THE FASTEST-growing part of the Caribbean economy is the services sector. It is also one of the few areas in which smallness, fragmentation and all the other characteristics that are said to disadvantage the Caribbean are largely irrelevant. For this reason, the sector if that is not a misnomer for so varied a range of activities has come to represent a significant part of the region's future.
Despite this, it may be the next in a long line after sugar, bananas and rice, value-added products such as rum and offshore financial centres, to be subject to attack in international trade negotiations.
At its most obvious, the services sector is tourism and the myriad ancillary activities that support hotels, airports and cruise ships and provide hundreds of thousands of jobs across the region. But the sector is significantly wider than this.
COMPOSITION
It includes financial services, shipping and telecommunications and takes in all of the professions from architects through lawyers to dentists and doctors. It embraces those who work in information and communications technology (ICT) and the media. Less obviously, it is also the many small and medium-size enterprises (SMEs) that operate in every Caribbean country from the artists and musicians to the accountants.
What all these activities have in common is that they are indigenous, knowledge-based, and require those involved to have had a sound education and ideally creative ability. What makes such industries unique is that to a significant extent, they offer the opportunity for economic growth in a manner that enables the Caribbean to become the base for commercial activity that can be sold across the region and ultimately the world.
A 2005 World Bank report points to this. It notes that offshore education, health services and ICT all offer areas of potential growth. It observes that in education, the region's 23 offshore and onshore Caribbean medical schools, have responded to a growing and unfulfilled demand for physicians in the United States so that they now account for close to 70 per cent of the international medical graduates entering the U.S. The report also notes that demographic trends in the U.S. suggest that there is scope for an expansion of cross-border health services in a manner that could create opportunities for Caribbean health services and health-tourism providers. It cites Le Sport in St. Lucia and the rehabilitation service offered by Island Dialysis in Barbados as examples.
But much more needs to be done to make the regions service industries competitive.
Central to their development is the effective use of ICT and the creation of a sustainable strong educational infrastructure. This requires a more competitive telecommunications sector that is able to provide high-speed Internet services at a reasonable cost for both small and large companies, deliver reliable global connectivity and for governments to regionally harmonise ICT policies.
ENHANCEMENT OF
THE SKILLS BASE
A vibrant and growing services sector also requires constant enhancement of the skills base in every Caribbean nation.
Services have the unparalleled capacity to create higher-paying employment and to lift the region out of its reliance on jobs for primary agriculture, but this will take time. Services are highly competitive. They pit companies in the Caribbean against others not just in neighbouring islands but against others that might be in Costa Rica or South Africa.
For this reason, such industries need time to mature. In certain cases, they require degrees of protection restaurants, small hotels, taxi services, for example, secure in the knowledge that they remain locally-owned and an authentic part of the regional identity.
Alarmingly, this may not be allowed to happen.
There are signs that in trade negotiations on services that Europe may be taking a hard mercantilist approach towards the Caribbean.
ADVANCING EU INTERESTS
Over the last week, a number of Caribbean organisations and those close to the negotiations for an economic partnership agreement (EPA) with Europe have commented privately on this. They make clear that European negotiators, far from seeing services negotiations with the Caribbean as a step towards enhancing regional development, appear to regard their role as to try to force open the Caribbean services market in a manner that advances the interests of EU companies.
While some of the blunt language currently being used may represent a negotiating strategy, there are strong indications that on services the EC will take an offensive line against the Caribbean when it comes to negotiating an EPA. This view is bolstered by the fact that in the tourism sector in particular, large European commercial interests are seeking commercial advantage from the negotiations.
If the EC continues down this route and is not able to accept that services the one area in which the Caribbean might hope to have long-term competitive advantage need a more sympathetic approach, then any last vestige of belief in an EPA being a tool for development will be gone.
Small hotels, taxi drivers, restaurateurs, to say nothing of the many thousands of individuals just gaining a foothold in the services sector, cannot be swept away by generic demands for market opening, free movement and the many other negotiating issues that touch on services providers.
A trade negotiation between the Caribbean and Europe is not the same as one between Europe and the United States. The EC's Trade Commissioner, Peter Mandelson has recognised this. He has noted that any EPA will be development oriented and suggested that Europe "is very sensitive to the unique challenges of development in the Caribbean and it is deeply committed to helping the region manage its economic transformation."
For most, the language of trade negotiations on services is impenetrable. For this reason, the little-understood and frequently arcane discussions on these issues in Brussels and Geneva warrants significantly more attention from the industries concerned and from governments. If the industries that represent a significant part of the future of the Caribbean and their elected representatives do not take careful and early note of what is happening in Brussels, the last remaining source of the region's future wealth may prove illusory.
David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org. Previous columns can be found at www.caribbean-council.org.
