Despite its relatively small size, Trinidad and Tobago has played a significant role both politically and economically in the Caribbean since its independence from the UK in 1962. Given its strategic location at the southernmost point of the region, the island serves as a nexus between the island nations to the north and its southern neighbours on the South American mainland. It has been part of CARICOM since its inception in the 1970s and has close relations with a number of Spanish-speaking countries, including Venezuela, Cuba, Guyana, Suriname and the Dominican Republic.
CARICOM is a supranational organisation consisting of 15 member countries and five associate members, including all independent Anglophone countries in the region as well as Belize, Guyana, Montserrat, Aruba, Colombia, the Dominican Republic, Mexico, Puerto Rico and Venezuela.
While the most common language of the organisation is English, Spanish, French and Dutch are also spoken. The total population of member states is 16m, with 60% under the age of 30. The bloc was created out of the pre-independence West Indies Federation and the Caribbean Free Trade Association, which lasted from 1967 to until 1972, when Caribbean leaders decided a common market should be formed. As such, it is the oldest integrated supranational network in the developing world. CARICOM’s first four signatories were Barbados, Guyana, Jamaica and T&T on July 4, 1973 in Port of Spain. While the overarching mission is to deepen integration and build resilience, the organisation’s pillars lie along four lines: security, economic integration, coordinated foreign policy, and human and social development.
CARICOM’s Council for Trade and Economic Development (COTED) aims to promote trade and economic development throughout the community, as well as administer the CARICOM single market. COTED’s shorter-term agenda is focused on reviewing the strategy and challenges associated with the implementation of the CARICOM Single Market and Economy (CSME), including the necessary legal framework and alignment of competition practices. The CSME is comparable to the EU and the Association of South-East Asian Nations.
One issue of particular concern is Brexit, as the UK is an important market and trading partner for CARICOM. In April 2019 T&T signed an economic partnership agreement between the members of the Caribbean Forum – that is, Caribbean countries in the African, Caribbean and Pacific Group of States – and the UK that was inked the month before. The agreement ensures continued preferential access to the UK market and minimal disruption as the UK leaves the EU.
The revised version of the bloc’s original Treaty of Chaguaramas was agreed upon in 2001 and came into force on January 1, 2006. It shifted the organisation from a common market to a single market and included most CARICOM member states – with the exception of the Bahamas and Montserrat, which remain part of the original treaty. The most notable consequence of the new treaty was the removal of barriers to trade for labour, services, capital and technology, as well as the free movement of people. It also harmonised the region’s economic, investment, fiscal and monetary policies.
The transformation of CARICOM to a single market resulted in the creation of the CSME, the unit of the secretariat charged with assisting small regional economies that face declining growth and reduced access to preferential markets. At the outset, the single market’s function was to help member states better integrate into the global economy and repeat the success of other international trade blocs.
Only 11 km off its coast, T&T’s closest neighbour is Venezuela. While the South American economy is in recession and experiencing high inflation and a volatile currency, it remains an important partner in terms of energy. Particularly regarding the exploration and extraction of natural gas. In August 2018 the countries’ heads of state signed an memorandum of understanding (MoU) to export 150m standard cu feet of gas per day to T&T for onward export, allowing Venezuela to profit from its natural gas in international markets and supplying T&T with cheap energy. However, in June 2019 local media reported that Venezuela had provided Russia control of new gas deposits off T&T, along with 100% of all gas rights to Russian state-controlled Rosneft. Also in 2019, T&T approved Shell’s exploration of the Manatee natural gas field that straddles its maritime border with Venezuela. The move came after delays by the Venezuelan administration in approving the joint development of the larger Loran-Manatee field, approximately 30% of which is within T&T’s maritime borders and is estimated to hold 10trn standard cu feet of gas.
An ally of both the US and Venezuela, T&T has taken a neutral stance on the political crisis in the South American country and abstained a vote at the Organisation of American States in January 2019 about whether to recognise Venezuelan opposition leader Juan Guaidó as the legitimate president. The exodus of Venezuelans in the wake of the crisis has had a notable effect on T&T. The estimated 40,000 Venezuelan refugees who now reside in the twin-island nation have received a mixed welcome, and T&T lacks a formal asylum system to deal with the influx (see Country Profile chapter).
T&T and Guyana have close relations based on a shared language, colonial history and demographics. Most notably, T&T supplied Guyana with hydrocarbons on credit during the 1970s and 1980s when its economy was experiencing structural difficulties. This period also saw a large number of Guyanese emigrate to T&T to find work. Due to underdeveloped infrastructure and unfavourable geographical attributes that would be needed for the establishment of deep-sea ports, T&T is likely to serve as a logistics platform for Guyana as the latter begins to export oil to global markets, at least in the short to medium term (see analysis).
A country of almost 600,000 people, Suriname shares a border with Guyana to the west, Brazil to the south and French Guyana to the east. Formerly a colony of the Netherlands known as Dutch Guyana, Dutch remains the official language. After a period of economic contraction following a drop in commodity prices in 2014, IMF-backed reforms helped the country exit from a recession in 2017, and its economy grew by 2% in 2018. It is forecast to post stronger growth for 2019 (2.2%) and 2020 (2.5%). Suriname’s economy remains mineral dependent, and the country is a major exporter of gold, bauxite and oil.
The government has engaged in structural reforms to reduce both the fiscal and current account deficits, and encourage wide-ranging privatisation. While economic performance has been subdued, there has been improvement in GDP growth, inflation, employment and the current account deficit.
T&T is Suriname’s most important trade partner in CARICOM, and there are renewed efforts to boost economic collaboration between the two countries through sectors such as tourism. In June 2019 Suriname Airways and the country’s tourism association marketed Suriname to Trinbagonians as an alternative tourist destination to the Dutch Caribbean island Curaçao. Surinam Airways now flies between Port of Spain and the capital Paramaribo five times a week. The tourism authority is also in the process of developing special packages for tourists from Europe to visit Suriname and T&T on two-stop holidays.
The neighbouring island of Barbados shares a common heritage with T&T. Barbados had a GDP of $5bn in 2018 and a population of around 300,000, making it among the wealthiest nation in the Eastern Caribbean. Its economy was largely based on sugarcane but has now diversified towards tourism and light industry. While ties between Barbados and T&T have been strong in the post-colonial period, there have also been occasional political tensions, including a dispute surrounding their territorial waters that was resolved in 2006 by the Permanent Court of Arbitration.
Relations appear to have improved in more recent years and economic collaboration is strong, regardless of past issues between the two sides. In August 2019 the two countries signed an MoU establishing the framework for future cooperation in energy security, exploration, development and production that extends across their maritime boundaries. Barbados and T&T are also in discussions about opening shared diplomatic missions to a number of countries in Africa and Asia.
Both Jamaica and T&T declared independence from the UK in August 1962. Jamaica is CARICOM’s largest English-speaking country and has the fourth-highest population in the region. While T&T has focused on developing its petroleum industry, Jamaica has made a transition towards services such as finance and tourism. Throughout the second half of the 20th century Jamaica experienced low levels of growth and accumulated a public debt of 145% of GDP. The IMF implemented two successive support programmes designed to lower public debt, restructure the economy and restore growth in 2013 and 2016. As a result, unemployment is down and growth is positive – forecast at 2% for FY 2018/19 – largely buoyed by mining, construction and agriculture.
In 2012 a trade facilitation desk between the two countries was established to compensate for cutbacks on commercial attachés from both governments. The bilateral collaboration also sought to reduce barriers to trade and encourage collaboration on both the governmental and private sector levels.
Jamaica has been recognised as being at the forefront of the technological revolution in CARICOM. “T&T has got an enormous amount to learn from Jamaica regarding ICT,” Dirk Prudent, director of local geospatial engineering company Giscad, told OBG. “With its governmental strategy and engagement geared towards ICT, it is the leader in CARICOM and many of these processes should be emulated by T&T.”
Occupying the eastern half of the island of Hispaniola, the Spanish-speaking Dominican Republic has the third-largest population in the region after Cuba and Haiti, respectively. Its capital city of Santo Domingo has the largest population of any urban centre in the Caribbean, at 3.7m.
The country is a CARICOM observer state and signed a free trade agreement with the bloc in August 1998. The Dominican Republic’s main exports to T&T are sauces, bananas, candles and cigars, and the country sent $31.8m worth of goods and services to the twin-island nation in 2018. Imports from T&T – dominated by petroleum products – were over 10 times higher, reaching $319.9m that same year.
The Caribbean’s largest island with the biggest population has maintained strong relationship with T&T, despite its isolation from the US since its 1959 revolution. Cuba is an important economic force in the Caribbean. Around 80% of regional goods imported to Cuba arrive via T&T, and a number of Trinbagonian companies are active in Cuba, including Carib Glass, Sacha Cosmetics, Trinidad Tissues, Caribbean Airlines, ANSA McAL Carib Brewery and ANSA Coatings. At the launch of Expo Caribe 2019 in April 2019 Norris Herbert, the permanent secretary of T&T’s Ministry of Trade and Industry, said his country’s goal was to increase non-energy exports to Cuba by 50% by 2020.
Challenges to Growth
Many of the economic challenges that the Caribbean faces are rooted in its geographical dispersion and smaller populations that are reliant on trade with larger markets and trade blocs. “Our small economies face a number of challenges, which we have to confront head-on,” Irwin LaRocque, secretary-general of CARICOM, said at a COTED meeting in April 2019. “Nevertheless, we continue to demonstrate to the world that a group of small and vulnerable economies can make progress on the basis of joint commitments to human and economic development. Small size should not in and of itself be a hindrance to progress. What matters is the extent to which we continue to develop our human capital, foster innovation within our economies and present ourselves to the outside world as a region that is welcoming to international partnerships and investment.”
Moving forward, it will be necessary to maintain momentum behind the convergence of the region’s economy in order to give CARICOM more collective weight and allow it to become more prominent in the global political economy. Shared challenges such as prolonged low commodity prices, climate change and reforms in the global banking sector following the 2008 financial crisis will continue to affect member countries.
Despite these challenges, CARICOM member states are in a position to be optimistic about their shared potential in the coming decade. According to the IMF, the region’s economies are expected to grow by 2% in 2019 and 2020, supported by economic expansion in the US and recovery from the 2017 hurricanes. Improving economic performance, integration and collaboration in sectors such as energy have put the Caribbean in an advantageous stead. Policies that centre around the regional harmonisation of regulatory procedures will likely prove important in reducing barriers to increased social integration and intra-regional trade (see analysis).
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