The View From Europe
Nearly two decades ago, a former Caribbean minister with an unconventional background would try to shock those that he met into recognising that agriculture in the region was dying and that it was the services sector that represented the future.
“One day, all of this,” he would say, pointing at fields of waving cane, “all of this will be gardening.”
For the most part, Caribbean sugar and banana production has contracted dramatically as the preferential access and the prices paid have eroded as Europe has reformed its commodity regimes. In some cases where there have been clear domestic or international niche opportunities, Caribbean agriculture has reoriented itself. However, for the most part, despite soaring global food prices and a pressing need for Caribbean food security, farmers have turned only slowly to the production of higher value crops for food or export.
As a consequence, with the notable exception of nations like the Dominican Republic and Guyana that continue to see a long-term opportunity in agriculture, or Cuba that is desperate to reduce its food import bill, the regional economic role of agriculture is in decline so that as a sector it now accounts for just x per cent of Caribbean GDP. It is therefore hard to avoid the conclusion that as global markets recover from the present economic crisis and the pressure again increases for multilateral trade liberalisation, the Caribbean, may have to accept that there is virtually nothing it can grow more competitively than its vastly larger neighbours in Latin America.
Whether it is foodstuffs (or manufactured goods or capital equipment), the probability is that in two or more decades the region will be supplied by Latin America, displacing to a significant extent not just Europe and North America but newer trade partners as well. This process will take time, involve multilateral and bi-regional trade liberalisation and significant improvements in transport. However, the signs are already present that this day will come. The Doha Round leads in that direction as do the various Latin American economic integration processes.
More practically, Brazil recently proposed a metalled surface to the highway that runs from Boa Vista through Guyana’s interior to Georgetown. If this happens and attendant port facilities are constructed, this will open up Brazil’s agriculture and manufacturing rich north-eastern provinces to the Caribbean and the wider world. Although a lesser role for agriculture may be hard for some in the region to accept the economic future for the region is unquestionably in services. The services sector is the only economic space in which the real value of the Caribbean’s intellectual and creative abilities can be realised and where it is possible to demonstrate long-term global competitiveness. It is perhaps also the only economic area in which, with infrastructural improvements, the region can achieve sustainable growth despite its geographic smallness, relative isolation from major markets and its susceptibility to climate change.
Speaking recently about the now central economic role of services, Caricom’s Secretary General, Edwin Carrington, noted that the sector now accounts for more than sixty-six per cent of Caricom’s annual GDP and for more than seventy per cent of jobs. In some nations like, the services sector is estimated to account for more than ninety-five per cent of total output with Anguilla, Antigua, Montserrat, the Bahamas, Barbados, St Vincent and Grenada also recording similarly high levels of reliance on income from the export of services.
For the most part these figures are achieved through tourism, but importantly the regional services sector is expanding into many other areas. Typically these range from pure services such as consulting, marketing and advertising through professional services such as architects, doctors and lawyers and on to education, health care and the myriad of other activities that now make up everyday commercial life. Importantly in the Caribbean, the services sector also encompasses high-earning activities such as the entertainment and film industry and more recently services to promote earnings around some of the region’s world class sportspeople.
So significant have services activities including tourism become that it is no longer possible to consider the Caribbean’s future as anything other than services based. Despite this few officials and ministers have developed a deep understanding of what it takes to nurture, promote and sustain this diverse industry.
Most involved in services (with the exception of tourism) are small in size, have limited resources, depend on high levels of educational achievement, require efficient and cheap information technology, are able to leap cultural barriers and are to a significant extent export oriented. By their nature they tend to have little contact with government or its promotional agencies, depending instead on their own knowledge and contacts to develop markets.
In order to create greater awareness of the requirements of the non-tourism services sector, a number of nations have established services coalitions that bring together a diverse national group of companies and interests. Such organisations now exist in Barbados, the Bahamas, Guyana, Trinidad, Belize, St Lucia, Dominica, Suriname, and Jamaica and may before long require region-wide ties if they are to be able to change the environment in which they operate. That is to say, ensure that their requirements for success are achieved in key areas such as education and training, new forms of finance and market intelligence or the provision of reliable low-cost high speed communications networks.
Later this year the European Union and Caribbean Ministers will hold the first EU/Cariforum Economic Partnership Agree-ment (EPA) Council of Ministers meeting. The event, which is scheduled to take place in Barbados, will bring into being the various bodies that will take the EPA forward and which will by extension support building the private and public sector capacity necessary to take advantage of its provisions.
Unlike all previous trade agreements the EPA is unique in that it liberalises trade in services between Cariforum and the EU. It is an area with planning and forethought where the Caribbean can succeed in creating new business. For this reason when EPA related support comes to be considered it is to be hoped that the development of services beyond tourism will be at the top of every national and regional list.
Previous columns can be found at www.caribbean-council.org