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The Context

T

he WTO ‘Aid for Trade’ initiative has emerged at an opportune time for the fifteen, small Caribbean countries that form the Caribbean Community (CARICOM).1 Individual countries are engaged in an intense process of domestic restructuring, particularly those that have been seriously damaged by the loss in trade preferences.2 At the same time, the region as a whole is pursuing vigorously a strategy of deepening regional integration to enhance domestic efficiency and improve international competitiveness. Overall, the intention is for firms to take advantage of the new and existing opportunities associated with world trade liberalization. In the short-run, trade liberalization could hurt Caribbean countries but once supply-side conditions are conducive they stand to benefit substantially in the long run. ‘Aid for trade’ is timely for the support it could provide to build productive capacity in Caribbean countries, boost trade-related infrastructure and assist firms adjust to a changing world trading environment.3 The 15 countries in CARICOM share certain common features as a result of their small size. They all have narrow productive structures and are heavily dependent on trade. Many also have limited natural resource endowments and their development is constrained by the lack of a sufficiently large and trained workforce. However, Caribbean countries are also at different levels of development and have varying economic and trading conditions. For example, St. Lucia is tourist-oriented with a per capita GNI of US$4,580; Trinidad and Tobago is energy-based, with a per capita GNI of US$10,300; and Guyana, which has one of the lowest per capita incomes in the region (US$1,020), depends largely on agriculture. [22] Approximately 80–85% of Caribbean trade is with the developed countries, to which products such as oil, bauxite, rum, sugar and bananas are exported. In addition, about 90% of tourists to the region come from the USA. Intra-regional trade accounts for about 15–20% of the region’s total trade. A central aim of Caribbean countries’ development strategy is to ensure their eventual integration into the world economy. Besides their own regional integration efforts, countries are actively 1

The countries include Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Lucia, St. Kitts and Nevis and St. Vincent and the Grenadines, Suriname, Trinidad and Tobago. 2 An IMF study [2] had estimated potential losses from preference erosion to be substantial for Guyana—a 17.7% reduction in government revenue, 7.9% reduction in goods exports earnings and 5.8% reduction in GDP. 3 For other Caribbean countries, however, losses were expected to be less severe. See Annex 3. In this paper, the term ‘aid for trade’ refers to “the flow of development finance from developed to developing countries.”

mobilizing aid for trade: focus on latin america and the caribbean: proceedings of the regional r...  

this report was prepared by the integration and trade sector (int) as a contribution to the regional meeting on mobilizing aid for trade: la...

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