Studies and Perspectives Series : The Caribbean
From the document:
Despite its active embrace of trade liberalization and the maintainance of relatively open economies, CARICOM trade performance both within the region and extraregionally has been poor. The nexus between bilateral Free Trade Agreements (FTAs), Partial Scope Agreements (PSAs) and preferential trade arrangements, which was intended to assist in compensating for the small size of domestic and regional markets, while providing an additional tier of trade and economic integration, has thus far failed to deliver its intended results. This paper makes this conclusion in assessing the performance of these extraregional trade agreements and sheds light on issues not often discussed.
In spite of the various trade agreements negotiated, CARICOM export performance has not improved significantly and there has been little movement up the value chain, particularly since subregional economies have been unable to transform their production systems in order to take advantage of the market access opportunities provided by these trade arrangements. In addition, production and exports of Caribbean goods are extremely specialized and along with its services sectors have been declining in competitiveness.
The results suggest that for the subregion’s extraregional trade agreements to generate an expansion in exports, countries of the Community may need to address their inherent structural rigidities and transform their production systems including improving the business environment. Further, a parallel process of exploring avenues for broadening the scope and coverage of existing as well as future bilateral trade agreements to include a services liberalization regime, may provide avenues for CARICOM economies to exploit comparative advantages in key sectors in Latin American economies with which they have a high level of trade complementarity.