Unlocking the Full Potential of the Association of Caribbean States

Dr. Jan Yves Remy and Chelcee Brathwaite

The signing of the Convention Establishing the Association of Caribbean States (ACS) on 24 July 1994 in Cartagena de Indias, Colombia, signalled a new era of regional cooperation, one envisaged in the 1980s when CARICOM indicated its desire to widen the integration process to include all other countries in the Caribbean Basin. Against the backdrop of furthering cooperation and strengthening bargaining power, one of the largest integration movements in the Caribbean was created through the ACS. Today, the ACS comprises 25 Member States, including CARICOM Member States, Central America and the littorals of South America.

On October 28th – 30th 2020, the ACS held its 13th Business Forum of the Greater Caribbean. This SRC Trading Thoughts which discusses the ACS’ pivotal role in deepening the integration of the Wider Caribbean, is an extract from an SRC Working Paper presented at the ACS Business Forum.

MOBILISING THE ACS AGENDA

Despite the ACS’ achievements over the last two decades – like implementing the Agreement for Regional Cooperation on Natural Disasters, the Convention Establishing the Sustainable Tourism Zone of the Caribbean and the Air Transportation Agreement, among other accomplishments – possibilities abound for further cooperation and joint action.

Troubling still is the bloc’s economic underperformance. In 2019, the ACS’ annual GDP growth rate dropped to -1.37%, persistently fluctuating over the last two decades. Several crises have constrained the collective economic growth of the ACS including the recent COVID-19 pandemic. Member States are at different levels of development in terms of per capita income and intra-regional trade and travel remains limited.

The answer to many of these challenges lies in unlocking the full potential of the ACS. The bloc’s 5 main priority areas include: (1) The Preservation and Conservation of the Caribbean Sea, (2) Sustainable Tourism, (3) Trade and Economic External Relations, (4) Natural Disasters, and (5) Transport.

THE PRESERVATION AND CONSERVATION OF THE CARIBBEAN SEA

Under the mandate of preserving and conserving the Caribbean Sea, the ACS has advocated for the designation of the Caribbean Sea as a ‘special area’. Although the proposal was not endorsed, Resolution A/RES/54/225 was adopted which “acknowledged the need for an integrated approach to ocean governance in the Wider Caribbean Region.” Going forward, fully capitalizing on the blue economy will require collaboration and an environmentally sustainable approach. Beyond the region’s traditional blue economy activities (shipping, tourism, oil and gas, fisheries, etc.), higher value-added and non-traditional opportunities must be pursued (ocean-based renewable energy, marine pharmacognosy, marine biotechnology, etc.).

SUSTAINABLE TOURISM

The ACS has been instrumental in promoting sustainable tourism by creating the world’s first sustainable tourism zone in the Caribbean, while forming strategic alliances with international tourism organizations like the United Nations World Tourism Organization (UNWTO). However, the COVID-19 pandemic has dealt a blow to the global tourism industry. International tourist arrivals are down by 65% and are expected to recover only by the fourth quarter in 2021. Against this backdrop, the ACS countries will need to reconfigure, repurpose and rebrand their tourism industry – and plans are already afoot. For example, Barbados and Antigua and Barbuda are capitalizing on the global shift towards remote working by offering long-stay visas for digital nomads. Imagine the possibilities of expanding this concept to allow digital nomads long-stay visas across the Greater Caribbean. Such a move could reboot international arrivals. Opportunities for digital forms of tourism also exists. For example, Guatemala is offering 360° virtual tours of the country. Potential also lies in leveraging the ACS as a regional destination to outsiders.  The Greater Caribbean must leverage its diversity and develop other forms of tourism which hone the region’s comparative advantages like agro, cultural, historic, ecological and spiritual tourism, among others. Scope also lies in promoting intra-regional travel and tourism, which to date is still minimal due to underdeveloped transport and infrastructural links.

TRADE AND ECONOMIC EXTERNAL RELATIONS

The ACS was founded on functional cooperation on trade and development to achieve sustainable economic growth and regional equality. Despite the various activities by the Special Committee on Trade Development and External Economic Relations to promote and strengthen trade relations, intra-regional trade is still minimal. Global disruptions from the COVID-19 pandemic have sharpened the call for countries to diversify trade partners and to develop local and regional capacities. Even prior to COVID-19, events at the multilateral level including trade wars have led to greater emphasis on regional groupings. An IDB Study posits that “a Latin America-Caribbean Free Trade Agreement (LAC-FTA) driven mostly by tariff elimination would increase intra-regional trade in all goods by an average 3.5%, adding an additional $11 billion in annual trade flows.” The ACS may prove instrumental in advocating for – and ultimately implementing – an LAC-FTA, since the group’s Membership already comprises Caribbean states, Central America and the littorals of South America.

NATURAL DISASTERS

The ACS has emphasized the importance of “regional cooperation in the area of disaster risk reduction; supporting national, regional, and international organizations dedicated to disaster risk reduction; and strengthening the response capacity of Members with coaching and training.” Some achievements include: the formation of the Special Committee for Natural Disasters, the Agreement for Regional Cooperation in Natural Disasters, several MOUs with international organizations and various projects. Going forward in highlighting the vulnerabilities faced by the region, the ACS countries should support the efforts to create and deploy a  “vulnerability index” that uses indicators based on economic, environmental and social vulnerabilities to measure countries’ (relative) vulnerabilities as an alternative to GDP per capita.  This would allow the region’s ‘high’ income Members to access certain recovery funds and obtain special treatment in trade and other negotiations.

TRANSPORT

The ACS launched the programme ‘Uniting the Caribbean by Air and Sea’, which has already had some success. For example, the Air Transport Agreements signed in 2004 and 2008 allowed airlines to offer a variety of air cargo and passenger services and facilitated the entry of Copa Airlines Group into new markets of the region. Moving forward, the ACS should consider using low-cost carriers to serve the region, a move which would revolutionize intra-regional travel in the Greater Caribbean and would greatly benefit the Eastern Caribbean which needs more intra-regional travel options. Additionally, the ACS must champion the need for Member States to review tax structures on travel and encourage the elimination of excessively high fees. For maritime transport, the ACS must focus on transforming the region’s ports to be internationally competitive. Approaching the implementation of the WTO’s Trade Facilitation Agreement, from a regional perspective can also help to improve trade facilitation aspects that have reduced the competitiveness of the region’s ports.

The ACS is a geopolitical force waiting to be awakened. Therefore, it is time to overcome traditional barriers like distance, language, culture, and political and economic asymmetries and create new synergies among the ACS membership.

This SRC Trading Thoughts is an extract from an SRC Working Paper entitled: Trading Without Borders: Celebrating the Association of Caribbean States and Unlocking its Full Potential written by Dr. Jan Yves Remy and Ms. Chelcee Brathwaite and presented at the 13th ACS Business Forum of the Greater Caribbean – Virtual Edition on October 28th 2020. The full document can be downloaded at: https://shridathramphalcentre.com/src-research-papers/

Dr. Jan Yves Remy and Ms. Chelcee Brathwaite are, respectively, Deputy Director and Trade Researcher and at the Shridath Ramphal Centre for International Trade Law, Policy and Services, at the University of the West Indies’ Cave Hill Campus (Barbados). www.shridathramphalcentre.com