Geneva.– Despite their small size, economies in the Caribbean must strive to become more competitive to fully reap the benefits of global trade integration.

The report, “Caribbean: Accelerating Trade Integration. Policy Options for Sustained Growth, Job Creation, and Poverty Reduction,” presented today at the World Trade Organization’s (WTO) Committee on Trade and Development, acknowledges the region’s efforts in pursuing an external trade policy over the past three decades anchored on preferential access to the European and North American markets, but stresses that the Caribbean’s integration into the world economy has been slow and compares poorly with some Asian countries with similar levels of integration 30 years ago.

“A new global and regional trade environment presents the Caribbean countries with critical challenges, but also many opportunities to reposition itself as a growing and competitive region, translating into significant economic and social gains,” said Yvonne Tsikata, World Bank Director for the Caribbean.

Economic growth in the Caribbean countries is expected to slow down relative to 2007 as these economies have been hit hard by recent shocks, including a recession in the U.S. economy, the global financial crisis, and a period of high food and fuel prices. Lower economic growth and consumption in North America and Europe could reduce exports, remittances, tourism, foreign direct investment and foreign aid.

With an aggregate GDP of about US$70 billion in 2005 and a population of about 25 million people, the Caribbean economy is relatively small, three times smaller than Ireland’s. Growth performance has varied widely across countries and has been highly volatile: St. Kitts and Nevis, St. Vincent and the Grenadines, Grenada, and Antigua and Barbuda have had the highest growth trend in the long-run, whereas Haiti, Jamaica, and Guyana, the slowest.

Deficiencies in access and low quality of infrastructure and low labor productivity have resulted in relatively high production costs, which coupled with an elevated export concentration and undiversified production sectors, have continued to limit the region’s ability to compete on international markets.

The region also suffers from skill mismatching and shortages. Presently, most of the Caribbean countries’ overall performance of doing business ranks below that of comparable developing countries, including Mauritius, Hong Kong, Malaysia, and Singapore.

While many Caribbean countries (most notably Trinidad and Tobago, Dominican Republic, and Jamaica) have undertaken policy measures to improve their trade policy, important weaknesses remain in five major areas:

Customs procedures and administration;

Legal framework for businesses, including taxation;

Comprehensive competition policy;

National institutions in charge of trade policy formulation and implementation; and

Trade policies have thus had limited outcomes. Trade costs are relatively high in the Caribbean, potentially impeding trade.