C A R I B B E A N C
O M M U N I T Y S
E C R E T A R I A T
THIRTY- FIRST MEETING
OF
THE
STANDING COMMITTEE OF
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EUROPEAN COMMISSION EuropeAid Co-operation Office Africa,
Directorate |
FINANCING PROPOSAL
9 ACP RCA 12 & 13
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Recipient Country |
ACP
Member States of CARIFORUM |
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Requesting Authority |
Regional
Authorising Officer, CARIFORUM |
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Project Title |
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Aid Method |
Contribution Agreement and project approach |
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Total cost |
€ 41,565 EDF
contribution € 40.5M CARICOM
contribution € 900,000 UNDP
Contribution € 165,000 |
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Sectoral Classification (according to Classifications) |
33130 Regional Trade Agreement |
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Identification No. |
RCA/003/05
rev |
Allocation
RIP €57
million |
71% |
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DAC code of Implementation |
3130 |
Sector |
Regional
Trade Agreement |
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1.
RATIONALE
1.1 EC aid policy objectives and priorities
The
Cotonou Agreement attaches particular importance to regional economic
integration and trade support. These
areas are also among the priorities listed in the Statement of the Council of
the EU and the European Commission on the European Community’s Development
Policy of
The
overall objective of the Caribbean Regional Indicative Programme (CRIP) is the
beneficial integration of the Caribbean Region into the world economy, through
a global repositioning aimed at achieving sustainable economic growth, regional
cohesion and stability, and continued improvements in living conditions. The CRIP specifies that CARIFORUM, the EC’s
implementing partner, will endeavour to establish a harmonised economic space
for the generation of sustainable and equitable economic growth aimed at entry
into the global economy and poverty reduction. The project is, therefore, fully
coherent with the CARIFORUM Regional Strategy Paper and RIP. Furthermore, the
mid-term review conclusions confirmed that the current RIP was adequate to meet
the needs of the Millennium Development Goals and of Regional integration; and
that it seemed to correspond to the main needs of the Region. The mid-term
review also envisaged available funds being used for some additional small
projects, among which are,
1.2 Lessons learnt
It
has become clear that, with the globalisation of economies, the small Caribbean
countries, which tend to be dependent on agriculture and are often
mono-cultures, have to stand together to face and deal with their national
economic difficulties; they need to band together to create larger markets,
practising economies of scale, to increase intra-Regional trade and to make
themselves more attractive to foreign investment. The physical, economic and
social constraints of the Region, described below, make such integration
particularly necessary. In addition, the Region can then offer more competitive
products to other countries. The RIP for 9th EDF is more oriented
than previous RIPs towards promoting integration within the
CARICOM
was established in 1973 by the Treaty of Chaguaramas. In 1989, its Governments
decided to advance towards the CARICOM Single Market and Economy (CSME) which
aims to achieve a single market in which people, goods, services and capital could
move freely. This is a major and costly Regional integration operation, which
still requires much to be done before completion and which the present programme
will support. The CARICOM Single Market (CSM) took effect from
An
evaluation carried out on behalf of the Commission in 2004, whilst recognising
the achievements of EC co-operation in the Region, also recognised that the
allocation of resources in the past had broadly focussed on countries, sectors
and institutions rather than on real strategic issues. The present programme
aims at addressing the strategic aspects by focussing on key aspects of
Regional integration and by providing most of the funds through the principal
agency for the co-ordination of Regional integration, namely the CARICOM
Secretariat. Furthermore, with the merging of the CARIFORUM Secretariat
function into the CARICOM Secretariat, the linkage between CARICOM and the
Dominican Republic (DR), in the context of EDF programming, should be
strengthened. It is hoped that this will also advance the links between the DR
and the CARICOM countries. Such co-operation is particularly important in view
of the size of the DR population and the fact that it is contiguous to
Economic
Partnership Agreements (EPA) were envisaged under the Cotonou Agreement in
order to strengthen trade relations between the EU and, in this case the Caribbean,
in a manner that is compatible with the World Trade Organisation rules but
which also has a major development component so as to assist the Region to advance
economically and socially to face the challenges of global trade liberalisation.
Thus, much needed support to EPA negotiations will form a part of this programme.
The programme will also support: improving expertise in ICT (Information and
Communications Technology) for development; statistical work, the trade
negotiations of the Organisation of Eastern Caribbean States (OECS)[2],
and combating illegal drug trafficking, a serious problem in the Region. The major
task of achieving the CSME will be facilitated by the provision of human,
logistical and financial support and, indeed, this is the major component of
the programme. Since the CARICOM
Secretariat is now undertaking the technical functions of CARIFORUM, it will
require capacity building and other institutional support, provided by the programme.
This
programme will also support activities intended to more closely integrate
1.3. Complementary actions
The
tenor of ongoing RIP projects under 8th and 9th EDF is
improving the economy of the Region and promoting greater integration. Regional
Sustainable Tourism (€8 million), Caribbean Trade and Private Sector
Development (€2,6 million), air access to
The
CSME, which is one component of the present programme, is also supported at the
EU bilateral level, by DFID, who financed an extensive analysis entitled
‘CARICOM Single Market and Economy: Assessment of the Region Support Needs’ and
currently has in place a ‘Regional Assistance Plan for the Caribbean’ up to
2007. At the multi-lateral level,
assistance has been provided by the Inter-American Development Bank (IDB), the
World Bank, UN Agencies, USAID and CIDA. Assistance is being provided by USAID
for translation of some legal documents at the CARICOM Legal Drafting
Facility. Statistical development in
CARICOM has benefited from ad hoc support from CIDA, UNDP, the World Bank and
UN/ECLAC although that support did not focus on economic statistics, which is
intended in the present programme.
The
macro-economic management component of the present project will be financed
through the Caribbean Regional Technical Assistance Centre (CARTAC), which is also
being financed by the Caribbean Development Bank (CDB), IMF, World Bank and
UNDP under a cost sharing agreement.
Support
for the Caribbean Court of Justice, which has as its primary mandate the
interpretation of the provisions of the Revised Treaty of Chaguaramas, has been
provided by the UNDP and the IADB; some €1.3 million is envisaged for the Court
under the 9th EDF RIP
1.4. Donor co-ordination
Donor Co-ordination in the Region is currently being guided
by the Paris Declaration in Aid Effectiveness which most of the Region’s donor
partners have adopted. This Declaration seeks more coherence, accountability,
improved performance and harmonisation in the delivery of donor assisted
programmes. At present, there is very little donor co-ordination, except in the
field of HIV/AIDS and with the RNM. In the context of the CSME, the CARICOM
Secretariat has agreed to play a lead role in the co-ordination of donor
supported activity. The Secretariat is seeking to work with the donor community
to ensure that the implementation, reporting and monitoring functions of
Regional programmes are conducted in a similar fashion. This will lead to
better information sharing on donor activity and reduced duplication of effort
(should it currently exist) and should facilitate monitoring of progress with the
CSME. This should also facilitate the EC’s active participation in the
programme approach for the implementation of the CSME. In the case of the
present programme, the EC Delegation in
2. REGIONAL
CONTEXT
2.1. Economic and social situation
CARIFORUM
countries are mostly small island states. The smallest island is
The
Caribbean Region is a Region blessed with the advantages of a good climate, a
relatively educated population and, in most countries, established democratic
systems. CARIFORUM countries have open economies and are thus vulnerable to
external developments, such as the recent major increases in oil prices, and the
loss of or reduction in preferential access to EU markets. Geographic and
environmental vulnerabilities are pronounced and include an annual hurricane
season (25 hurricanes in 2005 alone), floods and volcanic eruptions. Social
vulnerabilities, related particularly to illegal drugs, arms trafficking and
crime, place heavy burdens on the limited institutional and financial
capacities of countries in the Region.
CARIFORUM
countries are overwhelmingly Anglophone in terms of the number of members but,
in terms of population numbers, they are dwarfed by the Hispanophone Dominican
Republic and Francophone Haiti. Furthermore, Dutch is the language of
2.2. Development Policies of the CARIFORUM
Region
CARIFORUM
countries have adopted an ‘outward oriented’ regional integration policy, which
interprets regional integration as a mechanism for participation in the global
economy. All CARIFORUM Member States, except
A
€75 million Work Programme to implement the CSME has been developed by CARICOM
Secretariat. This is being financed through contributions from CARICOM Member
States and with donor support. The Work Plan identifies major outstanding requirements/issues
that need to be tackled for the full establishment of the CSME. Among those
issues of major relevance with regard to the Region’s objective to increase
both intra- and extra-regional trade are: strengthening of the Regional
Organisation providing services related to standardisation within the CSME and
for export goods; as well as measures in favour of enhancement of customs
administration practices and procedures to facilitate trade and business. As
regards the legal framework, a US$100 million Trust Fund financed by CARICOM
Member States, has been established and its proceeds will finance the recurrent
operations of the Caribbean Court of Justice, which was formally opened in
April 2005 is empowered to interpret the provisions of the Revised Treaty of
Chaguaramas.
2.3. Sector context
The
primary objectives of the CSME include the following: to improve living
standards, to create full employment, to facilitate economic development
convergence, to enhance international competitiveness, to increase levels of
production and productivity, and to facilitate trade and economic expansion.
As
regards implementation of the provisions of the Single Market, progress has
been made in respect of liberalisation of the main elements of the internal
market, namely: goods; services; skills and establishment. Capital market
liberalisation continues to be a challenge, as well as the building of
institutions and strengthening, reform and modernisation of administration at
national and community levels.
EPA
negotiations with CARIFORUM are also ongoing and have reached phase 3, with the
next step, a text of an Agreement to be drafted for Ministers due at the end of
2006. The many meetings both within the Region and, more particularly in
Support
to CARTAC is included in the programme as a continuation of previous EDF
support from the 8EDF RIP, along with other donor support, since the ad hoc
technical support and training given to Governments in various macro-economic
fields has proved very helpful for formulating policy at the national
level. The funding for the extension of
To
enable the CARICOM Secretariat to manage this package of aid according to their
own procedures and thus to increase ownership, the Commission considered that a
Contribution Agreement signed between the CARICOM Secretariat and the Commission
would be the best way to proceed. In order to have such an agreement, the
Commission needed to be assured of the sound financial management of the
CARICOM Secretariat. External auditors were therefore recruited to carry out an
audit of the CARICOM Secretariat financial, procurement and recruitment
procedures. The auditors concluded that the CARICOM Secretariat benefited
"from a robust internal control environment, which is based on the
principles of segregation of duties and good governance"; the auditors
recommended some changes, of which the most important have been accepted by the
two parties. Funding to meet some of the costs of implementing these changes is
included in the institutional support to CARICOM component of the present
project, as well as general institutional support.
Two
feasibility studies were commissioned by the EC Delegation in Guyana to prepare
for this major package of EDF support, namely, an" Organisational Audit –
CARIFORUM/CARICOM Capacity Building/Institutional Support Study" and the
"CARICOM/CARIFORUM Action Plan Support and Implementation of the CARICOM
Single Market and Economy", in addition to the above-mentioned financial
audit made of the CARICOM Secretariat. Feasibility studies were also carried
out for the ICT, the statistics and the drug control components of this
programme. EUROSTAT contributed to the statistical work. The CRNM component is based on the Strategic Plan of the CRNM and
a related draft Financing Proposal, and CARTAC intervention is based on the
CARTAC Programme Support Document (UNDP/IMF).
3. DESCRIPTION
3.1 Objectives
The
overall objective is to contribute to the Region's integration and
repositioning in the world economy. The project purpose is to address capacity
constraints of CARIFORUM and its
3.2 Expected results and main activities
PROBLEMS
TO BE ADDRESSED
The
specific problems, in achieving effective economic integration and development
within the Caribbean Region, which will be addressed by this programme include:
Policy,
strategic, legal, institutional and capacity issues arising out of the Region’s
work to create a CSME. The programme
will provide assistance to advance the CSME in certain priority areas. The
CARICOM Secretariat itself needs more staff and capacity building, as well as
more logistical resources. The programme will provide capacity building within
CARICOM, including in the fields of ICT and statistics, and externally through
its support to CARTAC. The programme will also put in place an enabling
environment which will address constraints and seek to promote the Information
Society and to standardise and harmonise statistical data. As mentioned above,
the CRNM and OECS lack human and financial resources to carry out the EPA and
other international trade negotiations. Support to the OECS Geneva office will
also complement the Region’s efforts to coordinate its position at the WTO
which the OECS island economies are struggling to do at present because they
are suffering from the effects of the sugar and banana market reforms. At present,
the OECS Geneva office is being supported out of all-ACP funds. Civil society and, in particular the private
sector, need to be more involved in the building of the CSME and in the EPA
negotiations; this will be addressed in the present programme.
The
challenges arising out of the language diversity of the Region will be addressed
since the programme will contribute to the CARICOM Institute of Translation and
Interpretation. This is particularly important as a means of better integrating
Deficiencies
in regional transportation infrastructure are another hindrance to bringing
about the CSME. This programme will make a limited intervention in the regional
transport infrastructure through contributing to the upgrading of
There
are many problems arising out of illegal drugs, crime and related activities
and this programme will attempt to deal with some of these at the CARICOM
level. Additional support to deal with these major problems will be considered
in 10 EDF programmes.
RESULTS
1.
Establishment and consolidation of the CSME.
2.
Improved external trade negotiating capacities
of
3.
CARICOM Institute of Translation and Interpretation
established and operational.
4.
Improved and harmonised production of
statistical data at national and regional levels.
5.
Caribbean Information Society established.
6.
Supply and Demand for illegal drugs reduced.
7.
Improved macro-economic management (CARTAC).
8.
Phase II Ogle Airport Development,
9.
Capacity to co-ordinate regional programmes,
effectiveness of regional programmes and financial management in CARICOM
Secretariat enhanced.
MAIN
ACTIVITIES (see annexes for details)
1. (i) Establishing
and consolidating the legal and institutional framework of the CSME;
(ii) Reviewing and improving mechanisms and
regulations for national treatment and market access;
(iii) Developing and improving framework for
macroeconomic and sectoral policy co-ordination;
(iv) Implementing business facilitation measures
through improved operational effectiveness of
CROSQ (Caribbean Regional
Organisation for Standards and Quality)
(v) Enhancing institutional and management
capabilities within customs administrations ; improving
operational effectiveness of
procedures affecting business transactions; increasing transparency of
operations of customs services affecting
cross-border transactions.
(vi) Promoting
measures to protect stakeholders’ interests and welfare, particularly labour
and
consumer protection;
(vii) Supporting
CSME administrative capacities at national and regional levels;
(viii) Developing and implementing programme
of education for public on benefits of CSME;
(ix) Providing
institutional support to Work Programme management and administration;