The CSME realities of a single economy
A GINA feature
Tuesday, December 07, 2004
The Caricom Single Market and Economy has come about with a view to unifying the Caribbean to meet the challenges of an increasingly globalised world.
It was recognised by regional leaders that integration was necessary for the small states of the Caribbean region if they were to remain economically viable. And so in 1989, at Grand Anse in Grenada, CARICOM Heads of State decided to establish the CARICOM Single Market and Economy (CSME).
But what are theses challenges the Caribbean so desperately needed to counter? Chief among them is globalisation and trade liberalisation.
According to Mr. M. Suppermaniam, Deputy Secretary General of the Ministry of International Trade and Industry in Malaysia, Globalisation includes concepts of cross border operations of economic activities, the integration of world economies to the point where the world economy is viewed as a single market and the easy flow of products and capital across borders.
Liberalisation refers to the removal of barriers to cross border economic activity.
Simply put, these terms mean that national borders do not matter when it comes to trade and investments. Capital investments, the flow of products and services and company buyouts are unrestricted.
The world has accepted the concepts of free trade and single market economies. However, these concepts have implications for Third World and developing countries that are critical to their economic growth.
Chief among these is the inadequacy and unreadiness of the domestic national capacity to participate actively and may lead to inequalities and inability of nationals to realize the benefits of globalisation.
Globalisation has actually resulted in countries banding together in trading blocks to strengthen their position in the world market. It was this same concept that resulted in the formation of Caricom and later, the CSME.
The aim is to create a single economic space which will provide for the free movement of goods, services, labour and capital between member states.
Under Protocol II in the revised Treaty of Chaguaramas, member states must ensure that there are no restrictions on the establishment of agencies, branches and subsidiaries and companies of CARICOM nationals.
This opens the door for companies within the region to establish their presence in any member country that has a market for the goods or service they offer. This can be done through direct investment in existing companies, the establishment of branches or subsidiaries or the purchasing of majority shares in companies across borders.
Recent rumours in the press have brought to light the possibility of takeovers of some of Guyana’s largest companies.
A home grown company has received prominence and suddenly, according to reports, it is in danger of being taken over by a foreign company. It is no surprise that every Guyanese is prepared to rally around the company at the possibility of a take over.
The fact is the country of origin of a company is becoming less relevant. Intra-regional economic actions allow for the emergence of strong regional conglomerates that can compete on the global market.
The reality is that national companies may not be able to compete in a global economy. Therefore mergers, acquisitions and takeovers could serve to strengthen the position of already strong regional companies.
Mergers, acquisitions and takeovers would also serve to inject capital into national companies. National economies could benefit from new investments from companies with the capacity to expand local production.
Caribbean people must begin to think in terms of regional economic strength.
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