When it comes to identifying new trading opportunities up north, the USA always serves as a starting point for the Caribbean family. Yet, as a nation that regularly ranks within the world’s top ten biggest economies, Canada is a powerhouse in its own right. It is a country that has had a long trading relationship with the Caribbean region, and one that wishes to grow stronger trading links with like-minded states in an international community currently in the grip of a protectionist fever not seen since the first half of the 20th century.
But even though the relationship with Canada is one of promise, it’s also not without hurdles, and potential pitfalls for Caribbean states seeking to grow trade without wounding industry at home. So what has held back further progress in this space? And what are the prospects for the future of the relationship in the 2020s?
The History and the Present of Canada-Caribbean Trade
It is only in (comparatively) recent times that the country of 37 million and this region of over two dozen nations have approached their relationship with independence from European colonial powers. Beyond the economic links alone, the shared aspiration to be free of European rule and American domination has seen close ties forged between Canada’s governing class in Ottawa and those across Caribbean capitals.
More recently, over the past decade, aluminium ores, gold, alcohol and vegetables have been leading regional exports to Canada; with Canadian wheat, medicines, fish, meat and paper enjoying strong demand locally. In 2017 these goods contributed to total Canada-CARIBCAN trade (exports plus imports) of CAN $1.9bn.
Canada’s Prospects for the 2020s
Canada’s progress over the past decade illustrates the foundations on which it will build in the 2020s. Its largest city, Toronto, overtook Chicago during the 2010s to become the 4th biggest in North America, behind Mexico City, New York, and Los Angeles. Out west, Vancouver is looking to develop a world-leading tech sector to rival that in the US giants of Seattle and Silicon Valley which are today world-famous for their innovators like Microsoft and Apple.
Canada’s GDP growth throughout the past decade has been consistent, if somewhat lacklustre. But, as the fundamentals of its economy appear solid at the start of this decade – with exports staying resilient, the real estate market returning to strength after a lull in 2019, and unemployment rates reaching historic lows in numerous parts of the country – it is expected that once global issues such as Brexit reach a conclusion, Canada will be able to achieve even stronger growth.
Making a Trade with CARIBCAN
Currently, the Canadian-Caribbean economic relationship is largely driven by one particular agreement: in 1986 the Caribbean Canada Trade Agreement (CARIBCAN) was introduced. CARIBCAN is non-reciprocal, providing Caribbean countries preferential, duty-free access to Canada’s market for many Caribbean goods, while imposing tariffs on Canadian goods entering the region.
Somewhat unsurprisingly, Canadians have been keen to do away with CARIBCAN and strike a new agreement – a free trade agreement (FTA). Between 2007 and 2016 alone there were seven rounds of negotiation between Ottawa and CARICOM surrounding the establishment of an FTA, all of which were ultimately unsuccessful. Initially, Ottawa signalled that it would not seek to renew the CARIBCAN waiver in 2013 but, after an array of back and forth and the failure to obtain an FTA that would replace the existing agreement, Canada made a request to the World Trade Organization, that was subsequently granted, to obtain an extension until 2023.
A Frank Talk Among Friends
Historically, the enduring challenge to forming a new FTA has been seen in the diversity of Caribbean trade, and accordingly the disparity in outcomes. For while nations like Jamaica and Trinidad and Tobago have enjoyed a strong trading relationship with Canada (and have previously been earmarked as regional states that would stand to benefit most from an FTA), for others, the incentives for an FTA are far smaller; and in some nations, even pose a danger instead of an asset to future profitability.
Those in the Caribbean who look upon the prospect of a Canadian FTA as they did the Economic Partnership Agreement with the European Union in 2008 – as an agreement that constricts instead of enhances the capacity for local economic growth – will view the delay of Caribbean states entering another big agreement with a major economic power as right
and proper.
Oiling the Wheels
Although obtaining an FTA between Canada and regional nations has been a challenge, the recent oil finds in Guyana and Suriname have added a new dimension to this dynamic. Canada has traditionally been hungry for natural resources from the region, and the oil boom in these two states provides them with a new point of leverage in any future FTA.
As aforementioned, there remain many hurdles ahead in the relationship and, with seemingly easier paths on offer for both parties in growing trade profitability elsewhere, then it is possible that in ten years’ time we may still be noting the inability of the latest round of negotiations to go anywhere.
That said, Canada and Caribbean states are committed to growing links in new markets in the 2020s, recognising that failure to do so threatens to see them slide backwards in profitability while economic powerhouses in Asia and Africa come to the fore. While some nations may be ready once more to flirt with protectionism in the 21st century, those that have long since committed their economies to engaging in globalised trade know that there has never been a more crucial time to strengthen economic friendships, when a number of the world’s largest economies seek to rock the boat in catering to the mood of domestic stakeholders.
