Perspectives on Regional Trade: CARICOM, MERCOSUR and NAFTA Revisted

By Leonard, Thomas, M. | Hemisphere, Spring 1997 | Go to article overview

Perspectives on Regional Trade: CARICOM, MERCOSUR and NAFTA Revisted


Leonard, Thomas, M., Hemisphere


Four University of North Florida professors,9(1) who recently completed a two-year study under the auspices of a grant from the United States Department of Education, concluded that the "opening" of Cuba will have a greater impact upon the Caribbean community than the North American Free Trade Agreement (NAFTA). Furthermore, intraregional commercial relations are more important to the South American countries than NAFTA.

When Congress passed--and President William J. Clinton signed--the NAFTA agreement in late 1993, there was widespread concern of its potential damage to the United States economy. Little attention was given in the US to the possible impact that NAFTA might have upon the Caribbean and South American countries. Although the Caribbean Community and Common Market (CARICOM) established a series of commissions to study the issue, the Southern Cone Common Market (MERCOSUR) countries only started an examination of NAFTA's significance to the region in 1996.

As part of the project, the team visited three CARICOM countries (Barbados, Belize and the Dominican Republic) and the four MERCOSUR countries (Argentina, Brazil, Paraguay and Uruguay). With the exception of Argentina, the United States embassy staff in each country provided the team with an introductory briefing on the nation's contemporary economy and politics, followed by interviews with personnel in various government ministries, private research organizations, and members of the business sector.

THE CARIBBEAN COMMUNITY

The origins of CARICOM can be traced to 1973 when several former British colonies agreed to establish a free trade area. Since then CARICOM has grown into a regional association representing 15 nations with the mandate to deal with intra-Caribbean and global trade.

The CARICOM nations visited by the team were selected because of their economic differences: Barbados has the best managed economy in the Caribbean community, Belize seeks to secure its future as the most recently independent Caribbean nation and, the Dominican Republic holds a special relationship with the United States "807" industries. Despite the diversity, each shares common concerns about its economic future.

Barbados and Belize are former British colonies that profit from two important legacies: a literate population and a functioning democratic form of government. In contrast, the Dominican Republic has a Spanish tradition and since its independence in 1844 has been marred by a series of dictatorships. Each also shares a history of government serving elitist interests. This legacy has been successfully challenged in Barbados and is now being challenged in Belize and the Dominican Republic. Clearly, these traditions provide guidance for the future, and bespeak that Barbados is the most confident of the three, Belize less so and the Dominican Republic the least confident.

Only the Dominican Republic anticipates an adverse impact upon its economy as a result of the NAFTA accords. The Republic is home to 17 Free Trade Zones where numerous US electric, garment and pharmaceutical plants operate under "807" status. According to this arrangement, parts are shipped to the Dominican Republic for assembly and returned to the US duty-free or near so. With NAFTA, Dominican officials expect that there will be no future expansion of these operations, but rather that new US investments in assembly plants will go to Mexico where wages and transportation costs are much lower. The Barbadian government does not share the Dominicans' concern because it views NAFTA as addressing an economy of the past. Instead, Barbados anticipates that its future rests not with manufacturing but with informatics, telecommunications and offshore financial services. Belizean officials do not anticipate that NAFTA will have an adverse impact upon its economy, save for the trucking industry which delivers goods from the wharf at Belize City to businesses in the Yucatan region of southern Mexico and the western border of Guatemala.

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