There have been various political and economic integration efforts in the Caribbean islands, a region that includes 16 independent countries and 12 dependent territories. Perhaps the first effort at regional or subregional cooperation or integration among the Caribbean islands was the creation of the now-extinct West Indies Federation (WIF) in 1958. The WIF consisted of ten dependent British territories at the time it was created. The territories included Antigua and Barbuda, Barbados, Dominica, Grenada, Jamaica, Montserrat, what was then St. Kitts/Nevis/Anguilla, St. Lucia, St. Vincent and the Grenadines and Trinidad and Tobago. The Federation was established by the British Caribbean Federation Act of 1956 with the goal of promoting political and economic union among its members. The Federation lasted just four years and was dissolved in 1962.

During this brief period, from 1958 to 1962, la WIF paid little attention to the region’s economic unification, concentrating instead on the political aspects of integration. In economic terms, the region remained unchanged. During this period, no free trade agreements were signed among the member countries.

In the years following the dissolution of the WIF, from 1962 to 1983, many of the territories in the extinct WIF achieved independence from Britain: Jamaica (1962), Trinidad and Tobago (1962), Barbados (1966), the Bahamas (1973), Grenada (1974), Dominica (1978), St. Lucia (1979), St. Vincent (1979), Antigua and Barbuda (1981), St. Kitts and Nevis (1983), Belize (1981), Guyana (1966) and Suriname (1975).

A second effort at integration (this time exclusively economic in nature) occurred in May of 1968, when the leaders of Barbados, Antigua, Trinidad and Tobago and Guyana signed the first free trade agreement in the Caribbean islands, known as the Caribbean Free Trade Association (CARIFTA). Later that year, the territories of Dominica, Grenada, St. Kitts/Nevis/Anguilla, St. Lucia, and St. Vincent and the Grenadines joined CARIFTA. Belize joined later, in May of 1971.

In 1973, the member states and territories of CARIFTA decided to expand the union further and created the Caribbean Community (CC), which would replace CARIFTA. Though intended to promote cooperation in broad areas such as trade, education, sports and culture, the CC also played an important role in economic integration in the region with the Caribbean Community and Common Market (CARICOM). The CC and CARICOM were established by the Treaty of Chaguaramas (which took effect on August 1, 1973) and which was originally signed by the leaders of four countries: Barbados, Jamaica, Guyana, and Trinidad and Tobago. Eight others joined later. On July 4, 1983, the Bahamas became the 13th CC member state, though it did not join CARICOM. In July of 1991, the British Virgin Islands and the Turks and Caicos joined CARICOM, followed in 1995 by Suriname, in 1999 by the island of Anguilla, in 2002 by the Cayman Islands, and in 2003 by Bermuda. Haiti joined CARICOM in 2002, becoming the only French-speaking state to join the treaty. The CC currently consists of 15 countries: 13 independent countries from among the English-speaking islands (plus Guyana), as well as Suriname and Haiti. There are also two British dependencies that are “associate members.” CARICOM also maintains cooperation agreements with Cuba and the Dominican Republic.

The Association of Caribbean States (ACS) was created as a CARICOM initiative in 1995. The ACS consists of 29 countries in total and includes all of the countries of Central and South America that border the Caribbean Sea, including Mexico, Colombia and Venezuela, as well as all of the Caribbean islands. The majority of the dependent territories, such as Puerto Rico, do not belong to the ACS. The ACS is thus a broader form of CARICOM that integrates continental Caribbean countries.

The Caribbean Development and Cooperation Committee (CDCC), an organism of the United Nations, integrates all of the ACS members plus the 7 dependent territories in the Caribbean islands as “associate members.” The three French dependencies attend the meetings of the CDCC as observers.

The Caribbean Basin Initiative (CBI) is the name given to a collection of U.S. legislative acts that allowed the creation of a preferential trade agreement with Central American and Caribbean nations, with the goal of reducing poverty in the region and thereby combating communism in the region. The specific pieces of legislation include the Caribbean Basin Economic Recovery Act of 1983 (CBERA), the Caribbean Basin Economic Recovery Expansion Act of 1990 (commonly called the “Expansion Act”), the Caribbean Basin Trade Partnership Act of 2000 (CBTPA), the Trade Act of 2002, the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 (HOPE Act), and the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2008 (HOPE II).

The historic events behind the passage of CBERA in 1983 are loosely tied to the triumph of the Cuban Revolution in 1959 and later to the growing influence of Marxist and communist ideology in the Central American and Caribbean region, as well as the rise of pro-Cuban leaders in the Caribbean and Central America during the 1970s: Michael Manley and Edward Seaga in Jamaica, Maurice Bishop in Grenada, and most importantly, the triumph of the Sandinista Revolution in Nicaragua in 1979 and the subsequent rise of the Farabundo Marti National Liberation Front (FMLN, for its acronym in Spanish) guerilla group in neighboring El Salvador in the early 1980s. Despite signing CBERA in 1983, the United States was simultaneously financing a counter-revolutionary guerilla movement known as the contras to confront the Sandinista Revolution, as well as invading the island of Grenada in “Operation Urgent Fury.” There was an implicit recognition by the U.S. government that the Congress would not approve a direct military intervention in the Caribbean or Central America with the objective of overthrowing a communist government, at least not at that time in history. In part, that was because a direct intervention would mean a radical change in the “good neighbor” policy the United States had applied toward Latin America since the 1930s, and also because of the “Vietnam syndrome,” which had made any military action highly unpopular among the voters. For those reasons, the CBI was an initiative designed to combat Cuba’s and Russia’s influence in the region through non-military means.

CBERA was the original agreement, temporary in nature, with an expiration of August 5, 1990, that allowed preferential customs treatment for manufactured and agricultural goods among the CBI member countries and the United States. To enjoy the benefits of CBERA, export products had to meet several requirements: (a) be imported directly from the member country to the United States; (b) be a product completely grown, produced or manufactured in the member country, or have been substantially transformed into a new or different item in the member country; or (c) have a minimum of 35% local content from one or more member countries. Some goods were excluded from this preferential treatment, such as textiles, leather goods, tuna, petroleum and products derived from petroleum, and watches. At the time CBERA was created, 27 nations and territories were designated as potential member countries: Anguilla, Antigua and Barbuda, the Bahamas, Barbados, Belize, the British Virgin Islands, the Cayman Islands, Costa Rica, Dominica, the Dominican Republic, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Montserrat, the Dutch Antilles, Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago and the Turks and Caicos. To access the CBERA benefits, the countries had to meet certain conditions. Countries with communist governments, whether in fact or in appearance, or countries that had expropriated property belonging to the United States or to U.S. corporations, were excluded from potential benefits.

When CBERA expired in 1990, the preferential customs agreements were extended permanently and indefinitely to all of the CBI countries through the Caribbean Basin Economic Recovery Expansion Act (“Expansion Act”). The 1990 Expansion Act was a revised version of the 1983 CBERA treaty, with certain amendments. The list of eligible products was expanded to include textiles and petroleum or products derived from petroleum. Also included were additional requirements for member states that were related to compliance with internationally accepted treaties on workers’ rights.

In 2000, mainly in response to complaints from the CBI member countries about unequal treatment in comparison with Mexico under the North American Free Trade Agreement (NAFTA) of 1994, then-President Bill Clinton created the Caribbean Basin Trade Partnership Act (CBTPA). Under CBTPA, the CBI member countries received the same treatment given to Mexico and Canada under NAFTA for any product, including those that had previously been excluded under CBERA and under the Expansion Act of 1990. In the case of textiles, these would be eligible only if they were produced with cloth completely made or cut in the United States or in the Caribbean. On the other hand, contrary to CBERA, which was permanent and indefinite, the CBTPA was temporary and had an expiration date of September 30, 2010, or when the Free Trade Area of the Americas (FTAA) or any other free trade agreement between the United States and the CBI countries was created, whichever came first. On August 5, 2004, the United States signed the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), a pact that included the Dominican Republic and five Central American countries: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. The moment CAFTA-DR went into effect, these six countries automatically were no longer part of the CBI. The Trade Act of 2002 was signed with the intention of making the eligibility criteria of the three U.S. free trade agreements, the Andean Trade Preferences Act, the African Growth and Opportunity Act, and CBTPA, uniform and also to increase the maximum limits for woven clothing and shirts from the Caribbean Basin. Finally, the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 (“HOPE Act”) and the HOPE II Act of 2008 extended the benefits of CBI to Haiti.

By 1984 (a year after the original creation of CBERA), 20 countries had asked to participate in the CBI. By 2000, the number had risen to 24. Anguilla, the Cayman Islands, Suriname and the Turks and Caicos never requested membership. With the implementation of CAFTA-DR in 2004, the number of members fell to 18.

Products imported from the CBI countries to the United States from 1983 to 2009 included, among others, petroleum and methanol from Trinidad and Tobago; pineapples, clothing, car wheels and ethanol from Costa Rica; ethanol from Jamaica; expanded polyethylene from the Bahamas; cigars, sugar, electronic circuits, transformers and malt liquor from the Dominican Republic; clothing from Honduras; and meat from Nicaragua. U.S. exporters also benefited from the economic activity generated by the CBI. Total exports of U.S. products to CBI members reached $25.1 billion in 2008, making the CBI region the 14th largest export market for the United States, above markets such as Australia, Switzerland and Hong Kong.

 

Author: Luis Galanes
Published: March 20, 2012.

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