Summary
Trade liberalization and economic integration are powerful tools for reforming less competitive economies and improving conditions for private sector development and sustainable economic growth. As local markets are opened to foreign producers and investors, domestic consumers and producers alike benefit from access to a greater variety of lower cost and/or higher quality goods and services. Better consumer purchasing power, producer gains from lower cost inputs, new ideas and technology, and foreign direct investment, can result in more employment, faster economic growth and increased government revenue for poverty reduction efforts. Getting to this point, however, often requires policy reforms that are technically challenging to implement and politically difficult to sell to businesses and workers with a vested interest in the status quo.
For the Eastern Caribbean States, there are significant concerns about the impact of these reforms and the adjustment process on social cohesion and standards of living. However, as members of the WTO and the Caribbean Single Market and Economy, many of these reforms are already required as part of membership obligations. More importantly, there is widespread recognition within the OECS (Organization of Eastern Caribbean States) and elsewhere that these and other reforms are essential to the ability of Eastern Caribbean States to thrive as independent economies. In this paper, I argue that even accounting for the legitimate challenges of adjustment, the FTAA represents an unparalleled opportunity to balance the concerns of local businesses and workers with the benefits derived from improved market access, investment opportunities, trade-related technical assistance and capacity building. Through the FTAA, the Eastern Caribbean would have the opportunity to generate both the technical capacity, and the political capital, for confronting many of the difficult and contentious economic reforms that are so essential to their future well being.
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