Free Trade Association

The regime for the free movement of goods started with the establishment of the Caribbean Free Trade Association (CARIFTA) in 1965.

CARIFTA was in essence a free trade area. In such a free trade area, members agree to eliminate tariffs, quotas and preferences and all other barriers to trade on most (if not all) goods produced within the area. In the case of CARIFTA however, Members still maintained quotas on certain goods and provisions were made for the imposition of duties on certain sensitive goods which were produced in the Less Developed Countries.

Customs Union

According to the GATT 1994, a Customs Union is an agreement among nation states in which substantially all restrictions to trade among them are removed and a common tariff and the same regulations of commerce are applied by all of the Members to the goods imported from non-members.

CARIFTA was replaced by the Caribbean Community and Common Market in 1974 (the actual Treaty of Chaguaramas was signed in 1973 and the Community and the Common Market were two separate legal entities). Though called a Common Market, in practice it was really a customs union where in addition to eliminating the barriers to trade in goods, the Member States established a Common External Tariff. This Common External Tariff is simply a harmonized schedule of duties that would be applied to goods produced outside of the region.

The net effect was that the Common Market area was protected for goods produced within the region. Within this regime, the special treatment for certain sensitive industries in the LDCs (Belize and the OECS) was maintained. It therefore meant that sensitive goods as identified by the LDCs would enjoy duty free access to the entire market, while the same goods produced in the More Developed Countries would not enjoy similar treatment – that is to say the rules of origin or tariff treatment would be suspended for such goods. This provision was articulated in Article 56 of the Original Treaty (Common Market Annex).

There are no import duties on goods of CARICOM origin. Tariffs and quantitative restrictions in all Member States are removed. The treatment of intra-regional imports will be different from those coming from the rest of the world.

In addition, there will be agreed regional standards for the production of goods throughout the Region. This could be a major incentive for producers/manufacturers to aim at a high standard of products. Manufacturers will be able to get their goods to over six million (14 million if Haiti is included) people in the Caribbean.