing countries. Initiatives were deployed to impose the Washington Consensus principles as a framework for macro—and micro-economic policy reform in return for balance of payments support and financial assistance for sectoral plans under structural adjustment programmes⁸. Essentially, the objective of this attack was to create a system which could secure the payment of debt to external creditors and ensure larger scope for involvement of foreign exporters and investors, through the liberalisation of fiscal and trade regimes. Another clear objective was to reduce the role of the state in the management of the economy and transfer the role of engine of growth to the private sector.

Concurrent with the three strategies above, two complementary strategies were set in motion, having as their objective, major policy reversals in the domestic political system of states. One promoted a concept of good governance of the political system as a condition for new or continued delivery of aid. The other was the promotion of Project Democracy within states by the US Government to open their political systems to accommodate a multiparty, multi-stakeholder system of advocacy and contestation. William Robinson⁹ documented this project, pointing out that its concern was institutional or representative democracy based on the electoral choice of a ruling elite, while it steered clear from the concept of democracy linked to popular, radical social change. Thus, far from being a humanitarian gesture, the creation and funding of the National Endowment for Democracy (NED) in 1983, was part of a foreign policy programme to provide a tool of the State Department that would promote American strategic interests by means other than support of authoritarian regimes, which policy was proving counterproductive. In this process of ‘low intensity’ democracy promotion, direct funding, as well as material and logistical support could be openly provided to civil society groups and opposition political parties. It was expected that they could then be persuaded or co-opted to promote neo-liberal policies and severely narrow the space for decision-making once enjoyed by the ‘development’ state. The attractive, moralistic rhetoric of democracy promotion, now a major conditionality of assistance at bilateral and multilateral levels, could be used as excellent cover for strategic interests including that of opening markets for TNCs and foreign investors.

It should be noted that there are corporate sector strategies that serve to reinforce the foregoing state-led strategies. John Perkins, confessing to having been an Economic Hit Man (EHM) for American corporate interests, describes how an elite group of economists and civil engineers (identified by intelligence agencies but on the payroll of corporations) between the 1970s and 2001, created a supporting mechanism of outward market-oriented dependency by encouraging leaders in developing countries to adopt large infrastructure projects based on deliberately inflated forecasts, as justification for excessively large loans. The loans then served to entrap them into a web of debt and conditionalities, and subsequently ensured their loyalty, in return for continuing external support, as part of a vast network that promotes US commercial interests. Through indebtedness to American banks or multilateral financial institutions, they could be relied on to open their markets and reform the policies so as to satisfy US interests in securing access to economic and strategic resources, voting support in the UN and military bases.¹⁰

As was made clear to Congress in 1995 by Linda Powers, former US Services Negotiator for NAFTA, the US government also supported the private sector making investments in projects that created action forcing events, which in effect, forced the host government to adopt a policy reform process in corporating IMF ideas as a condition for investment in sectors such as energy, transport, water and telecommunications. These ideas included regulatory reform, privatisation, removal of subsidies and enforceability of contracts. Over and above profits, they served to create commercial infrastructure tying them to global markets.¹¹

The Caribbean economies responded in a way dictated by their vulnerabilities and intense financial and economic difficulties arising out of poor economic performances during the second half of the 1970s and early 1980s. Caribbean diplomacy, early characterized by confident assertiveness, even open rejection of the monetarist orthodoxy of the International Monetary Fund (IMF), became constrained by deliberate decisions taken by leading politicians such as in Jamaica and Guyana. The Manley-Levitt letters¹² of December 1995 to April 1996 reveal a deliberate turning point in development approach which, from 1979 in the case of Manley in Jamaica, emphasized the value of adopting whole hog the market liberalization approach. Although Manley, one of the most charismatic and articulate Caribbean spokesmen, had demonstrated a rhetorical anti-imperialist flourish at the 1979 Non-Aligned Summit in Cuba, it was noted that he had been negotiating secretly with the IMF in 1977 (a year of intense destabilization and violence), to relieve Jamaica’s financial difficulties. During the period 1980-1985, under the Seaga government, Jamaica never sought the external profile of the previous government, its most significant effort in that regard being its coalition in 1983 with the OECS, Barbados and the US to reverse the Grenada Revolution.

The credibility of Jamaica’s call for self-reliant development and an NIEO was seriously undermined by financial problems reflected in the development of a burden of negative net transfers to international financial institutions. In any event, explicit advocacy of a social democratic path to development had shown its limitations when the then opposition party (JLP) combined with the private media and private sector to undermine such an approach.¹³ The effort of the private media, The Gleaner, was particularly striking in its capability to unleash psychological warfare, undermine the credibility of the Manley Government, destroy the investment climate and generally weaken investor confidence. The opposition party led the effort to close off capital markets to the government by its overseas missions to the US.¹⁴

What is striking, perhaps, is that in Guyana, the turning point had already been seen in 1977, only to be concretized following the death of President Forbes Burnham in August 1985, by the adoption of the neo-liberal policies brought about by Hugh Desmond Hoyte, his successor, in his relations with the IMF.¹⁵ It was twenty years later, at the Non-Aligned Summit in Cuba in 2000, that Guyana would seek to present itself afresh by articulating through President Bharrat Jagdeo, the call made earlier by President Cheddi Jagan for a New Global Human Order concerned with poverty eradication. But by Manley’s return to power in February 1989, the change in approach and assertiveness externally was clear in the pragmatic adoption of neo-liberal approaches in his vision of securing international competitiveness for Jamaica. The rhetoric in which he argued the new case opened him to the charge of ideological betrayal, although he rejected this in his 1995 letters to Kari Levitt.

In the mid-1980s, Jamaica’s debt/export ratio was 273 per cent, among the highest in the world. In 1991 Jamaica had, in fact, taken what has been seen as the precipitate step of foreign exchange rate liberalization with devastating effects. By 1992, annual debt service after forgiveness and Paris debt rescheduling was calculated at US$540 million.¹⁶ It became totally impossible therefore to service the debt without further borrowing and the acceptance of the conditionalities related with international financial institutions which do not reschedule their debt. So, economic difficulties in Jamaica, along with similar difficulties in Guyana, combined with loss of articulate leadership of Burnham (1985), deprived the Caribbean of the basis for its advocacy. Change of ideological direction and loss of international assistance created conditions for diplomatic changes which seemed to downplay the importance of sovereignty in a borderless world. On top of this came the World Trade Organisation (WTO).

This backdrop is important to note because, from the mid 1990s, the web of constraints grew even tighter as autonomous policy-making in trade policy (already undermined in ‘conditionality-based’ loans of the IMF and the World Bank) was reduced by commitments to lock-in reductions in tariffs and non-tariff barriers to imports, while enforcement powers were invested in the WTO—the first time for an international organization. Provision was made, on the other hand, under The General Agreement on Trade in Services (GATS) for a contrary type of regime which strengthened monopoly property rights of Transnational Corporations (TNCs) in copyright and plant-variety legislation, extending this to computer programmes, integrated circuits and pharmaceuticals as never before.

In the period since 1995, the diplomatic and policy space for Caribbean Governments was even further reduced by an expanded arrangement of cross-conditionality linking the newly established WTO to the IMF and the World Bank. As Greg Palast¹⁷ points out, in effect they became part of an international governance system based on cross-conditionalities among themselves in which they used triggers or requirements to ensure conformity of government policy with international requirements. Thus, a loan in education from the World Bank could trigger a requirement to accept a condition