USAID CBJ FY 2002: Caribbean Regional

Summary: Marginal economic growth and the concurrent lack of new employment opportunities are two of the most critical problems facing the Caribbean. The region is characterized by small domestic economies largely dependent on export revenues (including tourism) for growth. Most islands received preferential trade status from both the United States and Europe in the past, resulting in distorted agricultural investment, particularly in bananas and sugar. Due to heavy reliance on relatively few exports and tourism products, and the relatively high costs of transportation and telecommunications, dismantling the preferential trade regimes has resulted in serious and substantial displacements, especially in the Windward Islands. Economic growth has also been constrained by the limited capacity of these small nations to carry out the policy and regulatory analysis required for implementation of Free Trade Area of the Americas (FTAA) and World Trade Organization (WTO) trade standards.

To address some of these constraints, USAID is working with the public and private sectors to reduce barriers to increased production and marketing of goods, including non-traditional agricultural goods. Beneficiaries are the populations of the targeted Caribbean countries, particularly those who are directly displaced by economic restructuring. The project covers the Caribbean region but places special emphasis on the Eastern Caribbean countries, and complements other ongoing USAID bilateral activities. Two critical goals of this initiative are to increase the production and trade of select non-traditional, diversified products and services.

Key Results: Significant changes in the level of employment in production/provision of select non-traditional goods and services are not expected until the latter years of implementation. USAID is revisiting indicators to reflect a more manageable level of increased production and export. These indicators will be reported with baseline data later this year.

Performance and Prospects: Performance is meeting expectations. Extensive design work has been completed and activities are in the initial stages of implementation. An Activity Approval Document was approved in March 2000, and various sub-grants and cooperative agreements are expected to be signed in early 2001 for overall project implementation.

In 2000, USAID provided technical assistance and policy consultation to the Government of Barbados in order to help draft telecommunications reform and electronic commerce legislation. A final draft of the Telecommunications Bill, which moves the telecommunications sector from a monopoly to a free market environment, has been completed. The bill is expected to go to the parliament by the end of March 2001 after a process of public consultation. In early 2001, USAID plans to provide technical assistance to eastern Caribbean countries for drafting regulations under the newly established regulatory authority for the Organization of Eastern Caribbean States (OECS). Assistance includes drafting model licenses and requirements for implementing regulations, and support in policy areas such as interconnection and tariffs, licensing, spectrum allocation and management. USAID also plans to initiate the development of telecenters throughout the OECS to support economic projects using information technology (IT) applications, and to undertake an assessment of IT capabilities in the region's educational and training institutions.

Technical assistance has been provided to the Caribbean Community (CARICOM) member countries through the Regional Negotiating Machinery (RNM) to establish a trade information network ("Virtual Secretariat"). A website was established in Barbados and was connected to seven of the RNM's offices. Computer hardware and software were provided to all 15 CARICOM countries with 13 of the 15 trade ministries connected to the website. This trade network will allow for the effective participation of CARICOM member countries in the negotiation process towards their ultimate participation in the FTAA. To strengthen CARICOM's regional capacity to effectively participate in negotiations, USAID will provide training to assist the RNM to expand its pool of skills in international trade-related matters.

The Caribbean Association of Industry and Commerce (CAIC) is developing a competitiveness program for the small and medium enterprise sectors. In 2000 USAID provided technical assistance through the U.S. firm, Frontier, to sensitize the business community in the region to develop enhanced competitiveness. With USAID support, Frontier and CAIC are currently preparing a regional strategic action plan which identifies key areas of training required by the private sector and establishes a series of performance measures to improve productivity, promote competitiveness, better understand the needs of customers, and focus on results.

In previous work done under the Hemispheric Free Trade Expansion activity related to agricultural trade policy, USAID conducted an evaluation in the Eastern Caribbean to determine its future assistance needs. Recommendations were made to assist the OECS with drafting legislation on sanitary and phytosanitary (SPS) measures relating to animal/plant health and quarantine. This legislation is required to enable OECS countries to comply with the WTO agreement on SPS measures governing trade and agriculture, expand market access, and provide for fair competition through transparency. USAID plans to work with the Pan American Health Organization (PAHO) to provide the necessary technical assistance to the OECS.

In 2001, USAID and the Export Development Unit of the OECS Secretariat will provide support to small and medium enterprises to improve competitiveness, expand market access, and increase exports within a target enterprise base. This activity includes a technology and innovation activity that will provide technical assistance to targeted enterprises with emphasis on quick responsiveness to identified individual company business needs in technical, managerial and financial areas.

In FY 2001, approximately $900,000 will be provided for initial support to the development of small and medium sized enterprises; approximately $600,000 to promote increased free trade; and approximately $1,000,000 for initial strengthening of the telecommunications sector in OECS member countries.

These activities will be expanded in FY2002 with approximately $1,260,000 provided to support development of small and medium sized enterprises; approximately $840,000 to promote increased free trade; and approximately $1,400,000 for strengthening the telecommunications sector in OECS member countries. In addition, a $1,000,000 scholarship and internship fund will be established to promote private sector Caribbean leadership.

Possible Adjustments to Plans: Consideration is being given to recasting the strategic framework to reflect lower level and more manageable indicators. A scholarship and internship fund focused on building understanding in key economic and financial areas will promote private sector Caribbean leadership and competitiveness in the global economy.

Other Donor Programs: USAID is working with the World Bank and the Inter-American Development Bank (IDB) in shaping telecommunications and information technology activities. USAID initiatives in telecommunications will directly complement a larger IDB program designed to cover the entire region. The development agencies of Canada and the United Kingdom are involved in trade reform and integration, both with the RNM and CARICOM. Activities will also expand on the European Union initiative.

Principal Contractors, Grantees, or Agencies: International partners include the RNM, OECS, CAIC, and PAHO. Local partners include the Government of Barbados.

Caribbean Regional Program 538-004

U.S. Financing

(In thousands of dollars)

	Obligations		Expenditures		Unliquidated
Through September 30, 1999	307	DA	23	DA	284	DA
	0	CSD	0	CSD	0	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Fiscal Year 2000	150	DA	174	DA
	0	CSD	0	CSD
	2,500	ESF	0	ESF
	0	SEED	0	SEED
	0	FSA	0	FSA
	0	DFA	0	DFA
Through September 30, 2000	457	DA	197	DA	260	DA
	0	CSD	0	CSD	0	CSD
	2,500	ESF	0	ESF	2,500	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Prior Year Unobligated Funds*	0	DA
	0	CSD
	0	ESF
	0	SEED
	0	FSA
	0	DFA
Planned Fiscal Year 2001 NOA	0	DA
	0	CSD
	2,500	ESF
	0	SEED
	0	FSA
	0	DFA
Total Planned Fiscal Year 2001	0	DA
	0	CSD
	2,500	ESF
	0	SEED
	0	FSA
	0	DFA
			Future Obligations		Est. Total Cost
Proposed Fiscal Year 2002 NOA	0	DA	0	DA	457	DA
	0	CSD	0	CSD	0	CSD
	4,500	ESF	4,500	ESF	14,000	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA

Caribbean Regional

Activity Data Sheet

Caribbean Regional Program 538-004

U.S. Financing