The Caribbean countries and the Free Trade Area of the Americas

Abstract

The Caribbean countries are acutely conscious of their small size, whether judged by one or all of the criteria of land area, population or gross domestic product (GDP);. Paradoxically, this impels them to join a larger trading group for fear that they might otherwise be denied a place in the mainstream of international activity. This article analyses several characteristics of small countries, with particular attention to those that seem especially relevant to the Caribbean. The paper notes that small size does indeed place greater demands on the national leadership as regards appropriate and consistent economic management, while the citizens of small countries live at higher levels of risk, whether due to the vagaries of the weather or to the turmoil of international markets. It also recognizes that the range of production options open to such countries is inherently limited and that the transitional costs of entering the Free Trade Area of the Americas (FTAA); might be high, especially as some Caribbean countries have been pursuing policies which run somewhat counter to the new requirements. Emphasis is therefore placed on the lack of preparedness of many small countries for entry into such a market, and proposals are made as to internal and external policy options which might be chosen for this purpose. It is also suggested that, in order to mitigate the short-term transitional costs of entry and enhance their ability to participate in the new grouping, small countries should try in the prior negotiations to secure some transitional arrangements regarding internal policies, measures to increase the production of exportable goods, and joint negotiating strategies.