CARIBBEAN ACP COUNTRIES

This regional profile deals with the 15 Caribbean countries with which the European Union conducts a wide range of economic and development cooperation policies under the Lomé Agreement. General economic growth in the Caribbean ACP countries has been rather disappointing since 1980, with the region's gross domestic product rising by a modest 0.8% per annum between 1980 and 1993. Unfavourable price trends for the main products exported by Caribbean countries, the recession suffered by the western industrial nations at the beginning of the 1990s, changes in international terms of trade, internal political conflicts, bad weather conditions and, last but not least, only partial success in broadening their export basis were all determining factors explaining the weakness of the Caribbean economy. It is solely because of the strong resurgence of tourism, the most important factor in the region's economy, that initial estimates for 1994 predict slightly higher growth in GDP of between 1.5 and 2%. The dovetailing of foreign trade exchanges by the Caribbean countries with western industrialized nations can be seen in their existing trade relations. In 1992-93, 47% of total goods exports went to North America and 22% to the EU, whilst 41% of the goods imported into the Caribbean ACP countries came from North America and a further 20% from the EU. A similarly high level of dependency existed in the field of services. The Caribbean tourist trade, which in some countries is a much larger foreign exchange earner than goods exports, virtually owes its existence to American and European holidaymakers. The economic outlook for the Caribbean is uncertain given the rather downbeat medium-term trade prospects, and it is still heavily dependent upon the economic development of its main foreign trade partners. In view of the changes in international terms of trade since the conclusion of the last Uruguay Round, Mexico's entry into NAFTA, and the constraints expected to be imposed upon preferential access to the EU market with the expiry of Lomé IV and the revision of the EU's common agricultural policy, the export prospects for a whole series of important export products (clothing, sugar, bananas, rice) are looking rather bleak. Economic diversification has become a matter of the utmost urgency in almost every country, in order for them to achieve lasting economic growth in the future and avert the threat of dwindling trade flows. In this respect, the establishment of further export free zones, the increased cultivation of non-traditional agricultural export products, eco-tourism, offshore banking and computer services could all turn out to be promising niches with worldwide markets. In the field of regional economic integration, the Caribbean countries need to raise their sights beyond the Caribbean community (Caricom), which was set up in 1973 with the aim of developing a common Caribbean trade and customs policy and now numbers 13 of the 15 ACP Caribbean countries. The opportunities for economic development offered by this economic community are too limited due to the extremely small internal markets of its member States. It was for this reason that all the Caribbean countries present at the last summit meeting of American States in Miami in December 1994 expressed an interest in joining an enlarged NAFTA. At the present moment, it is not possible to give a final answer to the question as to how this could be squared with their existing status as ACP countries and with the conditions of the Lomé Convention. It is, however, more than likely that if they were to join NAFTA, the EU would have to redefine its economic relations with the Caribbean ACP countries.