The Caribbean - January 2008
Australia's Relations with the Caribbean
The Caribbean comprises a diverse range of island countries, most of which enclose the Caribbean Sea and are formed by over 7000 islands, islets, reefs and cays. Australia maintains one diplomatic mission in the Caribbean, in Port of Spain, Trinidad and Tobago. Australia’s High Commissioner to Trinidad and Tobago is accredited to the Caribbean countries of Antigua and Barbuda, Bahamas, Barbados, Dominica, Dominica Republic, Grenada, Haiti, Jamaica, Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines, along with Guyana and Suriname on the South American mainland. The Australian Mission in Trinidad and Tobago also has consular responsibilities for Anguilla, Aruba, British Virgin Islands, Cayman Islands, French Guiana, Guadeloupe, Martinique, Montserrat, Netherlands Antilles and the Turks and Caicos Islands.
Australia has friendly relations with the countries of the Caribbean, based on shared historical, sporting, social and political ties and membership of the Commonwealth. The Caribbean accounts for a quarter of all Commonwealth countries and many Caribbean countries have political systems that closely resemble the British model. Many Caribbean countries are also valued partners in the United Nations and a range of international organisations. Australia’s main commercial link to the Caribbean is the presence of BHP Billiton in Trinidad and Tobago and Suriname. The Australia-Caribbean commercial relationship, however, is expanding from historically low levels as commercial ties in other sectors (eg fast ferries, mining sector services and manufacturing) begin to grow.
The sporting ties underpinning Australia’s warm relations with the Caribbean are based on a shared love of cricket and participation in events such as the Commonwealth Games. The Caribbean hosted the 2007 Cricket World Cup, won by Australia, from 5 March – 28 April in nine locations: Antigua and Barbuda, Barbados, Grenada, Guyana, Jamaica, St Kitts and Nevis, Saint Lucia, St Vincent and the Grenadines, and Trinidad and Tobago. Seventeen Caribbean countries and territories participated in the March 2006 Commonwealth Games in Melbourne.
The Countries of the Caribbean – Political Overview
Regional Social and Political Diversity
The Caribbean consists of the islands of the Greater Antilles and the Lesser Antilles and is spread across an area similar in size to eastern Australia, with a total population of approximately 39 million. The islands are linked by a similar culture and history. Guyana and Suriname, on the South American continent, are generally included as part of the Caribbean as their outlook tends to be more Caribbean than Latin American (particularly with Guyana's cricket and Commonwealth links). Both countries are members of the Caribbean Community (CARICOM), the region’s main political grouping.
The population of the various Caribbean countries and territories differs considerably, ranging from smaller countries with populations in the tens of thousands, to the Dominican Republic with a population of over nine million (2006 estimate). Though internal political disputes are common, the region is generally politically stable, notwithstanding ongoing instability in Haiti.
Strong former colonial influences are reflected in the main languages - English, French and Dutch. Spanish is also widely spoken. The Caribbean includes the British crown colonies of the British Virgin Islands, Cayman Islands and the Turks and Caicos Islands, and the British dependent territories of Anguilla and Montserrat. Guadeloupe (with administrative responsibility for St Martin and St Barthelemy) and Martinique are French overseas departments, and Aruba and the Netherlands Antilles are autonomous members of the Kingdom of the Netherlands.
Antigua and Barbuda
Antigua and Barbuda gained full independence from the United Kingdom in 1981. It has a stable constitutional parliamentary democracy, based on the British model, with a Westminster-style parliament. The Head of State is Her Majesty Queen Elizabeth II, represented in Antigua and Barbuda by HE the Governor General, Sir James Carlisle. Barbuda has its own nine member Council headed by its Chairman, Mr Randolf Beazer. The Council has responsibility for electricity, water and education.
For much of the twentieth century, domestic politics were dominated by the Bird family. The late Sir Vere Bird was an active figure in the West Indies independence movement and formed the Antigua Labour Party (ALP) in 1931. The ALP won the country’s first election, held in 1951, and maintained a parliamentary majority until 2004, with the exception of the five years from 1971-1976. Sir Vere Bird served as Prime Minister of Antigua and Barbuda from the time of independence in 1981 until 1994, when he was succeeded by his son, Lester Bird.
During the late 1990s, the ALP Government was weakened by internal turmoil, including allegations of mismanagement, bribery and misconduct, and suffered major losses in the March 2004 elections. The United Progressive Party (UPP) subsequently won the election and their candidate, Baldwin Spencer, became Prime Minister and Minister for Foreign Affairs. The next elections are due to be held in 2009.
The UUP Government inherited serious structural problems, including an unwieldy public sector, high fiscal deficits and a large public debt. Since assuming power, the UUP has embarked on a programme of good governance, passing the Freedom of Information Act, Prevention of Corruption Act and Integrity in Public Life Act.
Antigua and Barbuda is a member of numerous international organisations. These include: the Caribbean Community (CARICOM), United Nations (UN), World Trade Organization (WTO), Commonwealth of Nations, Organization of American States (OAS), Organisation of Eastern Caribbean States (OECS), International Criminal Court, and the Group of 77 (of which Antigua will assume Chairmanship in 2008).
Tourism is the mainstay of the economy and accounts for over half of the country’s GDP (of around US$750 million). Historically, US visitors have made up around one-third of all tourist visitors to Antigua, but a new US passports law which came into force on 8 January 2007 may harm the tourism-driven economy, as tourists will now require a passport to re-enter the US from the Caribbean, not just photo ID.
Services contribute over 80 per cent of Antigua’s GDP. Antigua also has a small manufacturing sector, producing mainly beverages and construction material, contributing around 11 per cent of GDP, and an agricultural sector contributing 7 per cent. The Government has also encouraged the development of the offshore financial sector, which has needed reform after reports of criminal links to money laundering.
In 2005, the WTO appellate body rejected a US appeal against an earlier WTO disputes panel finding that the US was in breach of its obligations under GATS in denying Antigua internet-based gambling service providers access to the US market.
Australia enjoys friendly relations with Antigua and Barbuda through our Commonwealth ties and our shared love of cricket. Antigua and Barbuda hosted six Super Eight matches in the 2007 Cricket World Cup. Australia assisted Antigua and Barbuda to host the event through the provision of radio equipment to establish a communications network for security and emergency purposes.
Two-way merchandise trade totalled A$1.8 billion in 2007, with A$1.6 billion in exports (mainly coated steel, meat, specialised machinery and telecommunications equipment) and A$226 million in imports (mainly preserved fruits, vegetables and metal containers). An Australian company is currently in negotiations with the Antigua Government on a project to build housing estates in the country.
Aruba
Aruba (population 98,000) is an island of 193 square kilometres located 27 km north of Venezuela’s Paraguana peninsula. Until 1986 it was a part of the Netherlands Antilles. Since that time it has been an autonomous state within the Kingdom of the Netherlands. Aruba’s popularly elected 21-seat parliament has responsibility for all domestic affairs. The Dutch Government, however, retains responsibility for foreign affairs, defence and some judicial functions.
Prime Minister Nelson Oduber of the People’s Electoral Movement was returned to office at the October 2001 general election following an earlier term from 1989-94. He was re-elected in 2005. Members of parliament serve four year terms.
Aruba has a per capita GDP of around US$22,000. Its economy relies heavily on tourism exports, which contribute over half of GDP. Most tourists visiting Aruba come from North America and Europe. Other major economic sectors include construction, oil refining and off-shore banking. There is some primary production (agriculture, fishing) on the island.
Dominica
The French were the first Europeans to settle Dominica and the island became a British colony in 1763. Located between the Caribbean Sea and the North Atlantic Ocean, about half way between Puerto Rico and Trinidad and Tobago, Dominica is a member of the Commonwealth. Dominica achieved independence as a republic in 1978, with the independence movement led by the leader of the Dominica Labour Party (DLP), Patrick John. Following a period of unrest, Eugenia Charles (Dominica Freedom Party) became the first female Prime Minister of Dominica, remaining in power until retiring in 1995. Roosevelt Skerrit (DLP) became Prime Minister in January 2004, following the death of the then DLP Prime Minister, Pierre Charles. Mr Skeritt was re-elected in May 2005, despite the DLP Government’s unpopular stabilisation programme and austerity measures.
Dominica’s economy is based on tourism and agriculture, with around 40 per cent of the workforce employed in the agriculture sector. The country’s primary exports include tobacco, bananas, vegetables, citrus, copra, coconut oil and essential oils. Major industries, other than tourism, include soap, furniture, cement blocks and shoes.
Dominican Republic
The Dominican Republic occupies the eastern two-thirds of the island of Hispaniola, between the Caribbean Sea and the North Atlantic Ocean. The country has one of the strongest economic growth rates in the region. The Dominican Republic formally gained independence in 1844, following rule at various times by both Spain and Haiti.
After nearly a century of political turmoil, a dictatorship was established by Rafael Leonidas Trujillo from 1930-1961. Following Trujillo’s dictatorship, in 1962, Juan Bosch was elected as President; however he was deposed in a military coup in 1963. This prompted the United States-led intervention into the Dominican Republic in 1965, amidst a civil war sparked by an uprising to restore Bosch. In 1966, Bosch was defeated in the presidential elections by Joaquin Balaguer, who governed the country for 30 years. In 1996, following international reaction to flawed elections, Balaguer was forced to end his term. This has paved the way for regular, competitive elections. Former President Leonel Fernández Reyna (1996-2000), of the Partido de la Liberacion Dominicana, won election to a second term in 2004, following a constitutional amendment allowing presidents to serve more than one term. Mr Fernández has presided over a strong economic rebound and has taken steps to restore stability after an economic crisis and surge in inflation in 2003-04.
The Dominican Republic has long been viewed primarily as an exporter of sugar, coffee and tobacco, but in recent years the services sector has overtaken agriculture as the economy's largest employer, primarily due to growth in tourism. Development prospects have improved since the ratification of the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) in September 2005, which created the second largest trading zone in the Americas, after NAFTA. The Dominican Republic continues to have marked income inequality, with the poorest half of the population receiving less than one-fifth of GDP, while the richest 10 per cent enjoy nearly 40 per cent of national income.
Grenada
Located north of Trinidad and Tobago, in the southeast of the Caribbean Sea, Grenada (population 106,000) comprises the main island of Grenada and seven so-called smaller Grenadine islands. A member of the Commonwealth, Grenada was ceded from the French to the United Kingdom in 1763 and became a Crown Colony of the British Commonwealth in 1877. Grenada has since had a tumultuous political history, exacerbated by Cold War dynamics. Grenada became a province of the short-lived West Indies Federation from 1958 to 1962. Independence from the United Kingdom was achieved in 1974, under the leadership of Prime Minister Sir Eric Gairy.
Gairy’s government became increasingly authoritarian, and in 1979 the popular left wing leader, Maurice Bishop, mounted a coup d’etat. Bishop’s Marxist affiliations and close relations with Cuba intensified discord, resulting in a domestic power struggle. Bishop was placed under house arrest and, along with many others, was executed in October 1983 during a hardline coup which brought the pro-Soviet/pro-Cuba General Hudson Austin to power. Six days later, at the request of the Governor-General and with CARICOM endorsement, the US invaded Grenada, with support from seven Caribbean states. An interim government was set up, and the New National Party (NNP) won the 1984 election and retained power until 1990. The NNP, led by Dr Keith Mitchell, regained a majority in the June 1995 election. It has since remained in power, winning the 1999 and 2003 elections.
Grenada was devastated by Hurricane Ivan in September 2004, which caused an estimated US$815 million in damage and drove the economy into negative growth. In 2005, the northern areas of Grenada, including its larger outer islands of Carriacou and Petit Martinique, were damaged by Hurricane Emily. With assistance from international partners, including Australia, the damage caused by Ivan and Emily is receding as Grenada recovers and its economy begins to grow positively once more. Grenada’s famed nutmeg and spice agricultural industry (Grenada is known as the Spice Island), however, will take many years to recover fully.
The tourism sector is the mainstay of the economy, with services accounting for around 75 per cent of GDP. This sector has recovered well from the damage caused by hurricanes Ivan and Emily and many hotels have been rebuilt.
Guyana
Guyana is located on the northern tip of South America and borders Suriname and Venezuela. It is the only member of the Commonwealth in South America. Originally a Dutch colony in the 17th century, the country became a British colony around 1815. Guyana’s social and political history has been characterised by strong ethno-cultural divides: the abolition of slavery led to black settlement of urban areas and the importation of indentured servants from India to work the sugar plantations. This has led to an ethnically and culturally diverse population.
Guyana achieved independence from the UK in 1966. Since that time it has been ruled mostly by socialist-oriented governments. In 1992, in what are generally considered to be the country’s first free and fair elections, Cheddi Jagan, of the People's Progressive Party-Civic (PPP-C), was elected President. Following President Jagan’s death five years later, his wife, Jane Jagan, became President, but she resigned in 1999 due to poor health. Her successor, Bharrat Jagdeo, was re-elected in 2001 and easily won the general election of August 28th 2006. Previous elections (in 1992, 1997 and 2001) were marred by large-scale strikes, protests and disturbances between ethnic Indians and black Guyanese. In 2006, the relative absence of politically and racially motivated violence was a notable feature of the electoral process. Nevertheless, key challenges for President Jagdeo’s government include bridging domestic racial divides, bolstering the weak economy, stemming the brain-drain and addressing an increase in drug trafficking and other crime.
Guyana is one of the poorest countries in South America, with the UN Development Programme (UNDP) estimating that around 35 per cent of the country’s population lives below a nationally defined poverty line. Reducing poverty and achieving other development objectives are key issues for President Jagdeo’s new government. Agriculture, mining (bauxite and gold), timber and shrimp farming are Guyana’s main economic activities. Expansions in the agricultural and mining sectors, a more favourable climate for business, a more realistic exchange rate, fairly low inflation, and the continued support of international organisations have helped bolster economic growth in recent years. Nevertheless, chronic economic problems persist, including a shortage of skilled labour and a deficient infrastructure.
Netherlands Antilles
The Netherlands Antilles (population approximately 185,000) consists of five islands in the Lesser Antilles chain. Curacao and Bonaire are located at the southern tip of the chain close to Venezuela, and Sint Maarten, Sint Eustatius and Saba are found at the very northern tip of the chain between Anguilla and Saint Kitts and Nevis. Sint Maarten shares its territory with the French territory of St Martin, which occupies the northern half of the island. Aruba, now an autonomous state within the Kingdom of the Netherlands, was part of the Netherland Antilles until 1986.
Between 2000 and 2005, referendums were held on each of the islands of the Netherlands Antilles to determine their future status. After protracted negotiations on future arrangements, the Dutch Government and the Antilles islands reached agreement in February 2007. By December 2008, Curacao and Sint Maarten will join Aruba as autonomous states within the Kingdom of the Netherlands. Like Aruba, Curacao and Sint Maarten will have parliaments with responsibility for all local government while operating under Dutch Government suzerainty (the Netherlands will retain control of foreign and defence policy and some judicial functions). In December 2008, the islands of Bonaire, Sint Eustatius and Saba will become special municipalities of the Kingdom of the Netherlands and function in the same manner as other municipalities in Holland. The Dutch Government also agreed to provide a grant of one billion guilders to the Netherlands Antilles for debt-repayment.
The Netherlands Antilles is currently governed by a 22 seat unicameral parliament based in the Curacao capital of Willemstad. Members of parliament elect a prime minister for a six-year term. The Head of State is the ruling monarch of the Netherlands, and is represented in the Netherland Antilles by a Governor. Regional administrations exist on each of the five islands. The Netherlands Antilles parliament operates under Dutch suzerainty and has autonomy in all domestic matters.
The Netherlands Antilles GDP was US$3.6 billion in 2007. Tourism, oil transhipment (from both Bonaire and Curacao) and oil refining and off-shore banking in Curacao have been the key drivers of the islands’ economies. Services account for around 84 per cent of GDP, industry (light manufacturing) 15 per cent and agriculture 1 per cent.
The main trading partners of the Netherland Antilles are the United States (32 per cent of exports) and Panama (10 per cent of exports). Venezuela is the source of around 50 per cent of all imports (consumer and capital goods).
Saint Kitts and Nevis
Comprising the smallest nation in the western hemisphere (population 41,000), the islands of Saint Kitts and Nevis are located in the Caribbean Sea, about one-third of the way from Puerto Rico to Trinidad and Tobago. Saint Kitts and Nevis is a member of the Commonwealth. The British settled Saint Kitts and Nevis in 1623 and the islands became an associated state with full internal autonomy in 1967. The island of Anguilla rebelled and was granted independence in 1971. Saint Kitts and Nevis achieved full independence in 1983, although separatist sentiment on the island of Nevis has proven resilient. In 1998, a vote in Nevis on a referendum to separate from Saint Kitts fell short of the two-thirds majority needed. The federal government has since recommended constitutional reform as an alternative to secession, but the fiercely partisan nature of local politics has made obtaining the necessary two-thirds majority support required to make such changes difficult to achieve.
In the federal election in 1993, the Saint Kitts-Nevis Labour Party (SKNLP) won 54 per cent of the votes on the main island. The minority People's Action Movement (PAM) Government, however, clung to power and riots broke out. A state of emergency was declared, and the SKNLP announced a parliamentary boycott. Fresh elections were held in 1995, presided over by Commonwealth observers. The SKNLP won seven of the eight seats on the main island and its leader, Dr Denzil Douglas, became Prime Minister. Under Dr Douglas’ leadership, the SKNLP was re-elected in the March 2000 general election, and again in 2004.
Combating transnational crime and drug trafficking have remained key challenges for recent governments. In 2006, efforts to extradite two alleged drug dealers to the US were finally successful and the alleged large-scale drug dealers were sent to the US for trial.
Saint Kitts and Nevis is an upper middle-income country and has a GDP per capita of US$12,595 in 2007. Tourism has overtaken both agriculture and the sugar industry as the country’s main export. In 2005, around 214,800 cruise ship passengers visited Saint Kitts and Nevis, and there were around 127,000 land visitors. Activities such as export-oriented manufacturing and offshore banking have assumed larger roles in the economy.
In 2007, Australian cricketer Matthew Hayden was made an honorary citizen of St Kitts and Nevis in recognition of his achievements during the group matches of the Cricket World Cup played in St Kitts.
Saint Lucia
The island of Saint Lucia is located between the Caribbean Sea and North Atlantic Ocean, north of Trinidad and Tobago. Saint Lucia is a member of the Commonwealth. Possessing a fine natural harbour at Castries, Saint Lucia was fought over by England and France throughout the 17th and early 18th centuries, before it was finally ceded to the UK in 1814. Self-government was granted in 1967 and independence in 1979.
The leader of the United Workers' Party (UWP), Sir John Compton, was successively Chief Minister and Prime Minister for most of the period from 1964 to 1996. Sir John retired in 1996, handing the party leadership to Vaughan Lewis. Under the leadership of Dr Kenneth Anthony, the Saint Lucia Labour Party (SLP) won the election that followed in 1997. In the general election of 2006, however, Sir John Compton who had returned to politics to lead the UWP was re-elected Prime Minister in a surprise landslide result. In September 2007, Sir John Compton fell ill and died at the age of 82. A few days later Stephenson King was sworn in as the new head of government.
St Lucia is the largest of the Eastern Caribbean countries and the location of the headquarters of the Organisation of Eastern Caribbean States. In 2007, St Lucia switched its diplomatic recognition of China to Taiwan. This led subsequently to China suspending diplomatic relations with St Lucia and curtailing its development projects on the island.
Saint Lucia is an agricultural island, producing tropical commodity crops. The tourism sector is growing considerably, and tourism is now the major source of foreign exchange. Saint Lucia has a larger population and has undergone much greater economic diversification than most of its neighbours, as a result of changes in EU import preferences and increased competition from Latin America in the banana trade. The country has expanded its offshore banking industry and attracted greater levels of foreign business and investment. Saint Lucia’s manufacturing sector is now the most diverse in the Eastern Caribbean area.
Saint Vincent and Grenadines
The islands of Saint Vincent and the Grenadines are located between the Caribbean Sea and the North Atlantic Ocean, north of Trinidad and Tobago. It is a member of the Commonwealth. Saint Vincent and the Grenadines was disputed between France and the United Kingdom for most of the 18th century, before it was finally ceded to the UK in 1783. Between 1960 and 1962, Saint Vincent and the Grenadines was a separate administrative unit of the Federation of the West Indies. Autonomy was granted in 1969 and full independence in 1979.
Sir James Mitchell, of the New Democratic Party (NDP), was Prime Minister from 1984 to 2001. In 2000, widespread public protests developed in reaction to legislation that provided for generous increases to parliamentary pensions. After talks brokered by CARICOM, a fresh election was held in March 2001. The election was won by the Unity Labour Party (ULP), led by Dr Ralph Gonsalves. The ULP won a second term with an almost identical result in December 2005.
Saint Vincent and the Grenadines has one of the smaller GDPs of the Organisation of Eastern Caribbean member states (approx US$350 million). Economic growth hinges upon seasonal variations in the agricultural and tourism sectors. Tropical storms wiped out substantial portions of crops in 1994, 1995 and 2002, and tourism in the Eastern Caribbean is still recovering from the lows experienced following 11 September 2001. Saint Vincent is home to a small offshore banking sector and has moved to adopt international regulatory standards. Like most Caribbean countries, transnational crime, including drug trafficking, has also become increasing prevalent.
Suriname
Suriname is located in the northern tip of the South American continent, bordering the North Atlantic Ocean between French Guiana and Guyana. Political instability has characterised much of the country’s contemporary history. Suriname was settled by the British in the mid 17th-century, but became a Dutch colony in 1667.
Independence from the Netherlands was granted in 1975, but after just five years of civilian government a military regime came to power and declared a socialist republic. The military continued to exert control through a succession of nominally civilian administrations until 1987, when international pressure finally forced a democratic election. In 1990, the military overthrew the civilian leadership, but a democratically elected government – a four-party New Front coalition – returned to power in 1991. The New Front coalition has remained in power since 1991, despite frequent internal political disputes.
The mining industry dominates the economy, accounting for more than a third of GDP. This is expected to grow as Suriname begins to focus on the development and exploitation of its hydrocarbon resources. Australia’s BHP Billiton is active in Suriname and mines bauxite there. Since coming to power in 2000, and following his re-election in 2005, President Runaldo Venetiaan has implemented a number of austerity programs to help liberalise the economy, promote fiscal reform and control spending. Opportunities exist to develop further the bauxite and gold mining sectors.
Please also refer to the individual Country Briefs for Trinidad and Tobago, the Bahamas, Jamaica, Haiti and Barbados.
Regional Cooperation
Over the past decade, the Caribbean states have made efforts to integrate their economies and increase their combined voting power in multilateral organisations. The major regional organisations are the Caribbean Community (CARICOM), the Association of Caribbean States (ACS), and the Organisation of Eastern Caribbean States (OECS), a sub-regional grouping of six eastern Caribbean countries and three UK dependent territories. CARICOM is predominantly the English-speaking Caribbean plus Suriname and Haiti, comprising 15 members and around 13 million people. The ACS represents the Greater Caribbean, consisting of 25 members (including the Central American countries of Guatemala, Honduras, El Salvador and Mexico) and four Associate Members (Aruba, France – on behalf of French Guiana, Guadeloupe and Martinique – the Netherlands Antilles and Turks and Caicos).
While CARICOM focuses on enhancing greater regional integration and a single market economy, the ASC has broader aims of regional cooperation and addressing regional issues such as sustainable development, health (especially rampant HIV/AIDS) and tourism. The OECS, which has its headquarters in St Lucia, is dedicated to economic harmonisation and integration, protection of human and legal rights, and the encouragement of good governance.
In April 2004, the Caribbean Court of Justice was inaugurated. All CARICOM member countries have passed legislation to recognise the CCJ in its original jurisdiction (ie as a disputes mechanism for the CSM). To date, however, only Barbados and Guyana recognise the CCJ in its appellate jurisdiction – ie as a replacement for the UK Privy Council as the Court of last resort. This reflects the absence of bipartisan support in many countries for the replacement of the Privy Council, and a concern among some that the CCJ will become a “hanging court.” On 8 November 2006, in its first ever sitting in its appellate jurisdiction, the CCJ rejected a challenge by the Government of Barbados to an earlier decision by the Barbados Court of Appeal to commute to life imprisonment the death sentence handed down to two Bajans convicted of murder.
Economic Overview
The economies of the Caribbean are considerably diverse. A number of the smaller islands have GDPs of only $300 -$600 million. The largest of the Caribbean countries, the Dominican Republic, has a population of over 9 million and a GDP of around US$35.5 billion (2007). Trinidad and Tobago, with a population of just over one million, is the leading Caribbean producer of oil and gas and has a GDP of approximately US$20.7 billion. In contrast, Haiti, the poorest and least developed country in the Western Hemisphere, has a population of 8.3 million and a GDP of around US$5.3 billion (2007).
Economic and Trade Policy Directions
Smaller 'single commodity' economies in the Caribbean have been drastically affected by the demise of preferential trade arrangements for agricultural products, particularly bananas and sugar. The agriculture sector traditionally accounted for significant employment. Recently tourism and financial services have become the leading contributors to economic growth as the region responds to the challenges of diversifying economies.
Many Caribbean countries are members of the network of Small Island Developing States, an initiative of the United Nations Development Program. As small developing states, these countries are vulnerable to fluxes in global economic activity and tourism flows. As micro-states they have argued that because the small scale of their economies has little impact on the world economy, "special and differential treatment" should apply in any post-Doha, World Trade Organization agenda. Small Caribbean countries also want to receive special treatment within the Caribbean Single Market (CSM), which took effect on 1 January 2006.
Jamaica, Barbados, Belize, Guyana, Suriname and Trinidad and Tobago formally joined the CSM on 1 January 2006. Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia and St Vincent and Grenadines ratified the agreement in July 2006. The CSM is intended to enhance export opportunities and attract foreign investment by creating a single market among the participating member states. The main objectives of the CSM are to promote full use of labour (full employment) and to maximise production and exploitation of the region’s natural resources and capital. The CSM also hopes to improve competitive production and stimulate production of a greater variety and quantity of products and services, to maximise trade with other countries. These objectives are intended to promote sustained economic development and improve standards of living and work. A Caribbean Single Economy (CSE) is scheduled to come into effect in 2008 which, among other things, will look at the adoption of a common currency and common economic policies.
Trade and Investment
The Caribbean’s major trading partner is the US, followed by the EU. Australia's trade with the Caribbean is low, albeit growing modestly, with the balance generally in Australia's favour. The Caribbean region is growing as a destination for Australian foreign direct investment. While investment in the oil and gas sector by companies such as BHP Billiton accounts for a large proportion of the traditional direct investment, there is growing investment in the financial services sector in Caribbean locations such as the Cayman Islands. The Cayman Islands economy is based almost entirely on thriving tourism and offshore finance sectors, and it enjoys the highest GDP per capita in the Caribbean.
Export Opportunities
Possible niche trade opportunities for Australian exporters include:
Mining and related services:
Opportunities exist in the Dominican Republic, Suriname and Guyana. Opportunities also exist in the offshore oil and gas sectors in Suriname and Guyana, especially if border disputes can be resolved.
Fast ferries, pleasure boats, light vessels:
This sector presents a variety of opportunities. There is scope for developing fast ferry services within the region, especially the Eastern Caribbean, as an alternative to expensive inter-island air transport. The tourist sector generates a requirement for light and pleasure water craft.
Tourism and related infrastructure:
The economic backbone of many small Caribbean countries is tourism, with the region’s tourism totalling around US$21 billion. Around 18 million cruise ship visitors visited the Caribbean in 2005, and there were approximately 15 million land visitors. This creates opportunities for Australian companies in the area of resort development and management. Tourist industry services, such as hospitality training, are another area of potential investment.
Food and beverage:
The region imports processed food both for the domestic market and to cater for the 10 million tourists visiting the region each year. This generates demand for good quality international items such as cheese and milk products, meat and wine.
New technologies:
These include Australian polymer banknotes, construction, computers and computer accessories. Deregulation of telecommunications sectors in the region and the upgrading of facilities offers opportunities in telecommunications hardware and software.
Power generation:
The cost of traditional sources of power generation (ie petroleum products) is a major burden for Caribbean economies. With an abundance of sun and wind, many of these countries enjoy something of a comparative advantage where alternative technologies for power generation are concerned.
Education:
There is a demand for education services, particularly tertiary education, outside the region which is currently largely met by the US and Canada. Australian institutions are in a strong position to compete in this market.