Central American and Caribbean leaders gathered in Miami in December to discuss the future of trade in their regions. In one year in one country, 20,000 citizens have moved up above the poverty level because of the Central American Free Trade Agreement (CAFTA) and the resulting 5% economic growth. The 5% growth provides a good start, but speakers warned that economic growth must exceed 7% each year in order to overcome rampant poverty in the area.
The only way to achieve growth rates higher than 7% in the Caribbean Basin is through direct foreign investment. In order to attract investment at the levels needed, business and government in the area need to set aside their “cultural tendencies” of corruption and consistently apply more responsible business practices.
CAFTA-compliant nations have instituted honest arbitration systems to resolve business conflict. However, local courts often won’t enforce the judgments.
President Frederico Sacasa opened the conference by saying that although each country could continue to operate separately politically, economically they need to come together.
Each speaker highlighted improvements that have been made in the past year, while emphasizing the tremendous opportunities that still threaten the stability of the area in every way. Alberto Moreno, president of the Inter-American Development Bank, expressed his opinion that great opportunities exist in Trinidad and Tobago’s energy industry, and in the production of crude oil in Barbados and Suriname. He also pointed out that improved communication and education are producing economic rewards in the region. Moreno talked about new Central American projects including international highways, hydroelectric dams, water systems, fiber-optic lines and electricity grids. He cautioned that in spite of these gains, the region’s economy is still not competitive enough and is still very vulnerable to external factors like climate, geography, and world financial volatility.
Prime Minister Owen Arthur of Barbados told the conference that he is still holding out hope for the Free Trade Area of the Americas (FTAA). The FTAA was supposed to have come to completion in 2005 but Venezuela, Argentina, Bolivia, and Brazil rejected the terms, saying the treaty would increase poverty across the globe. Arthur said that the threat the countries face without the FTAA is of being left out of trade all together.
The trade programs known as the Caribbean Basin Initiative are intended to facilitate the economic development of the Caribbean Basin economies. This program has been in place since 1983 and was expanded in 2000 to provide 24 countries with duty-free access to the U.S. market for most goods.