Lessons from the OECS

During a recent presentation, Eastern Caribbean Central Bank Governor Sir Dwight Venner remarked that the Organisation of the Eastern Caribbean States (OECS), an economic union under the Revised Treaty of Basseterre establishing the Organisation of Eastern Caribbean States Economic Union ratified in 2011, had managed to accomplish a far greater and successful intergration than the wider Caribbean Community (CARICOM).

For him, the OECS’ determination to hold fast to its currency value and currency union, despite detractors heralding its demise, had been driven by the fact that these smaller economies would not be able to survive individually. The union, according to Sir Dwight, has already traversed some of the storms which the European Union now faces. He added that the success of the sub-region was a necessary condition for the success of CARICOM, “with its much closer and deeper arrangement [and with] its common currency”, and that if the OECS did not succeed, the chances of CARICOM being able to do so were that much less.

Indeed, the region as a whole, has found itself – whether it cares to admit it or not – looking to the Eastern Caribbean, stigmatized as “poor relations”, to see how it should chart a path of Caribbean integration. While some of the bigger economies have been accused of “pompasetting”, the fact remains that we still have sore points surrounding movement of goods – and to a smaller but vital extent, services – movement of labour, both skilled and unskilled, and even movement of capital, due to variations in legislation governing taxation, currency-related risks, and differences in business facilitation practices.

Regional Stock Exchange

The issue of movement of capital and the above-mentioned variations in jurisdictional practices were highlighted in several fora over the last week, as it relates to the idea of a Caribbean Stock Exchange. Touted by major players in the market as necessary for growth in equity trading in the Caribbean, research suggests that an active equity market is an important engine of economic growth in the CSME.

The problem here is that CSME is not working, at least not how many envisioned it on paper. Said Sir Dwight of the “vexed” issue: “There was no progress with the regional initiative… [so] we [the OECS] then had to do what should have been done across the board”.

The concern of some is that most trading would likely occur in Trinidad or amongst Trinidadians. The consensus is that many countries still have along way to go in getting their publics to invest and become equity traders. The ideal of giving Caribbean people an opportunity to buy into equities and provide much needed funds which would be necessary to finance economic activities without the region having to depend too much on extra-regional sources for funding, remains an ideal in the far distance. At the end of the day, and despite the best efforts by those who have laid the foundation for such an exchange to be possible, it rests in governments’ hands to streamline tax laws, information systems and so on, which if not done could make investing in the region unattractive and laborious.