Can CARICOM/Canada Trade and Investment flows be revitalized?
By Elizabeth Morgan
Canada, although having a longstanding relationship with the Caribbean Community (CARICOM) and its Member States, being in the hemisphere and the Commonwealth and the third major trading partner, does not usually generate much attention and scrutiny in the region. The planned visit by Prime Minister Justin Trudeau in February, as Canada campaigned for a seat on the United Nations (UN) Security Council, sparked region wide media interest. This visit was postponed. Canada was unsuccessful in its bid for a non-permanent seat on the Security Council.
Canada is a development partner whose support within the region is focused on disaster preparedness, climate change, women’s empowerment, security, integration, the energy sector and current COVID-19 response, among other things. Canada is also known annually for its Seasonal Agricultural Workers Program and Temporary Workers Programs, which see people from the Caribbean, primarily Jamaica, employed in Canada. Of course, Canada is a primary destination for immigrants from CARICOM countries.
Having looked at CARICOM’s trading relationship with the USA, Africa, Europe and Latin America, I thought that this week, I would focus on Canada. I referred to the history of the CARICOM/Canada trading relationship in my article of May 28, 2019 titled “CARICOM/Canada: Know your Friends” and examined the diaspora relationship in my article of June 19, 2019 titled ”A United Caribbean Diaspora?”. From the latter, you may recall that there are approximately 800,000 persons of Caribbean origin residing in Canada with the majority, over 300, 000, from Jamaica.
Canada’s trade policy
Canada, the world’s second largest country in land mass, presents a smaller market of nearly 38 million people and has a gross domestic product (GDP) of US$1.74 trillion. In 2019, Canada remained in the world’s top ten (10) economies.
The Canadian economy is driven by international trade which is 66% of its GDP and accounts for 2.4% of global trade in goods and services. Under the administration of Prime Minister Trudeau, Canada’s trade policy is based on its commitment to multilateralism, supporting reform of the World Trade Organization (WTO); implementing its trade diversification strategy aimed at increasing exports by 50 % by 2025; and ensuring that the benefits of trade are inclusive of all segments of society through public consultations and provisions that protect and strengthen labour and the environment, advance gender equality and women’s empowerment, consider the interest of small and medium sized enterprises (SMEs), and indigenous peoples. Canada’s principal trading partners are the USA and Mexico, hence it has focused on the revision of the North American Free Trade Agreement (NAFTA) which has now become the US, Mexico and Canada Agreement (USMCA). Following disputes with the USA, which insisted on the renegotiation of NAFTA and applied tariffs on Canadian steel and aluminum exports, Canada emphasized its diversification strategy to accelerate trade negotiations with other countries, e.g. India, and promote already existing free trade agreements (FTAs), including those with the European Union and the Asia Pacific region.
Trade/Investments with CARICOM
CARICOM countries have been trading with Canada under the non-reciprocal Canada/CARICOM Trade Agreement (CARIBCAN) since 1986. This, because of its unilateral nature, requires a Most Favoured Nation (MFN) waiver at the WTO.
From 2009-2015, CARICOM and Canada were negotiating an FTA which was suspended by Canada. The MFN waiver for CARIBCAN was renewed at the WTO up to 2023.
The volume of merchandise trade between CARICOM countries and Canada is actually quite low. CARICOM has a surplus with Canada, exporting in 2019, an estimated US$944.61 million and importing US$768.31 million.
Trade in services is shown in Canadian statistics as concentrated on travel, commercial services, transportation and government services. In travel and leisure (tourism), Canada is a principal source market for the Caribbean. The Caribbean Tourism Organization informs that, in 2019, 886, 300 Canadians came to CARICOM countries with the majority, 395,561, visiting Jamaica.
In financial services, Canadian banks dominated in Caribbean commerce since 1864 beginning with the Royal Bank of Canada followed by the Bank of Nova Scotia. At the beginning of 2020, Canadian banks (Scotia, Royal Bank of Canada, and Canadian Imperial Bank of Commerce) had restructured or withdrawn from several CARICOM countries. Scotia Bank remains in Jamaica, Barbados, and Guyana, just.
On investments, Barbados and Trinidad and Tobago have investment treaties with Canada. From available information, Canada’s level of investments into the CARICOM region since 2015, also seems very low. Between 2015-2018, Canada’s investments in the Caribbean, including Cuba and the Dominican Republic, were valued at US$864 million. Canadian investments into Jamaica between 2015-2019 were valued at US$410.1 million. There is Canadian interest in Guyana’s oil industry and there was interest in developing the cannabis industry in Jamaica.
Outside of bilateral consultations, there is still currently no formal mechanism through which CARICOM and Canada can engage on trade and investment issues. The Canada/CARICOM Joint Trade and Economic Committee (JTEC), linked to the 1979 Canada/CARICOM Trade and Economic Cooperation Agreement, has been dormant since 2002.
I am proposing that the UWI and Brock University’s Canada/Caribbean Institute and others, including UWI’s Sir Shridath Ramphal Centre and the Canadian Council for the Americas, convene a virtual discussion on the realities of CARICOM/Canada Trade and Investments in this time of COVID-19. Is it desirable and feasible to expand trade and investments between Canada and CARICOM Member States?
Submitted by Elizabeth Morgan, Specialist in International Trade Policy and International Politics