Front Cover
 Title Page
 Table of Contents

Title: Conference on economic coordination in the Caribbean held at San German, Puerto Rico, May 17-19, 1965
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Permanent Link: http://ufdc.ufl.edu/UF00001340/00001
 Material Information
Title: Conference on economic coordination in the Caribbean held at San German, Puerto Rico, May 17-19, 1965
Physical Description: Book
Creator: Conference on Economic Cooridation in the Caribbean
Publisher: Conference on Economic Cooridation in the Caribbean
Place of Publication: Hato Rey, Puerto Rico
Publication Date: 1965
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Bibliographic ID: UF00001340
Volume ID: VID00001
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: ltqf - X

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Title Page 1
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    Table of Contents
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Full Text


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Commonwealth of Puerto Rico



Held at San German, Puerto Rico

May 17-19, 1965


452 Ponce de Le6n Avenue
Hato Rey, Puerto Rico

33?. f// i/Zl



Introduction ........ .... ...... .. ,... ........... .......

Programme .............................. ................... i ii

Delegates Attending the Conference ........... .......................

Monday, May 17, 1965

1st. Closed Session: Summary Report ........... .......... 1

1st. Open Session: Talks Delivered by ......................... 9

Dr. Fuat Andic Institute of Caribbean Studies ...,.......... 11
Dr. William Knowles Inter American University .............. 23
Dr. Carlos J. Lastra Secretary of State of P. R. ........... 37

Tuesday, May 18

2nd. Closed Session: Summary Report ............................. 41

2nd, Open Session: Talks Delivered by ......................... 47

Dr. Gerard Latortue Professor of Business and Economic IAU.. 49
English Abstract of Dr. Latortue's Remarks ................... 53
Dr. Henri Bangou Mayor of Pointe-e-Pitre, Guadeloupe ....... 55
English Translation of Dr. Bangou's Address ................ 63
Dr. Alvin Mayne Consultant on Economic Development to AID .. 71

Wednesday, May 19

3rd Closed Session: Summary Report ............................. 83

Final Open Session

Hon. Errol Barrow, Premier of Barbados (Guest Speaker) ....... 89

Final Closed Session

Report of the Committee of the Whole ........................ 105
Report of Committee I ................. ...... ........... 107
Report of Committee II ...................................... ll

Appendixi Summary of Recommendations

Appendix II- Proposed Caribbean Investment Company (CARINCO)

Appendix III- Proposed Caribbean Investment Company (CARINCO)
Outline of Legal Study

Appendix IV A proposal for an informal system of economic coordination
in the Caribbean

Appendix V The law creating CODECA


The Caribbean area, conscious of the need for regional cooperation in.

order to obtain the betterment of its peoples has not been discouraged by the

failures of previous attempts and once again is striving to attain that goal.

On the closing of the Caribbean Organization, the third attempt to stimulate

regional cooperation, Puerto Rico decided to convene a Conference on Economic

Coordination in the Caribbean in the hope of finding a new approach. The

Government of each of the Caribbean islands and the Gulanas was Invited to

send representatives to the Conference to discuss three aspects of regional

cooperation and make recommendations thereon to their governments. The three

items of discussion were to be: the framework of regional cooperation, the

financing of regional cooperation and programs of immediate impact to be


During this first conference on Economic Coordination in the Caribbean,

attended by 25 official delegates from 13 Caribbean islands, and 8 observers

and special guests, Puerto Rico proposed a new approach to regional cooperation,

which, because of its informal nature, has great possibilities of success.

Having obtained an endorsement in principle for its proposal, Puerto Rico

created an instrumentality which, with the joint effort of all the Caribbean

islands, will be able to turn effective regional cooperation and exchange into

a reality.

It seems appropriate to include in these Official Records the law that

created CODECA, Puerto Rico's contribution to regional cooperation, so that

the Puerto Rican proposals be more fully understood. (See Appendix V)

We regret that the welcoming addresses of Dr. Hoxeng and Secretary of

State, Dr. Lastra could not be included in the Records, due to technical

difficulties with the recording machines.

We also want to commend the Inter American University, the President of

the Conference, the Rapporteur, and all the delegates and special guests and

observers, whose great capacity of work and genuine Interest in solving:: the

problems of our area made possible the success of this conference.


Monday, May 17 9:30 am Inaugural session Welcoming addresses by
Dr. Raymond B. Hoxeng, Chancellor, The
inter American University and

: The Hon. Dr. Carlos J. Lastra
Secretary of State
Commonwealth of Puerto Rico

10:00 am : Coffee break

10:30 to
1:30 pm : Initial closed session

Selection of Chairman and Rapporteur;
general debate and approval of agenda.
Following the approval of agenda, commit-
tees will be appointed to discuss the
topics decided upon.

1:45 pm : Joint conference luncheon at Beverley
Hall Guest Speaker, Dr. Fuat Andic,
Institute of Caribbean Studies,University
of Puerto Rico.

2:30 to
3:00 pm : Joint session with Inter American University
guests. Speaker Dr. William Knowles,Chalrman,
The Department of Economicsand Business
Administration of Inter American University.

7:30 pm : General reception offered by the Chancellor
of the Inter American University.and Mrs.

Tuesday, May 18 9:00 am to
1:30 pm : Closed session Committee meetings

1:45 to
3:00 pm : Joint luncheon session Guest speakers,
The Honorable Dr. Henri Bangou, Mayor of
Pointe-a-Pitre, Guadeloupe and Mr. Alvin
Mayne, Consultant on Economic Development
to the Agency for International Develop-
ment, Washington, D. C. and Consultant to
the firm of Collett and Clapp.

3:45 to
5:30 pm : Closed session Committee meetings


Tuesday, May 18

Wednesday, May 19

7:30 pm

9:00 am

12:30 pm

3:30 to
4:00 pm

4:50 pm

: Reception offered by the Delegation of
Puerto Rico at the Mayaguez Hilton.

: Closed session Committee Reports and
Preparation of Final Report.

: Joint luncheon session Guest Speaker,
The Hon. Errol Barrow, Premier of

: Final closed business session.

: Departure from Mayaguez airport.



Hon. McChesney George, LLB
Minister without Portfolio; Chairman, Central Planning Unit

Address: Ottos Main Road
St. John's, Antigua


Mr. Neville Osborne
Assistant Financial Secretary

Address: Green Acres
Brittons Hill, Barbados

British Guiana

Hon. John Carter, Q.C., LLB
Pro-Chancellor, University of Guiana

Address: 10 Croal Street
Georgetown, British Guiana

Hon. Rahman B. Gajraj, C. B. E., J. P., A. M. B. L. M.
Mayor of the City of Georgetown; Chairman, Board of
Governors, Bishop's High School.

Address: P. 0. Box 440
Georgetown, British Guiana

Mr. George W. Williams
Principal Assistant Secretary

Address: Ministry of Finance
Georgetown, British Guiana

British Virgin Islands

Hon. J. S. Archibald
Acting Crown Attorney

Address: Crown Attorney's Chambers
Tortola, British Virgin Islands

Hon. H. 0. Creque

British Virgin Islands

Mr. C. B. Romney
Secretary, Works and Communications

Address: Inter American University
San German, Puerto Rico


Mr. George T. Pilgrim
Permanent Secretary to the Chief Minister, G.D.H.

Address: St. George's, Grenada


H. E. Ashton G. Wright, D.P.A. (London),Barrister-at-Law (Grays Inn)
Jamaican High Commissioner for Trinidad and Tobago

Address: 2 Newbold St.
St. Clair
Port-of-Spain, Trinidad


Mr. G. C. H. Thomas
Permanent Secretary
Ministry of Trade and Production

Address:- Ministry of Trade and Production

Netherlands Antilles

Dr. Theo G. M. TIJssen
Head of the Department of Economic Affairs

Address: Department of Social and Economic Affairs
Bargestraat 53
Wlllemstad, Curacao (N.A.)

Mr. Clinton H. Whitfield
President, Chamber of Commerce and Industry of Aruba;
Member, Economic Advisory Board, Government of Aruba

Address: Chamber of Commerce and Industry
Aruba, (N.A.)

Puerto Rico *

Dr. Luis-A. Passalacqua Christian
Director, Foreign Office
Commonwealth Department of State

Address: Department of State
Fortaleza 54
San Juan, Puerto Rico

Dr. Jorge Morales Yordfn
Consultant, Department of State

Address: Department of State
Fortaleza 54
San Juan, Puerto Rico

Dr. Vernon Esteves
Vice President
Government Development Bank

Address: Government Development Bank for Puerto Rico
San Juan, Puerto Rico

Dr. John H. Mudie
Assistant Vice President
Government Development Bank

Address: Government Development Bank for Puerto Rico
San Juan, Puerto Rico

Mr. Pedro Bonilla Torres
Director, Domestic Trade Division
Department of Commerce

Address: Department of Commerce
Commonwealth of Puerto Rico
Condominlo San Alberto, Stop 18
Santurce, Puerto Rico

Miss Ana Lydia Torres Lupiahez
Research Analyst
Commonwealth State Department

Address: Research Division
Department of State
Fortaleza 54
San Juan, Puerto Rico

* The addresses of several members of the Puerto Rican delegation have changed
since the Conference and the new titles and addresses are included after the
listing of delegations.


St. Lucia

Hon. Noel Venner
Secretary of Finance

Address: Government of St. Lucia
Castries, St. Lucia

St. Vincent

Mr. J. V. Alves
Permanent Secretary to the Chief Minister

Address: Office of the Chief Minister
St. Vincent

Trinidad and Tobago

Mr. Eustace Seignoret
Counsellor, Permanent Mission of Trinidad and Tobago to
the United Nations

Address: 801 Second Avenue
New York, New York 10017

United States Virgin Islands

Hon. John L. Maduro

Address: Capitol Building
St. Thomas, Virgin Islands, U.S.A.

Mrs. Eldra Shulterbrandt
Director of Mental Health
Government of the Virgin Islands

Address: St. Thomas, Virgin Islands, U.S.A.

Mr. James A. Bough
Vice President
St. Thomas Chamber of Commerce

Address: P. 0. Box 879
St. Thomas, Virgin Islands, U.S.A.

Delegation of Special Observers from the Faculty of Inter American University

Dr. Williamr Knowles
Department of Economics and Business Administration


Dr. Gerard Latortue
Mr. Shashi Gadgil
Mr. Julio Ramtrez

Special Guests invited by Inter American University

Dr. Fuat Andic
Institute of Caribbean Studies
UnJversity of Puerto Rico

Dr. Henri Bangou
Mayor %
Pointe-a-Pitre, Guadeloupe

M Alain Buffon
Assistant to the Mayor
Pointe-a-Pitre, Guadeloupe

Mr. Alvin Mayne
Collett and Clapp

Hon. Errol Barrow
Premier of Barbados

* Puerto Rican delegation

1. Dr. Luis A. Passalacqua Christian
Executive Director
Caribbean Economic Development Corporation

Address: Box 1058
Hato Rey, Puerto Rico

2. Dr. Jorge Morales Yordan
School of Public Administration
University of Puerto Rico
Rto Piedras, Puerto',lco

3. Dr. Vernon Esteves
Dean, Faculty of Commerce
University of Puerto Rico

4. Mr. Pedro Bonlla Torres
Director, Program of Foreign Trade
Department of Commerce
Santurce., Puerto Rico

5. Miss Ana Lydia Torres
Assistant to the Executive Director
Caribbean Economic Development Corporation
P. 0. Box 1058
Hato Rey, Puerto Rico


MONDAY, MAY 17, 1965

The closed session of Government Technicians was opened by Dr. Carlos J. Lastra,

Secretary of State of Puerto Rico, acting as temporary chairman. As the first order

of business, Dr. Lastra called for the appointment of a permanent chairman. Puerto

Rico proposed the name of Mr. Ashton G. Wright of Jamaica and the nomination was duly

seconded by the U. S. Virgin Islands and British Guiana. No further nominations were

made and the delegate from Jamaica was unanimously elected to chair the Conference.

Dr. Luis A. Passalacqua of Puerto Rico was elected Rapporteur.

As; the next order of business, the proposed time-table was opened for discussion.

The discussion centered around the selection of topics to be taken up in the discussion

of major problems of the region and the priorities to be assigned to them.

The delegate from Antigua suggested that the first priority should be education

and there was general support for this suggestion. A delegate from Netherlands Antilles

pointed out that transportation and communication are the basic ills of the region and

that unless those problems are solved none of the others can be tackled successfully.

The delegate from Trinidad requested clarification of the terms of reference of

the proposed committees. The Rapporteur explained the implication of the committees

and a.discussion ensued as to the desirability of increasing the number of committees.

A delegate from Puerto Rico suggested that a committee of the whole consider

the first topic on the agenda: the framework of regional cooperation.

After some discussion this suggestion was adopted. Dr. Carlos J. Lastra then

presented Puerto Rico's proposals on the subject;

- 1 -

"I envision that from time to time, maybe once a year, we will meet to
discuss regional collaboration as we are doing here in what we might call
Regional Committees. These committees might then branch out into various sub-
committees, say In education, tourism, transportation, trade, Industrial devel-
opment, finance, and various others. The subcommittees would consider their
subjects, the problems involved and suggested solutions after which they would
reconvene as a committee of the whole which would prepare concrete proposals.

The Regional Committee then would present its proposals to the heads of
the governments of the area, to the Council which will meet once a year or
once every two years according to the needs. This Council would normally meet
at the ministerial level without any formal organization or, on occasion they
may meet at the level of Heads of Government. They meet to discuss and to
agree on what should be done in the area.

Let us suppose that in Regional Committees we decide that we wish to
create a regional private investment corporation. The recommendation might
be taken to a Council of Heads of Government. But, If we can agre~eat the
ministerial level that this has to be done it may not be necessary for the
heads of government to meet. Or they might meet simply for a discussion of
that plan.

A moment ago, someone suggested that we might do some research on specific
problems. We believe that there must be a place where we collect information,
a place which we might call a clearing house of research and information. We
propose that the corporation which we call CODECA would serve this purpose.
CODECA (Corporacion de Desarrollo Econ6mico del Caribe) Is our*name for the
Caribbean Economic Development Corporation established and financed by the
Government of Puerto Rico. This corporation will house the Library of the
Caribbean Organization and is designed to serve as the clearing house of
information for our regional collaboration.

If we decide to establish a scholarship program for the region, CODECA
would serve to implement that decision. It would be an Instrument of service
for the area.

It could send statistics to all the different countries of the area,
collecting, assembling and distributing them for all the countries. It Is
simply a servicing corporation.

Suppose that we decide in Regional Committee and in Council to carry out
a project once the research has been done by CODECA with the help of the
governments, I then envision that other countries could participate in the
financing and the operational work of the Corporation or of an ad hoc committee
which might be called upon to implement that decision.

Let us take another example: suppose that we decide to create a regional
private investment company. This could be what I call a subsidiary. This could
be an independent corporation. On the other hand,assume that we decide to
design a program for tourist promotion in the area. We could Implement the
decision by forming a corporation, or a foundation or a non-profit organization
or even a loose Institution. Anything that we decide t6 do will come out as a

- 2-

decision of the Regional Committee approved in Council and its implementation
will be worked out by CODECA.

The Government of Puerto Rico Is creating this corporation. It will be
a public corporation of the Government of Puerto Rico designed to serve all
the people of the area. It is designed mainly as a service corporation.
The Government of Puerto Rico is giving this corporation $200,000 as an initial
investment to commence this service. This does not mean that this is to be the
total contribution of the Government of Puerto Rico. CODECA can draw upon other
facilities in the government such as those of the State Department, the Economic
Development Administration, the Labor Department, or the Government Development
Bank in accordance with the needs of the program and the willingnes sof those
institutions to participate.

Let us go back to the private investment company. A committee of all the
countries of the area discusses and decides to create such a company. CODECA
might need funds to research the project. If the Government of Puerto Rico
decides to contribute for that research, it will do it through CODECA itself.
The next step, after the research is completed, would be the creation of an
ad hoc technical committee of all the countries of the area or of all the
countries that are willing to participate in the project. The committee
approves the project and it is then submitted to the Heads of Government in
the participating countries. If they approve, the project will be implemented.

Suppose that we decide to establish a scholarship program which is needed
in the area In various fields including vocational training. Whatever Puerto
Rico could contribute would be channelled through CODECA.

This Institution does not exclude other approaches. This will be the
spokesman for Puerto Rico, the institution that will represent Puerto Rico
in regional collaboration. It may be that other countries find that such
an instrument does not meet their needs. They might wish to make their
contribution through their Ministry of Finance, through the Ministry of Trade
or through another kind of Development Corporation.

CODECA, however, will represent Puerto Rico in the task of regional
col laborat on".

In answer to questions from other delegations seeking clarification of

the purpose of CODECA, of the difference between it and the former Caribbean

Organization, of the advantages of this agency over other existing agencies

operating in the same fields, and the method of its operation, Dr. Lastra

made the following points:

1. CODECA is an Independent public corporation, wholly owned and operated

by the Government of Puerto Rico. It is a Puerto Rican public corporation.

Since the questions were not picked up by the microphones and there was much
repetition, the answers have been summarized by the Rapporteur.

- 3

It will be controlled by a Board of Directors composed of 3 government

ministers and 2 members from private sector. It is nothing more

than a clearing house, a service institution which Puerto Rico is

prepared to furnish.

2. He suggested that CODECA could serve as a permanent Secretariat for the

operation of the technical committees, to call meetings, to prepare reports

and to service the Regional Committees and the Council. It will provide

such basic services as library, a clearing house on various types of

statistics, office space, a meeting place, technicians, etc.

3. He pointed out that CODECA will assume the trusteeship of the library of

the former Caribbean Organization and will maintain it for the benefit

of all countries of the area. The library will be .increased, bibliographies

will be published and other library services will be made available. The

library, however, is not owned by CODECA or by the Government of Puerto

Rico but is merely administered in trust by CODECA.

4. CODECA Is Puerto Rico's participation in the effort of regional cooperation.

Because it is a Puerto Rican public corporation, other countries cannot

participate directly in its operation. They may make contributions to it

for the implementation of specific projects. However, CODECA may establish

subsidiary corporations to carry out specific programs and other countries

will have direct participation in the operation of these subsidiaries.

5. CODECA will be interested principally in projects which bqnefi't the whole

area, not one particular country. In the case of projects that apply to

two or three countries only, it will seek to either include other countries

or to benefit them as suppliers of goods and services in the project.

6. The proposal of Puerto Rico, of which CODECA is only one aspect, differs

from the former Caribbean Organization in its flexibility and in its design.

-4 -

The Caribbean Organization was a passive organization designed for research

and advisory service. This new proposal is geared to implement projects.

It is an active organization aimed at concrete results.

At the Caribbean Organization, countries met and prepared a program

on which everybody had to agree and the cost of which was shared by all,

whether they benefited or not. These costs had to be ratified by the

parliaments and by all departments. This is one reason why it was

practically impossible to reach a decision.

Under the new proposal, if the area as a whole, or some countries of

the area, have a specific problem, they bring it to the Regional Committee

for consideration. An ad hoc technical committee will be formed consisting

only of the countries interested in that particular project. Their agreement

would not need parliamentary ratification.

Therefore,flexibility and action will be the main differences between

the Caribbean Organization and the Puerto Rican proposal.

7. By this form of regional approach we pull together all the resources of the

area for regional collaboration instead of having a multiplicity of small

individual plans.

8. It is important when presenting our case to an institution such as an

international agency or another country such as the United States or

Britain or the Netherlands or France to remember that the case is weaker

when presented alone than it is as a joint effort of all the countries of

the area. If an international agency is presented with a program to

develop the region as a whole -- not just the smaller islands but also

the larger ones -- the program is easier to defend. We of the region are

better equipped to join forces and design the best program for our needs.

- 5 -

People who come from outside the area to help a particular country

will find it extremely difficult to analyze only the problems of that

country without taking into account the region as a whole.

9. Puerto Rico is making an initial investment of $200,000 in CODECA. Later

the funds needed for research and for projects may be much more than this

and Puerto Rico may decide to contribute to the subsidiaries on the basis

of specific projects. In the case of a project such as tourist promotion,

CODECA would approach Fomento for assistance because Fomento has the funds

for promoting tourism. The decision as to the amount of the contribution,

however, would be up to Fomento.

10. CODECA could seek financing for specific regional projects from governments

in and out of the region, from international agencies and from private

sources, and it will channel these funds into the area for the benefit of


11. CODECA would be operated with funds from the Government of Puerto Rico.

But to implement specific projects it will need the participation of the

countries that are interested in the project. Such participation can be

through subsidiaries. A subsidiary could be a corporation owned by the

various countries which are interested.

12. CODECA could serve as the channel or administrator of funds coming from

international organizations for the benefit of the region as a whole.

An ad hoc committee of representatives of all the countries of the area

that are involved could allocate the funds. CODECA will serve as a

channel for their management.

13. Puerto Rico is not eligible to benefit from any.A.1.D. funds.

After the presentation it was the feeling of all the delegates that

the time table had to be altered to allow for more closed sessions. In


the ensuing discussion it was decided to open the morning sessions at

9:00 A.M. and prolong them until 1:30 P. M.; to eliminate the panel

discussions on May 18 and use the time for committee meetings, and

to convene for the final session in the afternoon of May 19 calling

off the sightseeing tour.

At 1:30 P. M. the session was suspended for lunch to reconvene at

9:00 A. M. on Tuesday.



1. The Problematic of the Caribbean
Common Market

2. The Development of the European
Economic Community

3. Commentary on the preceding two

: Dr. Fuat M. Andic
Associate Professor of Economics
University of Puerto Rico

: Dr. William Knowles
Department of Economics
Inter American University

: Dr. Carlos J, Lastra
Secretary of State
Commonwealth of Puerto Rico

- 9 -



Fuat M. Andic
Associate Professor of Economics
University of Puerto Rico

Mr. Chancellor, Hon. Dr. Lastra, Hon. Delegates of various countries, ladies

and gentlemen:

When nations Join or Intend to join their forces in organizing a common

market, however vaguely the term may be defined, the immediate question that

arises is: Are the differences concerning natural or geographical conditions,

political and economic circumstances likely to impair or foster the common market?

Today a number of developing areas are planning or thinking of forming a

common market. South East Asia is thinking of one, Latin America is thinking of

one, Central America and East Africa already have one, and the Caribbean is think-

ing of one. The optimist observer looks at the picture and says: "Wonderful,, .

Nothing could be better for these areas. Common Market Is the panacea to their

problems, divided they will fall, united they will stand. Just look at the

beautiful example of the European Common Market." A pessimist observer would

say: "Yes, indeed, a common market in Latin America or in the Caribbean makes

sense. They should cooperate, coordinate, even integrate. But unfortunately

it cannot be done. Look at the European Common Market. Of course it has had

a great success, but that is a common market of the very developed countries,

and even they have problems." My purpose is not to build a straw man and then

attack it, for not everybody thinks either in terms of black or white. But I

do consider that the point is worthy of dramatizing, for It Is inescapable that

many of us be influenced by the apparent success of the Europeat Common Market

- 11 -

and make reference to it either consciously or sub-consciously.

Therefore, I shall try to underline here the differences between the European

Economic Community and a potential Caribbean Common Market; and then, I would like

to turn my attention to the question I posed at the beginning, namely what are the

political, economic and geographic conditions which are likely to foster or impede

a possible economic cooperation in our region. Finally, I shall turn to the most

important question, which I do not profess to answer here fully, namely what are

the costs and benefits of such an organization or cooperation.

The first difference between the backgrounds of the European Economic

Community and a common market among developing regions is the extent and the

pattern of trade between the countries forming the market. Western European

countries trade very extensively with one another (24 per cent of world trade)

In a great variety of manufactured products for which they have established

secure export markets. In the five years between 1955 and 1960 their exports
rose by more than 40 per cent. On the contrary there is very little trade within

the majority of the Caribbean nations, rather, channels of trade run from them to

the developed countries and back again. Furthermore they are just as dependent

upon the export of a relatively few primary products as they were 10 to 20 years

ago or even earlier, perhaps with the exception of one or two countries.

I should like to add, however, that although the absence of trade appears

to be a stumbling block in the first instance, it may turn out to be a blessing,

since removing hindrances, reconciling a number of bilaterial agreements or interests

harmonising and reconciling taxes on sales and consumption etc. have been creating

problems in the European Economic Community. Member countries of the Caribbean

will be working in an almost virgin field.

- 12 -

The second difference is geographical, namely the problem of transportation.

Trade between the European Economic Community countries takes place via overland

traffic, and it is a very developed and efficient network of transportation. The

flow of goods is not hampered by controls and regulations at every point of entry

at the borders. In the Caribbean, transportation is, and of course will be,

essentially by sea. On the one hand this hardly exists today, and on the other,

even if a fully developed transportation system existed in the Caribbean, petty

annoyances would arise because customs regulations and controls cannot be removed

easily, since each Caribbean country will have one or several points of entry,i.e.

harbours, which will have to deal with goods imported both from their own common

market area and from countries outside of this market.

The third difference concerns the revenue and expenditure structure of the

European Common Market countries vis-a-vis the countries in the Caribbean. In the

Caribbean, government revenues largely depend upon import duties and internal

consumption taxes, whereas in the European Common Market countries, well developed

income and corporation taxes form the backbone of government revenues. A common

market in the Caribbean, as any other common market, will require, among other

things, a harmonisation of the various types of taxes collected. If we assume

that taxes are to be adjusted not according to the existing highest scale of

country X or Y, but that a happy medium is to be found, then some of the countries

will have to give up certain revenues, and perhaps at a considerable extent, so as

to create serious revenue shortages. Needless to say these countries will not be

able, at least immediately, to replace those revenues with the usual direct taxes.

In addition the European Economic Community countries have two major preoccupations:

one, to combat unemployment, and two, to prevent inflation. These are reflected

in the expenditure pattern of their budgets, apart from their usual outlays.

- 13 -

Combating unemployment and preventing inflation are the goals of the Caribbean

countries as well. But they have at least two additional aims, namely to achieve

a fast rate of growth, and to stabilize the prices of their export commodities.

Caribbean countries are more exposed to the conditions of the rest of the world

than are the EEC countries. They will find it, therefore, more difficult to

maintain price stability, full employment and growth. Consequently they will

need a much greater cooperation among themselves in carrying out their fiscal

policy measures and harmonising their revenue structures.

Although no one can say that it is not the aim. of E.E.C. to maintain a high

rate of growth, Caribbean governments, at least some of them, are committed to a

rate of growth which is faster than that of the E.E.C. countries. Rapid develop-

ment is usually taken as industrialization. This in turn, among other things,

means obtaining capital from the rest of the world and channelling it to the

areas which the governments deem most desirable. A common market would require

first that there be no competition for foreign funds, and secondly that develop-

ment plans be complemented and coordinated according to long run purposes,rather

than short run or immediate purposes. In other words, as opposed to the E.E.C.,

countries try to harmonise their economic and fiscal systems so as to allow free

movement of capital within themselves, a Caribbean economic integration, which

will get very little of its capital from internal sources and will look.-for the

rest of the world for it, will need a cooperation and coordination much stricter

than the E.E.C. In order to avoid tax and incentive wars among themselves and keep

their fiscal systems and organizations much more strictly harmonised than those of

the EEC countries.

Finally, as much as the European Economic Community is a product of historical

conditions so are the recently autonomous or independent nations of the Caribbean.

- 14 -

Such historical conditions, with which most of you are familiar and into which,

therefore, I shall not delve, forced the European nations to accept a supra-

national power over and above the prerogative of national sovereignty. The

Caribbean countries which are autonomous or independent today find their

raison-d'etre in the deeply seated nationalistic feelings. It is much more

imperative, but at the same time infinitely more difficult for them to accept

a supra-national power and let go of a number of prerogatives they have, and

they have had them for an infinitely shorter time than the European countries.


With these differences in mind, let us now consider three fundamental factors

which may be hampering or helping the formation of a common market in the Caribbean:

1. Natural and geographical conditions.

If integration is taken to be some sort of regionalism, it follows that this

regionalism finds its meaning in strengthening mutual cooperation for the sake of

promoting common economic interests among geographically adjacent countries (EEC,

COMECON, CACM). Among these countries contacts are close and cohesion is strong.

The same cannot be said for the Caribbean which is dispersed over 1200 miles of

ocean, where we have islands and oceanic countries, like the Guianas, and where

distances between individual countries are expressed sometimes in three or four

digits. Partly due to these geographical conditions and partly tohistorical and ,

cultural conditions, like mindedness and community of interests, so essential for

economic integration, are not yet to be found.

2. Political Conditions

The Caribbean, together with great many parts of the world, is the seat of

political unrest and antagonism. In this area we have, first of all, widely

opposing economic systems and political philosophies, like Cuba vis-a-vis the

rest of the Caribbean. Secondly, we have sister countries where political unrest and

- 15 -

civil war are frequent news in dally papers. Thirdly, many nations in the

Caribbean, common objectives of which were national freedom, gained their

independence in varying degrees. Some of them formed equal partnership with

ex-colonial powers, some became independent with commonwealth status. Some

are still trying to formulate or reformulate the political meaning of their

existence. Finally, there are countries whose relationship with the colonial

powers is very strong, and they have this relationship willingly or unwillingly,

whether they are called colonies or departments.

Moreover, this political 'tower of Babel' has at least one more language

added to it, namely the struggles and conflicts of interest among international

influences. Because many of the countries in the area used to be colonies or

semi-colonies (and some of them still are) certain big powers still maintain

persistent economic and political interest in the area, which may run counter

to that of the area itself.

3. Economic conditions

Subjected to colonial rule for great many years, the Caribbean countries,

with the exception of few, still retain colonial backwardness in their economic

conditions. They have been, without exception, assigned the role of agricultural

producers in their relationship with the industrially advanced nations. This tail

end of the vertical scheme of international division of labour produced monocultural

or at best bi-cultural type of an economic set-up. Economic modernization based on

industrialization was suppressed on the whole and these countries were caught in the

usual vicious circle and only few of them managed very recently to break this famous

vicious circle, and they are on their way to industrialization.

It would be very unnatural for these countries not to aim at economic

independence after gaining political freedom. In many cases, however,those

countries which are on their way to economic development have tended, and those

- 16 -

which will be on their way to economic development will tend, to become overzealous

n achieving economic independence, with each country undertaking its own economic

development projects without due consideration to the need of establishing effective

complementary relations with neighboring nations.

On the other hand, during the initial stage of their independence, many

aribbean nations, although carried away by surging nationalistic sentiments, did

ot turn their back to foreign aid, as some other newly independent nations did,

or example, in the other parts of the world. At least some of them were quick

o realize that population, which for long was considered as an important element

n economic development, was in fact a drawback, for abundant manpower per se does

ot necessarily constitute a useful labour force. It takes a long period of time

nd technological training to convert manpower into useful labour force. Practically

11 the nations in the Caribbean have demonstrated enthusiasm for technical training

nd compulsory education. They have an open-door policy to capital imports and foreign

id. The trend seems to indicate that in all the developing countries of the region

social development is pushed along with economic development. If these preconditions

develop, be it slowly, the economic development of the Caribbean countries ought to

progress gradually and preparations could be made for mutual cooperation in carrying

ut development programmes more effectively.


Assuming that a general Caribbean common market embracing the Caribbean

s a whole from Cuba to the Gulanas or a partial Caribbean common market with

ome countries in the area is to be formed, then the question can be asked:

that are the essential elements in the materialization of a satisfactory regional

integration? I think we can group these elements under four headings:

- 17 -

I. Interrelationship with political integration.

2. Realization of economies of scale.

3. Specialization.

4. Free Interchange of capital and labour.

1. If a perfect economic integration is to be attained,. t Is necessary

for member nations to entrust a part of their political and economic sovereignty

to a supra-national central organ. In other words, Integration becomes complete

if and when economic integration is accompanied by or merged with political

integration. Under the powerful control of a central supreme organ, member nations

are to maintain partially restricted political and economic independence.

2. Such a regional economic integration must guarantee economies of

scale, that is, the benefits of large scale production, stable and expansive market

increased employment and.higher productivity. It may not be necessary, therefore,

to integrate a large number of countries spreading over a wide area. The best

possible form of integration is a union agreed upon by countries meeting these

requirements within a scope that promises the materialization of the expected


3. The countries thus integrated must pursue productive activities in

accordance with an agreed specialization programme as decided by the central

supreme organ. Under the regional economic integration barriers are removed as

a matter of principle and therefore it is desirable that member nations agree on

their prospective share of Industrial activities.

4. Finally, in order to make the regional economic integration more

dynamic, not only the free movement of goods among member nations, but also a

free flow of labour and capital are desirable. In this sense a common market

designed to promote a free Interchange is more desirable than a free trade area

- 18 -

aimed at increasing the volume of trade within the area where there is very little

o exchange to begin with.

Supposing that the above conditions are realized and a common market is

ormed, what would be its benefits?

I believe economies of scale are a more important phenomenon in the

aribbean than either trade creation or factor mobility in providing benefits to

he area. This is partly because trade creation provides smaller gains when the

actor endowments of the countries involved are similar. Moreover, the relative

ains from an enlargement of the market are likely to be greater the smaller the

ase from which one starts. Thus opportunities for specialization would be of

greater significance to the Caribbean than, say, to the European Economic Community.

I should like to add here that a qualification must be made to the argument

hat integration enlarges the size of the market as measured in terms of purchasing

ower. At the present, this purchasing power, measured by income per head of

population is rather low, but it is expected to rise as economic growth takes

lace. The qualification is seen when one considers what is called the purchasing

ower density defined as the ratio of the common market's aggregate income to its

and area. This ratio tells what would be the purchasing power of each square mile.

low purchasing power density, especially accompanied with high costs of transpor-

ation, would reduce strongly the effective increase in the size of a market result-

ng from integration. Although purchasing power would be larger in the aggregate as

result of integration, the low purchasing power distributed over the land area

would reduce the effective market size. Let us give an example involving a potential

aribbean common market, the Central American Common Market compared with the United

states and some of the Western European countries. The purchasing power density in

he Caribbean (excluding Cuba and the Bahamas, but including the Guianas) is around

20.000. In the countries forming the Central American Common Market it is even less,

- 19 -

i.e. around $12.000. In the United States it is $ 144.000, in West Germany

$ 817.000, in France $ 298.000, and in the United Kingdom $ 786.000. This

suggests that to obtain a market of given size (measured in purchasing power)

the Caribbean and the Central American Common Markets must serve a greater

area than the United States or Western European countries. Given the absence

of an effective transportation network and the high unit cost of shipping, it

is obvious.that the effective enlargement of the market is greatly overstated.

With respect to labour and capital mobility we can say that there are

some restrictions on labour mobility across national boundaries in the Caribbean

(but free movement in groups of Islands such as French and Dutch Antilles), so

economic integration is likely to affect resource use in this respect. However,

the gains from labour migration are reduced as a result of unemployment in the

region as a whole. But a common market also affects the mobility of capital

- whether foreign or domestic and in this sense it may contribute to a more

efficient allocation of the region's resources.

Let us now turn our attention to the cost aspect. Three possible cost

elements suggest themselves immediately:

1. Some of the Caribbean nations are already in some sort of common market

agreements with non-Caribbean nations or group of nations, such as Puerto Rico

vis-a-vis the United States, Netherlands Antilles and Surinam vis-a-vis the
European Economic Community via Holland. If a common market in-the Caribbean

means that they may have to give up their sure and well-established market in

order to start an uncertain, new and infant common market, or that they may

find it difficult to reconcile the two, they are likely to suffer, be it only

in the short run; and the short run can be very important.

- 20 -

2. Secondly, common.markets may represent a positive element in the

:onomic development of fragmented areas, such as the Caribbean. But, if the

cpected and not yet realized economies of scale warrant far-reaching sacrifice

F national sovereignty, this in itself would constitute a great political cost

fich may not be compensated by the economic expectations.

3, Finally, some relatively rich countries will have to subsidize the

ilatively poor ones in the Caribbean if an overall economic integration is

ntemplated. This will be a burden for the rich ones to carry (e.g. Puerto

Ico, Jamaica and Trinidad whose NWi is 70% of the whole area will have to

jbsidize, for example, Grenada, St. Vincent, Tortola, Haiti). On the other

and, should some of the richer nations in the area, say, Puerto Rico,

stherlands Antilles, Trinidad, decide to form a common market among themselves,

Kcluding the relatively poor ones, this in itself would tend to favour the

relatively rich ones at the expense of the others. I shall not go into the

Kplanation of the mechanism of this process. I am sure that most of you are

familiar with the analysis of Myrdal where he argues that "there are inherent

forces tending to widen the gap between the rich and the poor." A partial

pmmon market may worsen the relative position of the poor ones. The situation

hen will be, quoting St. Matthew, Chapter 25 verse 29:

"For unto every one that hath shall be given and he shall have
abundance; but for him that hath not, shall be taken away even
that which he hath."

rsening the present position of the relatively poor nations is not only incompatible

ith the Caribbean spirit, but also very costly in the long run.

In short, .the problems raised with respect to the possibility of a common

market in the Caribbean are very thorny, difficult and complex, the practical

- 21 -

obstacles are great, but none of them is insuperable. A proposal of integration

calls for a vast program of work. This work must be undertaken with broad vision

and constructive boldness and as soon as possible. I believe that this meeting

of experts and interested parties will find solutions to at least some of the

problems during the course of the next two and a half days.

In the preparation of this paper I benefited greatly from: Sidney Dell,

Trade Blocs and Common Markets, New York, 1963; C. S. Shoup, Tax Policy on United

States Investments in Latin America, Princeton, 1963; B. F. Massell, East African

Economic Union, Rand Corporation, Santa Monica, 1963; Noboru Yamamoto, "The

Possibility of Regional Economic Integration in SouthEast Asia", The Developing

Economies, No. 1, March 1964.
22 -


Chairman, Department of Economics
Inter American University
San German, P. R.

I would like to Join the Chancellor and welcome you to our campus. I am

very proud to participate as co-host to this meeting and I want you to know how

happy we are to have you with us.

This afternoon I would like to review the development of the European

Economic Community. Although this has all happened within our lifetime and

you are aware of it from reading in the daily press, we thought that a review

of its historical development would be appropriate for this conference, and I

must say that the remarks by Dr. Andic certainly fit -nicely into what I have

to say. I am only sorry that we did not compare notes sooner so that we could

have had a better dovetailing of our two papers.

First of all, I should say that this subject with which we are to be

concerned for these three days is one that has considerable emotional content.

It is not something that we can dispasdonately analize based on pure economic

logic and, as an economist, I have to remind myself of that at all times.

This year I had a particular excellent group of students in my Principles

of Economics class. Many of them were from the West Indies and my feeling was they

were with me all the way until we got to international trade. And then I noticed

that economic theory and notions as to what is good for my country went their

separate ways. Thinking about that, I recall that when I took my first course

- 23 -

in International Trade as an under-graduate, there was a fellow student of

mine who announced to the professor at the beginning of the class: "I enjoy

economics, I am a major In economics; but you are never going to convince me

that free trade is a good thing." The professor answered: "Well, let us see

what it is after the end of the term." At the end of the term he asked:

"Well, how do you feel now?" My classmate replied: "Well, as an economist

I think free trade is right, but I am about to inherit my father's cattle ranch

and as a cattleman I believe in a high tariff on meat." A special Interest is

an obstacle and not a matter of cold logic. A special interest is a matter of

an emotional feeling. I am also reminded that, about a year ago, I was visit-

ing the home of an acquaintance who I consider to be a liberal, right-thinking

sort of fellow, very Interested in the welfare of humanity and a fighter for

many causes. We got into the discussion of trade policy and the argument

became a little bit too heated and he ordered me out of his house. No egg-

head professor was going to spin these fine theories as far as he was concerned.

Well, this afternoon you cannot order me off the campus, but since I do not have

a captive audience, you might walk out on me. I recognize that this is a

difficult subject, because it hits very close to home and we have to be able

to distinguish between logical economics and the emotional content of this


Now, as to historical background, you have to realize that there was a

deterioration of world trade that began with the depression of the 1930's and

that this was partly due to economic nationalism and rising tariffs. We had

an unfortunate thing called the Hawley-Smoot Tariff Act in the U. S. to start

things off. Countries having difficulties with their balance of payments

solved them by currency regulations and by tariffs and quotas which created

problems for other countries. These responded in kind and the vicious cycle

- 24 -

began and almost led to the stagnation of world trade and as far as the great

world depression. Economists during the war were of the opinion that we could

have to return to free world trade, as a condition of world peace, after World

War II. Many meetings, such as the General Agreement on Tariffs and Trade and

the International Monetary Fund, were aimed at greater liberalization of

international trade.

Somehow it did not work out that way. Countries found that the devastation

of war was greater than they had anticipated. There was a problem of post-war

inflation with serious exchange problems and then a new nationalism, particularly

In the new nations who wanted their economic independence as welliTas their political

independence. That meant that the freer world trade that had been hoped for in the

early 1940's did not materialize and has not materialized. Instead we seem to be

developing economic regionalism. The significance of economic regionalism we do

not entirely understand. It could develop in several different ways. Let us

look at the European one in some detail. The first thing I would like to do

is to list some of the organizations that were attempted since World War II

In Europe. It was not until going through this list that I myself fully

appreciated the many organizations that were attempted. Some failed, some

went long before things really got going in Europe. First of all in 1945 we

had UNRA which was simply a relief organization; but it was the first post-

war cooperation In Europe, of all of the war-torn nations, in the analysis

and establishment of priorities for the distribution of relief aid. Many

nations were involved Rusia was still ally and participating in this. It

worked fine considering its limited task. At the same time European control

of inland transport was established for exactly the same reason. Transporta-

tion was in bad shape, there was a limited rolling stock and simply to feed

the people meant that the limited resources had to be organized and work

as a unit. And this was done.

S25 -

Similarly, in 1945, the European Coal and Steel Community was established.

Again, coal was in short supply and the object was to set up a Europe-wide

rationing plan and a scheme for increasing output to meet a critical situation.

The Emergency Economic Committee for Europe was also organized in 1945. This

proved to be merely a forum for discussions and exchange of ideas and the making

of recommendations to governments for closer economic coordination. It was

followed in 1947 by the Economic Commission for Europe suggested by General

George Marshall, because a programme was terminated as to how there should be

continued cooperation. This meeting ended in a disaster with Russia and the

Soviet block nations being opposed to it on the ground that it invaded national

sovereignty. This marked the end of broad-scale European cooperation. Then

another Organization was created that you are all acquainted with: the OEEC,

the Organization for European Economic Cooperation. It has a very broad.member-

ship, except for the Russian block nations. It concentrates on having technical

experts make studies and make recommendations. OEEC does not hesitate to-criticiz

the governments very openly. It has been*successful as far as It goes. It is

limited to research and publishing of papers with recommendations. However, the

quality of the work has earned respect and there is what is known In Europe

today as the OEEC point of view, on which every politician looks as the

respectable point of view in economic cooperation.

There was also about this time a series of conferences of people interested

in closer economic cooperation In Europe. There was a Congress of Europe, in

1948, which proposed'closer economic and political ties. It did not get very far,

but it was all part of the general push towards closer collaboration. This was

followed by a Council of Europe which asked for a political union; but it appeared

that political union was much more difficult than economic cooperation, so this

Council failed. About the same time, Ernest Bevan called upon the nations-of

- 26 -

Western Europe to form a Western European Union for political unity for common

defense. Western European Union failed in its major objective and was replaced

by NATO. But it did accomplish a few things that I find rather interesting,

and I will just list them here because it might be applicable to problems of the


Here are some of the agreements they did reach, modest, but nevertheless

agreements: for the free movement of workers across the borders so that they

can move back and forth across the border for employment; for the exchange of

student employees, so students can get greater work experience; cooperation among

employment exchanges as to the uniformity of labor statistics and the exchange of

labor statistical information; a uniform health control plan for sea and air

transport; a cultural identity card for students, teachers and scientists for

the freer movement of this group of people; reciprocal recognition of university

degrees; and, a cultural exchange program. So that even though their major

objective failed, here is a modest accomplishment of cooperation and greater

freedom of movement. This was followed by the creation of the European Coal

and Steel Community that I will speak in a little more detail in about just

a minute. Here we are down to six nations, although the Scandinavian countries

and the United Kingdom were invited to join and declined, and limited goals,

namely, a common market for coal and steel and a very powerful organization.

An organization that has independent revenue. There was also created in 1953

the European Productivity Agency whose objective was to help the backward areas

of Europe such as Greece and Portugal and a technical assistance program for

those areas was developed and continues. Again in 1953, an attempt at political

union, a European Political Community, was organized. A very large group of

nations attended the meeting which was very broad in its political objectives

and for that reason it collapsed. In 1955 a European Monetary Agreement was

- 27 =

established and achieved convertibility of currencies, which is very important

to trade. The most important of all was in 1957, the European Economic

Community, which we commonly call the Common Market, established in the

Treaty of Rome. The Common Market was followed almost immediately by the

agreement of the European Atomic Energy Community and we are now on the road

to a very close economic Integration of Europe. What I would like to point

out to you Is that this is a culmination of centuries of economic rivalry

among the European powers which was mutually harmful but nevertheless existed.

It took over twelve years of negotiation after the World War II before the

Treaty of Rome was finally signed.

Now let us look at this European Coal and Steel Community for a minute.

What does it accomplish? First of all, there is a permanent transfer of

sovereignty to a supra-national authority. I would modify what Dr. Andic

said at noon today. It is not that you transfer sovereignty away from

existing states to some super state. It is rather you modify some of the

sovereignty and take some of the sovereignty away from the states and give

it to some international body. The critical Issue of course is how much

sovereignty are you willing to give up. Now in the case of the Coal and Steel

Community, it is agreed that there will be a single market among the six nations

for coal and steel with the elimination of duties and quotas. An.important

function of the high authority is the standardization of freight rates. Europe

was blessed with a developed transportation system, true enough, but there were

discriminatory rates and subsidized rates that interfered with the freedom of

movement of goods. For closer economic integration and fair competition you

need a uniform rate structure. The High Authority encourages the expansion

and the rationalization of the steel industry while at the same time discouraging

- 28 -

mo nplc'y and cartels. It does not oppose integration, so you can have the.

amalgamation of the more efficient units; but they do try to police. No

dumping is allowed. They are to encourage competition and examine pricing

to see that it is competitive and fair. They are concerned with the establish-

ment of uniform working conditions in the European coal and steel industry, and

they established a compensation fund for displaced workers in marginal plants

and mines. The Compensation Fund does not apply to highly subsidized mines

where the government is trying to maintain something that is clearly uneconomic.

This is a government problem that the government has to face, not the Coal and

Steel Community; but it did recognize that, where marginal firms suffered it

would become a community problem. The Coal and Steel Community has the

authority to borrow money and to lend it, and to guarantee loans,. In this

way it helps develop the coal and steel industry. It has the right to make

treaties with member nations over coal and steel products. Then, as I said

before, it has the powerful weapon that it can levy taxes on the production

of coal and steel, so that it is financially independent. Now the Coal and

Steel. Community has been an outstanding success and people who have examined

this Coal and Steel Community say that it has success for two reasons; first,

because of the financial success; second, because the member nations really

wanted it to work. There is no clever organizational structure or treaty

wording that will make economic cooperation work unless the parties to the

agreement really want to work. And that apparently is the case of the Coal

and Steel ,Community.

A moment ago I listed all the various organizations that tried and

either failed, or made modest success. But now we come to the Common

Market, which is modeled after the Coal and Steel Community.. That worked,

and so in 1957 they came up with a broader plan that was modeled after it.

- 29 -

It Is the result of very extended and complicated negotiations and like so

many treaties, may be considered a bundle of compromises that hoped to have

more nations participating than did participate. They finally got down to the

same six that belonged to the Coal and Steel Community. The United Kingdom

again was invited to participate, but Instead proposed a free trade area

broader in scope but less broad In its objective. This lead to a great deal

of difficulty as to which type of an organization, a simple free trade area

or genuine economic integration. The result was a complicated document of

378 pages and 248 separate articles plus all sorts of amendments and procla-

mations to go along with it. Now, what does it accomplish? First of all was

a time table for the elimination of tariffs, a time table for the establish-

ment of a common external tariff and a time table for the elimination of all

quotas on goods. There was established a special provision for agriculture,

which was and continues to be the most difficult problem faced by the European

Common Market. There were tremendous differences in efficiency of farms, in

size of farms, in land tenure systems and In government subsidy and price

support programs. In order to have genuine economic integration, you have to

have some unity In efficiency and government programs. So this has been set

aside and even today, although negotiations have continued, there has not been

a satisfactory result.

Another section deals with the free movement of labor. I know that free

movement of labor is something tha concerns us here in the Caribbean. It was

a stumbling block to the Federation. For that reason let me list some of the

things that are included in the Treaty of Rome, that is suggestive of what can

be done. First of all they had a two-year period in which you did not have

complete freedom of movement, but did have this provision: that Job vacancies

were to be advertised locally for three weeks and then all of the employment

- 30 -

exchanges of Europe were advised that the vacancy existed; that employers

could ask for foreign employees rather than foreign employees merely moving

around Europe looking for Jobs; where an employer had a relative he was free

to bring his relative to work;where foreign employees were working their wives

and children could also work. The rule was that the foreign employee had to

stay on the same job for one year, then he could have employment in the same

skill or industry for another year and then he was free to look for work of

any type he wanted. And then after four years he had complete rights as a

worker. Another thing that was accomplished through long negotiations was

the harmonization of vocational schools, training practices and standards,

harmonization apprenticeship rules and equal trade union rights. If you are

a worker and move from one country to another, you have the right to union

membership, the right to vote and the right to hold office in the union.

The standardization of social security systems is still going on, as are

standardization of over-time payments and holiday and vacation benefits

and encouragement of the exchange of younger workers and special arrange-

ments for seasonal workers and, at the insistence of France, equal pay for

women for similar work.

Trade unions feared the mobility of labor as a threat to their welfare,

but, as it turned out, labor was not as mobile as people anticipated and the

freedom of movement of workers has not created the problems.that some people

expected. As you know, the prosperity of Europe has created labor shortages

and the problem has been to recruit labor and get it to where it is needed.

So long as there is free movement of labor there is also freedom of movement

of capital and of course free currency exchange.

As with the Coal and Steel Community, discriminatory transportation

rates were abolished. and an anti-monopoly provision was included. Government

- 31 -

subsidies to industry a.'e outlawed a loss of sovereignty. A Monetary

Committee was established with general but not specific instruction~.to

assist nations in balance of payment problems. There is a special fund for

retraining displaced workers, which applies mostly to Italy, so that they

can be usefully employed in the expanding industry. A Development Bank was

created and a Special Fund for the development of backward areas was set up.

Where you have economic integration of an area there is the possibility

that one portion of that area will prosper while another will suffer from it.

The classic example was the unification of Italy in 1861 where all the benefits

went to Northern Italy which was more advanced industrially.

The per capital income of this backward area has gone up and, with that

increase in per capital income, there has been an increase in commerce which

has helped. Light industry has located in some of the backward areas and

labor is moving out of essentially over populated agricultural areas which

has helped. It has not been as bad as some people thought it would be.

There has been a competition for capital among these areas which I

think relevant for our meetings.here. With or without closer economic

integration, it seems to me that the nations of the Caribbean cannot afford

to compete by seeing who can be most generous to foreign capital as a means

of attracting it for economic development. There ought to be some rules of

fair competition in the attraction of foreign capital, it seems to me.

Another development that grew out of this backwardness of certain areas

of Europe is that regional planning has been a disappointment and they have

turned to the idea of poles of economic development. They are trying to

create alternative centers of industrial concentrations along with the

existing ones. Just as Dr. Andic said in his address the rich tend to get

richer. This has been the case in Europe and they try to counter it by

- 32 -

setting up some-new industrial complexes. Here in Puerto Rico, I understand,

we are trying the same thing. San Juan continues to grow and prosper and the

government would like to spread that prosperity over all of Puerto Rico but

this has proven rather difficult. And trying to have industrial complexes

in every community Is very difficult, so, the idea is to create new industrial

complexes in the Ponce and Mayaguez areas. Caribean regional planning could

consider, it seems to me, not only the continuation of richer position of the

already industrially advanced areas of the Caribbean but the purposeful planning

of new industrial complexes.

As you all also know, the European Economic Community provides a special

fund for the development of colonies and ex-colonies. The colonies and ex-

colonies are members of the Common Market and for a period of time are entitled

to have their own tariffs even though they have access to the Common Market.

These are considered temporary measures and at same time they must be integrated

into the Common Market and its common tariff system.

The European Economic Community is of tremendous historical importance.

The question Is why did it happen after all these centuries of fighting with

each other. The- reasons given are as follows: First of all, the fear of

Russia; and secondly, the loss of colonies whose trade had been oriented to

the metropolitan country. They had to have a new system of orienting trade

and indeed this has turned out to be a blessing. I know from my experience of

a year in Holland, that they originally thought that the loss. of -ndonesia

would be catastrophy and elaborate plans were made to export population to

Canada,Australla and New Zealand. They saw a bleak.future for the Netherlands.

Instead of that, they had a serious problem of labor shortage and a prosperity

they had never known before, a prosperity that reaches all of the people. This

Is something the Common Market did for them.

- 33 -

Also these countries were victims of two World Wars partly based on

economic nationalism and they did not want this to happen again. They

recognized that now they were no longer world powers in the sense that they

were prior World War II. That Russia and the United States were the world

powers; that China was becoming a world power and that Japan certainly was

a major industrial power if not a world power. The only way that Europe

would have significance was as a United Europe. And finally there is this

point of the economies of scale. The economists finally got the point across

that, if you are going to have efficiency and increasing productivity you have

to have larger more modern industry. It was these powerful forces that finally

led the six nations of Europe to get together economically.

As I look over this list, I really do not think any of these forces apply

to the Caribbean to any significant degree. I think closer economic cooperation

is possible. The question Is how badly do you want it. What is lacking are the

powerful reasons for having it that Europe was faced with.

I think we can say that the Common Market of Europe has been a success.

The tariff fell faster than the schedule for tariff reductions simply because

as industry organized itself for this great and rich market, they were in a

hurry to take advantage of it and the program moved much faster than anticipated.

Furthermore once it was realized that this rich and great market was created

there was a powerful Incentive for foreign capital to move in and invest in

order to take advantage of it. Successful competition with other economic

regions brought forth fresh capital. Again, one of the possibilities of an

economic cooperation arrangement among the nations of the Caribbean would be

that capital would be moving in to take advantage of a bigger market than

now exists.

- 34 -

Now what about the economic of customs union? Even when there is

diversion of trade rather than trade creation there is a benefit from it,

because consumers are better off with less costly products and a wider

variety. There are economies of scale which certainly apply to the

Caribbean area. We cannot have mass production plants for each island.

It seems to me the only issue is which island gets what plant. Perhaps

the safest thing to do would be to let the industrialists make their own

decisions on that, Finally, the economists are agreed that if the economies

have overlapping but competitive products the chances of success of the

customs union are greater, simply because there is a chance for a greater

specialization and greater efficiency. The question is to what extent

that observation is applicable to the Caribbean area,

Some people who did not think the Common Market of Europe had any

future jokingly referred to it as the Tie and Wine Market, because Italians

now could enjoy French ties and French wines and the French could enjoy

Italian ties and Italian wines. But in so far as all that was accomplished,

the consumers of Italy and France would be better off than they were ever

before, even though it was not a net increase in total production. We could

also say we might organize a Caribbean Rum Community, so that on the shelf

alongside of Don Q we could have Mount Gay and Rhum Clement. The consumers

of the Caribbean at least could have a wider choice of taste in their rums.

So just as the Tie and Wine Market has developed into much more, as the

industrial nations of Europe found that they could have a lot of trade with

each other, I suspect that although not much trade exists now, the opportunity

is there, and there will be more to Caribbean trade than taking each other's rum.

What I have attempted to do this afternoon is to give a history of the

trials and tribulations of arriving at the European Common Market. And the

- 35 -

points that I would make are that the road was long and arduous. It was

not something that was achieved with the greatest of ease. There were over

12 years of negotiations. Powerful pressures were necessary to get countries

to agree. Apparently a nation tends to preserve its sovereignty and preserve
economic protectionism very tenaciously unless there is some tremendous

pressure to cause it to relinquish them; even though it be better off by

relinquishing them. Finally as I have listed some achievements of the

Western European Union, the Coal and Steel Community and the Economic

Community, I think I suggested to you some inventiveness of the negotiations

in developing ways to meet agreements. I think that even though problems can

be difficult, what we must do is to be inventive as to what alternatives can

be developed that we can agree upon.

Thank you.

- 36 -


Secretary of State

The main comment that I would like to make is that the integration

of the Caribbean area stems from the supply side and not from the demand

side. The EEC, the Common Market, integrated to have a wider market which

in turn provides an economy of larder scale production. So, in fact,

industries located in that market are market oriented. The Integration of

the Caribbean Economic Community, if I may call it that, tends to produce

for outside markets. We are not planning to integrate in order to supply

the limited market of the Caribbean area. In fact Puerto Rico will not

integrate to lose say the United States market and to remain with only the

Caribbean market. The main target of Puerto Rico is the United States

market. But if you look at the area, there are many industries that can

integrate. In fact, we are more integrated than we think in the Caribbean

area. We imported petroleum from Venezuela to the extent of over $80,000,000

last year in Puerto Rico. And we are going to import more in the future

because of the new Phillips Petroleum project. We are processing that

petroleum in Puerto Rico and selling in different markets. Industries

located In Puerto Rico are not market oriented. What we would like to

see is the integration of the supply side.

Mr. Rafael Durand Manzanal, Administrator of the Economic Development

Administration of Puerto Rico, said in the hearing of CODECA that there is

a possibility of integrating some industries in Puerto Rico and the area as

joint ventures to produce certain Items. Bauxite is an example. Bauxite is

- 37 -

produced in British Guiana and in Surinam. Now the Virgin Islands are

establishing a bauxite industry to produce alumina and probably could produce

other things. Then we have the rum industry. How can we integrate the rum

industry if not for local consumption for the export market? If you look

at the Caribbean area, we can supply the three largest markets in the world:

the United States, the Commonwealth of Nations and the Common Market. If we

could first integrate the production side, we should not try to integrate the

demand side. Well, not until a second stage, once the income of the Caribbean

Community increases. Then we could think in terms of integrating some of the

industries on the demand side. Take for instance tourism. It is integrated,.

not on the demand side, but on the supply side. So the main approach in the

Caribbean area will be the integration In the Community of the supply side in

order to produce in a more integrated and coordinated way. Take for instance

the rum industry. In Puerto Rico we have developed the idea of quality control

and research in rum production. We are very proud that some of our friends in

the Caribbean area are adopting some of the results that we got in this research.

In fact they are competing now with Puerto Rico in the United States market. Well,

something of that sort may be diffused in the whole Caribbean area. There are

other examples in bauxite, in petroleum, in apparels, in fishery. In the fishery

industry we might establish in the area the best fisheries facilities, not only

because this industry is oriented in terms of the resources in the area, but in

terms of production facilities. That is why I was emphasizing in my initial

talk that we should give priority to education, to the development of the

resources that we have. What do we have? We have human resources. We do not

have too many natural resources. There are some countries, of course, that do

have such, as British Gulana and Surinam. But what we can offer is the human

resources and if we provide the human resources then the industry will be labor

- 38 -

oriented and not market oriented. And with that locational factor we can

establish industries in an integrated way. Mr. Durand mentioned that there

is a possibility in the future whereby, say, in one island you produce a

section of the whole process and finish it in Puerto Rico where wages are

very high and where the techniques are very advanced. But maybe the initial

stages of the production may be in some of the islands of the Caribbean area

where you have an abundant supply of labor and where wages are very low. If

the cost of labor in the production of an article is very high, then, perhaps

you could not compete by producing in Puerto Rico but could by producing in

other areas. This is the kind of thing that we would like to see. I ap-

preciate very much the warnings about the Economic Community of Europe. I

think: that we are taking a different approach. And that approach is not to

integrate our markets but to integrate our production, our supplies. This is

the thing I want to make clear.

- 39 -


Tuesday, May 18, 1965

The Chairman opened the meeting and requested that Dr. John Mudie of

the Puerto Rican delegation make a presentation of the Caribbean Investment

Corporation (CARINCO). (See Appendix 1).

Dr. Vernon Esteves, of the Puerto Rican delegation, requested permis-

sion to make a brief Introductory statement in which he referred to the

necessity for financing feasibility studies for certain types of projects

and tied the interest of governmental and international agencies in carry-

ing out these studies to the amount of government support and the contri-

bution from the interested governments. He pointed out the limitations in

obtaining financing for infrastructure projects by AID, IFC, IBRD and other

lending agencies caused by lack of proper presentation of the project. He

referred also to financing which would not cover Infrastructure, but would

be supplied by private investment facilities only when all required studies

had been completed and the project was ready for immediate investment. The

agencies or individual making this type of loan expect a return on the capital

and eventual recovery of that capital. He pointed out that CODECA would be a

useful tool for seeking out and attracting such private investment. He then

turned the presentation over to Dr. John Mudie.

Dr. Mudle noted that preliminary investigation regarding the proposed

Caribbean Investment Company (CARINCO) has been carried out over the past

year. He reported that considerable progress has been achieved during this

period of time. Dr. Mudie mentioned that a number of valuable contacts

have been established with potential investors as well as with government

agencies and international bodies in the Caribbean, the United States,

Canada and Europe. He noted that two advisory meetings of businessmen

and government officials were held in Puerto Rico and one meeting was held

with bankers in the Netherlands Antilles. Contact has also been established

with international agencies and AID.

The stated objective of CARINCO Is to link the countries of the

Caribbean more closely with the outside financial community. The proposed

company would provide financial assistance from its own capital, bring

together funds from other sources for specific projects, and provide

technical and administrative support In some cases. It Is anticipated

that the bulk of CARINCO's investments would be in areas of the Caribbean

outside of the Commonwealth of Puerto Rico.

It was pointed out that In each project CARINCO would seek participa-

tion by way of financial assistance from local and/or outside parties. The

operations of CARINCO would tend to stimulate Investment In the Caribbean

in amounts considerably beyond its own ability to participate.

CARINCO would invest directly in new or expanding business in such

fields as manufacturing, tourism and commercial development, grant loans

for similar purposes, underwrite issues and place stocks and bonds. For

technical assistance it would have to rely on government assistance of a

local and/or international nature, due to the heavy overhead expenses that

such activity would entail. Since CARINCO would be in touch with financial

centers around the world, it would be in a position to disseminate valuable

information about the Caribbean.

Dr. Mudie stated that on a recent trip to Washington he discussed this

- 42 -

subject with international agencies and the United States State Department.

He emphasized that the most important aspect as far as international and

United States officials are concerned will be the interest and degree of

participation which can be anticipated for this project from countries of

the Caribbean outside of Puerto Rico.

Dr. Mudle referred to the need for a legal analysis to consider

important tax questions, location of the company and other legal matters

leading up to preparation of the articles of incorporation. It was indicated

that a leading international law firm with broad experience in this field has

already prepared an outline for this legal work and has estimated the expenses

at $12,000 plus travel and incidental costs. A copy of this outline was dis-

tributed to the delegates. (See Appendix II).

It was noted that the Government of Puerto Rico will be in a position

to allocate the sum of $5,000 toward this legal analysis. In view of the

importance of demonstrating interest In this matter on the part of other

countries of the Caribbean, it was suggested that small contributions also

be provided by such countries.

Following the presentation of Dr. Mudie there was a general discussion

in which the question of location of CARINCO, in view of the variety of tax

problems in the area, was raised. It was also pointed out during the discus-

sion that the United States position on limiting investment in foreign areas

would not affect investment in less developed areas and, thus, CARINCO, would

not be bound.

The delegate from British Gulana Inquired as to whether governments

would be expected to guarantee Investments. Dr. Mudie expressed the belief

that they would not.

- 43 -

A discussion then ensued on the terms of the loans that might be

available from such an organization and the amount of support required

from each government. It was determined that no fixed assessment fee-

be required to finance the required study, but that each government

could indicate its interest by offering to contribute. It was suggested

that the Conference determine the formula according to which this should

be done. The Chairman called for the appointment of the committees to

discuss the various problems. The delegate from Trinidad and Tobago

suggested that a list of the problems should be discussed based on the

welcome speech delivered by Dr. Lastra and whatever additions the

committee of the whole may decide. The discussion then centered on the

number of committees to be appointed. At the suggestion of the delegate

of Trinidad and Tobago, the Conference dissolved into two committees:


Committee I was instructed to consider projects of immediate
results in the fields of education including the arts and
sciences; health and recreation; housing and social conditions.


Committee it was instructed to consider communication, trans-
portation including tourism and trade and finance including
agriculture credit.

The Conference decided to consider further the presentation made by

Dr. Carlos J. Lastra at the opening session. It was agreed that on Wednesday

morning the Conference would convene as the Committee of the Whole, at which

time Dr. Passalacqua would continue the presentation and answer whatever

questions were raised.

Due to technical difficulties, this speech and that of Dr. Hoxeng, which
were delivered without prepared texts, were not recorded and could not be

- 44 -

Committees I and II were instructed to report at the opening of the

meeting on Wednesday morning. The Chairman then declared the general

session to be closed and instructed the committees to meet.

- 45 -


1. Presentation of

: Dr. Henri Bangou
Mayor of Pointe-k-Pitre
Guadeloupe, FWI

2. English abstract of

3. Address by

4. English translation of

5. Address by


: Dr. G6rard Latortue
Professor of Business and Economics
Inter American University

: Dr. Latortue's remarks

: Dr. Henri Bangou

: Dr. Bangou's address

: Mr. Alvin Mayne
Consultant on Economic Development
for the Agency for International

- 47 -




Mesdames, Messieurs. J'ai 1'honneur d'introduire l'orateur de ce midi, le

Dr. Henri Bangou, Maire de Pointe-A-Pitre. C'est un plaisir parce que le

Dr. Bangou est un ami que j'ai appris A connattre durant mes different voyages

d' etude aux Antilles francaises. Il s'est toujours d6vou6 a me faciliter la tache

en m'introduissant aux diffdrentes personnalit6s de la Guadeloupe. Il m'a

toujours 6galement manifesto une tres grande amitie.

Cependant, bien plus q'un plaisir, c'est un honneur pour moi de vous

l'introduire aujourd'liui, et ceci pour deux raisons. La premiere c'est que face

. l'indifference du Gouvernement frangais de participer officiellement cette

conference, le Dr. Bangou s'est empress de r6pondre b l'invitation de l'-Inter

American University malgre ses nombreuses occupations.

En effet, le Dr. Bangou vient d'etre 6lu Maire de Pointe-A-Pitre. II a la

lourde responsabilit6 d'organiser la Mairie de la plus important ville de la

Guadeloupe sur des bases plus saines et plus rationnelles.

Malgr6 tout, il a estim6 que c'6taitpour lui un imperieux devoir d'etre ici avec

nous afin de t6moigner la sympathie des Antillais d'expression frangaise au rappro-

- 49 -

chementdes habitants de la Caraibe, sachant que les diff&rentes tentative jusqu'ici

faites t I'Organisation des Caraibe, ont partiellement 6chou6, souvent par 1'attitude

isolationist du gouvernement frangais.

lI second raison pour laquelle je crois que c'est un honneur pour moi de vous

presenter le Dr. Bangou aujourd'hui, est que, parmi les nombreuses personnalites

qui auront pu valablement representer les populations antillaises d'expression

francaise,l'orateur de ce midi est certainement l'une des plus brillantes et l'une

de celles qui peuvent avec assurance affirmer qu'ils parent effectivement au nom

d'an tres large secteur de l'opinion publique antillaise.

Docteur en medecine, historien, Henri Bangou vient de voir ses dix ann6es de

vie politique en Guadeloupe se couronner par son election A la tete de la Mairie en

mars dernier.

Election pas comme les autres en v6ritd. Comme vous le saurez peut tre, la

fraud Blectorale est assez courante aux Antilles frangaises. Etre maire est souvent,

pour ne pas dire toujours, une profession. On est maire pour la vie. En effet, c'est

le maire sortant qui organise les elections. I1 a toute la latitude: latitude qui'l'est

laissee par la loi de pouvoir frauder.

Or cette fois, en mars 1965, toute la jeunesse de Pointe-A-Pitre c'est entendue

pour prevenir toute possibility de fraud electorale. C'1tait trop reconfortant de voir

de jeunes lyc6ens de 14 A 18 ans, passer toute la nuit des elections dans les diff6rents

bureaux de vote afin de surveiller si le maire sortant ne faudrait. Ces jeunes n'6taient

pas en age de voter. Cependant ils ont estim6 qu'ils avaient un role t jouer et qu'ils

ne pouvaient pas laisser certain politicians disposer comme ils voulaient de leur

- 50 -

avenir. Ces jeunes ont pense que le moment 6tait arrive pour eux de faire connattre

leur point de vue, surtout face a une administration qui ne souhaitait pas 1'6lection

du Dr. Bangou.

En effet, le Dr. Henri Bangou est l'une de ces personnalites qui souhaitent pour

ce que l'on; est convenu d'appeler les D6partements frangais d'outre-mer, un statut

d'autonomie. Le Dr. Bangou a form avec quelques autres hommes politiques

frangais, il y a de cela une annie, une organisation appel6e 'Association pour

1'organisation d'une table ronde. En effet le Dr. Bangou a convoque les representants

des diff6rents secteurs politiques de la Guadeloupe. II leur a demanded de s'6tendre,

de discuter autour d'une table afin de voir dans quelle measure on pourrait changer le

statut actuel des D6partements frangais d'outre-mer dans le sens d'une plus grande


Comme vous le savez, dans cette zone de Caraibe, la Martinique et la

Guadeloupe sont les seules ties A& tre gerees directement par une m6tropole

europeenne. Tous les autres territoires ont acquit, A de degr6s divers, une certain

autonomie politique que jusqu'l present la Guadeloupe et la Martinique ne bendficient


Uorateur d'aujourd'hui est un lutteur, la lutte est dure, mais comme je le connais

il est de taille a pouvoir la mener. C'est pourquoi, vous comprendrez pourquoi

aujourd'hui je considbre comme un honneur 1'opportunit6 que j'ai de pouvoir vous

introduire le Dr. Bangou.

- 51 -


In view of the indifference of the French government to official participation

in this Conference, and aware of the fact that the failure of previous attempts at

Caribbean cooperation was due in part to the French isolationist attitude, Dr. Bangou

was ready to accept the invitation to speak to you.

Dr. Bangou has come here to express the sympathy of the French Antilles with

this attempt at a rapprochement among the peoples of the Caribbean. Dr. Bangou,

doctor in medicine, historian and politician, who has recently been elected Mayor

of Pointe-A-Pitre, has formed an Association for the Organization of a Round

Table, which will discuss the ways of obtaining greater autonomy for the Overseas

French Departments. The struggle to reach this goal will be a hard one, but

Dr. Bangou has the preparation required to lead it.

- 53 -




Monsieur le R6cteur de 1'Universit6, Mesdames, Messieurs.

En x pondant' h 1'aimable invitation de l'Inter American University, et du

Gouvernement de Porto Rico, que je m'honnore de saluer en mon nom propre et

au nom de mes compatriotes, je ne pensais pas qu'il m'6cherrait de supporter

seul la lourde tache de representer les Antilles frangaises; seul des deux fles

parmi les invites et seul de fie de la Guadeloupe don't je relive. C'est une

solitude. don't je sens tout le poids en cet instant surtout, oh de surerott je m'exprime

en une langue minoritaire.

Mais, Maire de la ville de Pointe-A-Pitre, qui compete environ une trentaine

de milliers d'habitants et qui est la ville la plus important de Pile, je me plais a

vous saluer au nom de mes collogues du Conseil Municipal et en mon nom propre.

J'apprecie a sa'juste port6e le privilege de leur representer parmi vous aujourd'hui

et je remercie tros sincorement ceux qui ont bien voulu associer la Guadeloupe a

l'heureuse initiative de cette conference.

L'avantage de cette conference c'est surtout de mesurer les perspectives

immense qu'elle est en train de trasser pour l'etablissement et le enforcement

de liens de quelques millions d'individus, g6ographiquement, ethniquement,

6conomiquement et politiquement proches, mais don't 1'histoire c'est ingenie a faire

- 55 -

des mosaiques, de petits mondes, plutbt qu'une seule identity geographique, politique

et economique.

Nous sommes en 1965, et A consid6rer l'objet de notre rencontre, nous pourrions

penser que, depuis Christophe Colomb, nous avons mis cinq siecles environ A border

sur nos rivages respective. Ce que le commerce des spices de 1'Europe m6diterra-

ndenne et ses imperatifs ont fait 40 ans apres la prise de Constantinople et ce que

la bourgeoisie marchande de l'Europe Occidentale a fait en quelques dicennies, nous

people caribden, nous en sommes encore A tenter de le faire mais dans la reserve et


Autant dire, Mesdames et Messieurs, que j'applaudis de tout coeur A I'esprit

et au fait de cette rencontre, que j'en compliment les auteurs et que je forme des

voeux pour que cette initiative alt du lendemain.

Vous attended sans doute davantage de moi qu'une carte de voeux que je pourrais

aussi bien vous adresser A occasion du jour de 1'An et je vous comprends. La

conference de ces jours-ci a precisement pour but d'aller au delA de intention et

d'essayer de remettre sur une voie plus naturelle et plus logique le destin tout au

moins 6conomique des pays de la region Caraibe.

La chose est peut-etre possible, A condition selon moi, de cerner les collectivites

qui nous interessent, A inventorier les difficulties concretes qu'elles auront a faire

face dans ce dessein tres louable de rapprochement.

II est deja symptomatique que pour la Guadeloupe, la Martinique et la Guyane

votre organisation a etW quelque peu embarass6e dans le choix des interlociteurs,

Fallait-il inviter les reprdsentants de la population ou les tenants de 1'autorit6?

- 56 -

L'attitude d'abstention des officials de chez nous tend A prouver que ceux derniers

considbrent non souhaitable tout rapprochement entire les populations de la

Caraibe. Selon eux, integres juridiquement a la France, les antillais devraient

maintenir de liens pr6f6rentiels avec les m6tropoles europ6ennes. Encore que nous

ne voyons pas de notre part,pourquoi il le serait a 1'exclusion de tout contact avec

des ties voisines. Cette opinion officielle explique egalement les declarations

reitfre.s de leurs envoys guadeloup6ens et martiniquais aux conferences de

l'ancienne Organisation de la Caraibe. Affirmations selon lesquelles il n'existerait

plus de problemes dans les ties, ni politiques, ni socials, ni 6conomiques.

Bref, tout cela peut se resumer dans le fait que chez nous il existe entire les

pays legals et les pays reels une tris grande difference. Soit que l'on consider -

l'autorit6 de tutelle ou bien les personnalit6s elues et tant que des rencontres

comme celle-ci ne reuniront pas de del6gu6s du pays reel qui seront aussi ceux

du pays legal il y a peu de chance qu'il y ait engagement de la part de ces delegues.

Et s'il y a engagement, il y a peu de chance qu'il soit operant en l'absence d'un pouvoir de

decision dansle domaineot ils se seraient engages.

Elu r6gulibrement par la population de ma ville, je crois pouvoir traduire ses

sentiments sur les problemes qui nousprboccupent aijourd'hii. Mais je crois aussi

plus ratonneld'enlimiter expression au strict problme des moyens concrets,

propres A 6tablir entire les diff6rentes ties de la Caraibe de liens de cooperation don't il

ne soit pas exclus qu'ils se transforment un jour en liens organiques et politiques.

Il existe un premier terrain oil logiquement les collectivites de la Caraibe

pourraient et peuvent se rencontrer, C'est celui de la solidarity et de la

- 57 -

comprehension reciproque dans les luttes qu'elles menent pour la solution de leur

problemes politiques et 6conomiques. De ce point de vue, aucune collectivity ne

peut etre 6cart6e, a priori, ni d'un cotd ni de l'autre, puisque de la latitude ou du

point de vue official nous sommes interesses, avec le management necessaire, bien

sQr, a la solution des problemes poses par la reality humaine, social, 6conomique

et politique de ces collectivit6s. De ce point de vue aussi, il y aurait une demarcation

entire la maniere de considerer les problemes des different status politiques des

fles de la Caraibe, A l'int6rieur de ces ties et dans le cadre ext6rieur carib6en.

Sur le plan interieur les luttes concernant le statut conserveraient toutes leurs implications

alors que sur le plan exterieur la question de statut deviendrait un probleme technique

en rapport avec la consideration plus general d'epanouissement reel, concrete et tres

large de la personnalit6 des guadeloupeens, des portoricains, des trinidadiens, des

jamaicains, etc.

Cette epanouissement devant necessairement conduire a une progressive

identity de vue entire les collectivites proches geographiquement, economiquement

ethniquement et politiquement. puisqu'elles sont toutes a affronter leurs destins

politiques A partir des positions d'inferiorite vis-a-vis des grandes m6tropoles.

De ce point de vue enfin, nous eviterions du moins moralement, de mettre

des barrieres humaines 1l oi~ il y aurait pretexte a mettre des barribres politiques.

Nous 6viterions aussi, toutes les entorses, toutes les entraves, des complexit6s

internes, des luttes emancipatrices..

Pour etre plus concrete, le Gouvernement frangais declare que la departemen-

talisation a resolu le probleme de la decolonisation a la Guadeloupe. Une fraction de

- 58 -

la population de ce pays applaudit et approve, une autre, don't je suis, affirmed le

contraire et se bat pour que le gouvernement en arrive a doter le pays d'un statut plus

conforme a l'int6ret des guadeloupeens.

En dehors de ces competitions interieurs et leurs implications passionnelles,

des travaux ont 6t0 faits sur la fiscalit6 dans les Departements d'outre-mer et sur

les revenues par l'lnstitut d'Etudes Caraibes. Les conclusions de ces travaux portees

A la connaissance des interesses eux memes, peuvent les aider, dans leur option sur

des bases irrefutables, de meme que ces bases irr6futables permettent a une

assemble comme celle-ci d'en inf6rer que techniquement le statut d6partemental a

resolu ou pas le problem des guadeloupeens.

La r6ciproque est vraje. Lors de nos derniers passages a Porto Rico, j'ai eu

connaissance d'une etude faite par le Directeur de 1'Ecole d'Administration Publique

de l'Universit6 de San Juan sur le statut d'Etat Libre Associe de Porto Rico.

Soucieux des problemes constitutionnels pos6s.par lechangement eventuel du statut de

mon pays, j'ai parcouru le texte en question et je ne fus pas peu surprise d'y voir

mentionner comme solution pour Porto Rico, sa representation au sein du Legislative

Americain. Je ne pouvais pas ne pas l'etre, puisque depuis 1851, a quelques annees

d'interruption pros, nous avons, nous guadeloupeens, eu deux Senateurs au Senat

Frangais, trois Deputes a l'Assemble Nationale et qui ne nous a pas semble que

cette representation ait modified les donnees essentielles des liens economiques de

dependance existants entire la Guadeloupe et la France.

Tel est par consequence un terrain sur lequel une collaboration peut s'etablir dans

le cadre de la preoccupation fondamentale de nos collectivit6s respective desireuses

d'aller le plus loin possible dans leur emancipation politique,6conomique et social.

59 -

11 existe A cot6 de ce domaine dl6icat, mais nous 1'avons vu abordable malgr6

tout, des domaines plus faciles mais aussi important des contacts culturels. Il

est nature de penser que des contr6es comme les notres, d6couvertes dans les memes

circonstances, ayant jou6 des roles similaires dans la naissance et le d6veloppement de

la bourgeoisie commercante, industrielle et financibre de 1'Europe, ayant Wtd

peupldes dans des proportions variables d'immigrants blancs, jaunes et noires; il est

natural de penser dis-je, que de telles contrees ont des inventaires culturels commun

A faire.

Pour que ces contacts culturels deviennent possibles et fructueux, un pr6alable,

qui est aussi un imperatif, c'est que toutes les measures soient prises 1A oil il est

ddja possible pour que les trois langues soient parl6es couramment par les

populations de cette zone. Dans ce domaine, les chefs du gouvernement qui peuvent

deja, dans cette zone agir comme tels, auront une grande responsabilit6 vis-a-vis de

l'avenir politique et culture de la Caraibe. Ils ne doivent pas se lesser dans leurs

efforts et doivent, au contraire, multiplier les initiatives tendant A prouver au people

don't ils ont la charge et aux autres,l'int6ret qu'il y a 5 devenir trilingue, condition

non suffisante certes, mais necessaire pour le rapprochement human que nous


Apres le probleme de langues, i1 y a celui de la connaissance de 1'histoire

passee et r4cente de nos diff4rents pays. J'entends par histoire, non pas celle vue

par les m6tropoles, non pas celle de hauts faits, mais celledes collectivit6s

autochtones elles memes, sans pour autant nier les liaisons temporaires ou

durables qu'elles ont pu avoir avec l'histoire de ces metropoles.

- 60 -

II faudrait en dire autant des autresdomaines de la culture: litterature,peinture,

sculpture, musique, danse. Beaucoup de ces aspects culturels de la personnalit6

des pays de la Caraibe parviennent aux autres ties sous 1'4tiquette folatre de l'exotisme

touristique. Le limbo, le shango, le vodou, la sculpture deviennent des actes points

d'une industries touristique orient6e vers le riche visiteur, l'industriel americain ou

europeen qui se d6lasse, plutSt que sur la connaissance profonde, explicitee, autant

que l1affirmation de soi meme.

Que dire de la litterature, plus particulierement du roman antillais. Dejh pour

pouvoir 6crire et se faire connattre, la plupart de nos romanciers tels que slamming,

Alexis, Glissant et tant d'autres sont obliges de vivre dans nos metropoles et non

chez eux. La raison c'est qu'il n'existe pas de march de lecteurs dans la Caraibe.

Insuffisance li6e, 1A encore, au cloissonement des iles, a la meconnaissance des

problemes respectifs, A l'impossibilite de lire dans une autre langue que celle de

nos m6tropoles.

Je voudrais dire deux mots de la m6decine d'entre autres disciplines qui

peuvent b6n6ficier de la collaboration des chercheurs de nos diff6rents pays. Ies

conditions climatiques et ethniques ont une incidence trop certain sur la

pathologies humaine, pour que l'on carte les possibilities de mettre tout un comparti-

ment de la pathologie courante caribeenne par l'tablissement des programmes communs.

Quant A 1'economie et a la finance, les discussions de ce matin m'ont montre

a quel point elles vous soucient. Pour ma part, je souhaiterais qu'a 1'occasion de

l'elaboration du project de developpement de nos ties, qui dans leur cadre juridique

actuel est int6gre dans le plan de d6veloppement 6conomique et social frangais,

- 61 -

nous soyons veritablement consults. Et nous souhaiterions d'ttre assis au fait de

vos problemes de d6veloppement pour pouvoir, au moins,6carter les erreurs deja

commises ou suggerer des initiatives d6eja prouvees.

Mesdames, Messieurs, telles sont les quelques paroles que je me croyais

autorise a vous adresser malgr6 le handicap de ma position de nouveau venu dans

une compagni6 qui, A ce que j'ai pu remarquer depuis hier, compete beaucoup de

veterans de debats caribeens. Soyez assure que de retour en Guadeloupe, mon ami

et compatriot Monsieur Buffon et moi meme, ne manqueront pas d'informer

exactement la population des perspectives que nous avons pu suivre dans une

conference comme celle-ci.

Je suis hereux d'avoir eu l'occasion de penser a la Jamaique, a Trinidad, a

Barbade, A Antigue autrement qu'a travers 1'image de leur situation sur une carte

geographique, mais A travers des contacts humans et je suis, croyez moi,

impatient qu'il en soit de meme pour le plus grand nombre de mes compatriotes.

Laissez moi en terminant renouveller expression de ma gratitude vis-a-vis

de l'Inter American University et du Gouvernement de Porto Rico.

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Mr. Chancellor, ladies and gentlemen:

It is a great pleasure for me to greet the Inter American University and the

Government of Puerto Rico personally and also on behalf of my fellow citizens.

Upon accepting their kind invitation to participate in this conference I never thought

that I alone would have had to represent the French Antilles. Loneliness overwhelms

me especially at this moment when I have to express myself in a minority language.

However, as Mayor of Pointe-A-Pitre, the principal city of Guadeloupe,

embracing a population of nearly thirty thousand inhabitants, I am pleased to greet

you all, personally and on behalf of my colleagues the Members of the Municipal

Council. I realize the full implications of the privilege of representing them here

among you today, and I wish to thank all those who have been willing to see

Guadeloupe participating in this enterprise.

The importance of holding a conference like this is that it provides us with the

opportunity to gauge the scope of all the great prospects for establishing and

strengthening ties among several million persons who are geographically,

ethnologically and politically close to each other. Yet, history has managed to

make out of this Caribbean conglomerate a plurality of small worlds instead of a

single economic, political and geographic unit.

- 63 -

We are in 1965, and as we stop to consider the purpose of our meeting, we

realize that since the times of Christopher Colombus it has taken us more than

five centuries to reach our own shores. We Caribbean people are still trying to

accomplish by way of reserve and apprehension, that which the spice trade of

Mediterranean Europe accomplished forty years after the fall of Constantinople and

the bourgeois merchants of Western Europe were able to accomplish within a few


For this reason, ladies and gentlemen, I heartily give my support to this

conference, I congratulate its organizers and I pray for the success of the


There is no question of the fact that you expect from me much more than a

good will message which I would have sent you on a New Year's Eve. I agree with

you. The purpose of this conference is precisely to go beyond intentions and to

try to develop rationally and logically the economic future of the countries in the


This may be possible, provided, I believe, that we ask all the territories with

which we are concerned to prepare an inventory of the specific problems that they

will have to face in their commendable efforts for rapprochement.

The fact that you have been a little embarrassed in the choice of speakers from

French Guiana, Martinique and Guadeloupe is already symptomatic. Should you

invite the leaders of the people or the holders of the power? The decision on the

part of our authorities not to participate shows that they consider undesirable any

kind of rapprochement between countries of the Caribbean. They feel that since the

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French Antilles are juridically integrated with France they ought to maintain preferential

ties with the European metropolis. We do not see for our part that this Should

necessarily exclude all contacts with the neighboring islands. The position of the

French Government explains the attitude of their delegates from Martinique and

Guadeloupe who on more than one occasion, at the meetings; held by the former Caribbean

Organization declared that the French Antilles no longer had any political, social or

economic problems.

To make a long story short, we can say that in our island there is a great

difference between what we may call the legal country and the real country. As long

as one has to choose between the metropolitan authorities and the leaders of the

people, and as long as delegates to meetings such as this one do not speak both for the

real and the legal country, there is very little chance for any commitment on the part of

such delegates. And if there is a commitment, the chances for success will be very

limited if they lack the necessary power of decision in the area of commitment.

As Mayor of Pointe-A-Pitre by the will of my people, I consider myself

capable of conveying to you their feelings concerning the problems which are before

us. However, I think it would be more sensible to concentrate on the specific

problem of the real means by which ties of cooperation could be created between

the islands in the Caribbean, without disregarding the possibility that such ties

might develop in the future into organizational and political ones.

In the first place we could say that logically Caribbean countries can meet at

the level of solidarity and reciprocal understanding in the struggle to solve their

political and economic problems. From this point of view$ not a single territory

65 -

can be excluded a priori by either side. From the broad or from the official

point of view, we are all interested under the right circumstances, of course, in

solving the problems arising from the human, social, economic and political

realities of our territories.

Accordingly, there would be a clear difference in the way of viewing the political

status of the islands in the Caribbean within those islands and in the context of the

region. Within each island the struggle for political status would retain all its implica-

tions, whereas in the regional context, the question of status would become a technical

problem related to the more general concern for the development of the personality of

the peoples of Guadeloupe, Puerto Rico, Trinidad, Jamaica and so forth.

This development of personalities would necessarily lead to a progressive

identification in the way of thinking of communities geographically, economically,

ethnologically and politically close to each other since all of them have to face their

political future from a position of inferiority vis-a-vis the great metropolis.

Therefore this wo uld enable us to prevent, at least in the moral sense, the

raising of human barriers where there might be pretext for raising political ones.

We would be able to avoid all the obstacles, all the internal complexities and battles

for emancipation as well as all sorts of violence.

To be more specific, I must say that the French Government has declared that in

Guadeloupe the problem of decolonization was solved as soon as the island became a

French Department. One part of the population of Guadeloupe supports this position,

while another, to which I belong, opposes it and seeks a status more in line with the

interests of the people.

- 66 -

Aside from these internal disputes and the passions they involve, studies have been

made by the Institute of Caribbean Studies on the fiscal system and the income of the

French Overseas Departments. The results of these studies if made known to the

interested parties could help them by providing solid foundations for their choice, just

as those solid foundations would enable a conference such as this to determine from a

technical standpoint whether or not the departmental system has solved the problem of

the people of Guadeloupe.

The reverse is also true. During one of my recent visits to Puerto Rico, I

happened to come across a study prepared by the Director of the School of Public

Administration of the University of Puerto Rico dealing with the status of the Common-

wealth of Puerto Rico. Since I was deeply concerned with the constitutional problems

brought about by the change of status in my country, I read the study and was very much

surprised to find that the author mentioned, as a possible solution for Puerto Rico,

representation in the Congress of the United States. The reason for my surprise was

obvious. Since 1851, with very little interruption, we the people of Guadeloupe have

had two Senators in the French Senate and three Deputies in the National Assembly.

However, it does not appear to us that the fact of having representation has in any way

modified our position of economic dependence on France.

This, then, is one area where collaboration between these territories may be

established within the framework of a basic concern of the people to go as far as

possible along the road to political, social and economic emancipation.

Besides this delicate area,.there are the less difficult though no less important

areas of cultural contact. Countries such as ours have very much in common in

- 67 -

terms of cultural development. We were all discovered under the same circumstances,

we have all played similar roles in the development of the commercial, financial and

industrial bourgeoisie in Europe and we were settled by white, yellow and black immigrants

in various proportions.

In order to make these cultural contacts possible and fruitful, a first and vital

requirement is that we take the necessary steps to see that the whole population of the

Caribbean is able to speak English, Spanish and French fluently. In this field, the

Heads of Government who are able to act-as such have a great responsibility via-a-vis

the political and cultural future of the Caribbean. They should never falter, on the

contrary, they should multiply their efforts to interest the people they govern and others

in becoming tri-lingual, for this is a necessary condition for the rapprochement that we


Next to the problem of language we have to deal with the problem of history, past

and present in the Caribbean. I understand by history, not the one seen by the metropolis,

not the one filled with great deeds; but the one that has to do with our own people without

denying the temporary or permanent ties they might have had with the history of the

metropolitan countries.

The same thing could be said of other fields of culture, such as literature, painting,

sculpture, -music and dance. Many of these cultural expressions of the personalities

of Caribbean countries arrive on other Caribbean islands labelled as exotic tourist

attractions. Limbo, -shango, voodoo and sculpture become the basis for a tourist

industry oriented towards the rich visitor, the American or European industrialist,

who comes for relaxation, rather than for a thorough explicit knowledge, even more,

an affirmation of their own identity.

- 68 -

What can we say about literature, especially about the Caribbean novel. Most

of our novelists such as Lamming, Alexis, Glissant, and so many others, are forced

to live in our metropolitan countries and not among us, in order to be able to write

and make themselves known. The reason for this is that the Caribbean lacks readers.

This is due to the isolation of our islands, to the lack of understanding of mutual

problems and to the impossibility of reading another language.

I would also like to say a few words concerning medicine which among other fields

of knowledge could profit from the collaboration among researchers throughout the

islands. As you know climate and ethnology have a strong influence on human

pathology. For this reason joint programs of action could be developed to deal with

problems involving Caribbean human pathology.

In the fields of economics and finance, the discussions held during the morning

session have shown me to what extent they concern you all. For my part, I would

like to see the French Antilles really consulted in the drafting of their social and

economic development plans which, as you all know, are integrated in the development

plans of metropolitan France. Also we would like to be informed about your problems

of development so that we might be able to avoid the same errors and to suggest


Ladies and Gentlemen, these are the few words I consider myself entitled to

address you in spite of my position as a newcomer at a meeting attended, I have

discovered, by so many veterans of Caribbean discussions. Be assured that, on our

return to Guadeloupe, my friend and fellow citizen, Mr. Buffon, and I, will make an

exact report of what took place at this meeting. I am very happy to have had the

69 -

opportunity to be in direct contact with Jamaica, Trinidad, Barbados and Antigua

instead of just knowing them by their geographic positions on a map and I am looking

forward to seeing that my fellow citizens have the same opportunity. Before I finish,

allow me to express my gratitude once more to the organizers of this Conference, the

Inter American University and the the Government of Puerto Rico.

- 70 -




Members of the Conference and Mayor Bangou:

I certainly appreciate the opportunity of ppeaking.to you at this time because I

think this is a turning point in the Caribbean, particularly among the islands who have

recently been colonies, or still are, or are in this intermediate stage; Commonwealth.

What I would like to talk about today does come out partly of my experience in

the last few years and also my experience in Puerto Rico contrasted to what I found

in Latin America. One of the :things that I fear most in the Caribbean economic

integration effort is the construction of an elaborate organization. We have seen a

Caribbean Organization which was organized but for some reason did not seem to

function right. I would not go into the reasons. But we have seen also many elaborate

organizations in Central America and Latin America that are having a great struggle

in order to accomplish their purposes. Since most of you sat in international

organizations you know that once you formalize that organization there is always the

danger that you are speaking for your government, and the resolutions have to be so

carefully worded that they mean nothing when they come out. And so it seems to me

that one of our efforts must be to try to not create elaborate organizations such as you

find in some of the other efforts at economic integration% Try to analyse the

factors that you need to move forward and to proceed not only with economic

integration but with the improvement of the level of living of your peoples.

- 71

When one thinks of the Caribbean area and looks at it from a standpoint of

economic integration one soon realizes that this is going to be probably one of the

most difficult areas in the world to integrate from an economic standpoint. As

Dr. Andic pointed out yesterday, there are problems, natural and geographic

problems, and political problems and economic condition s, which make for great

difficulty in an economic integration, let us say comparable to the European Economic

Community. And it is for this reason that I think we cannot pattern the attempt at

Caribbean economic integration along the lines of the European Economic Community

nor along those that are found in the Central American Community. However, we can

pick from each of these some aspects that would be desirable for the Caribbean. In

particular, I would not like to see all of the efforts concentrated on attempting merely

to increase trade. I would rather see the efforts of the Caribbean Community

concentrated on improving the economic conditions in each of the areas with the thought

that, in the meantime, certain aspects of trade and integration could be accomplished

as the economies grow and expand.

In watching the Central American Common Market attempt, I have been fearful

of what can happen if the economies involved in an integrating economic community are

not diversified and do not have the stamina that nearly every economy in Europe has.

In other words, you should really remember that you also open up an area of

competition that never existed before. And the great danger, unless you are careful,

is that the economies, which are, let us say, more backward than the average, will

tend to lose because they have less flexibility.

In Europe, you have countries and economies that are producing a whole spectrum

of products so that if one plan fails they can fall back on another. They have other

72 -

scales. But look what has happened in Central America. There are fights going on over

who should get the one tire plant, who should get the one cement plant and so forth.

If Honduras has a cement mill and there are no tariffs, and if there is already one in

Costa Rica which is more efficient for a variety of reasons, it could easily cut this

unprotected Honduras cement off.

You must have great flexibility and so must be very careful. And so for this

reason the other thing I will like to comment too is one of the peculiarities of the

Caribbean community economies: the fact that nearly all of them are tied to a

metropolitan country, usually with respect to the export of raw materials either in

mining material (as in the case of bauxite and petroleum) or in agricultural products

such as sugar or tobacco or bananas. In nearly every case one will find, particularly

with agricultural products, that this industry is subsidized by the metropolitan

country in the form of higher and more stable prices than in the world market. This

represents, to a large degree, a tax on the consuming metropolitan country. It is

easy to get a subsidy of this kind through the Legislatures of the metropolitan

countries, because the islands are also consuming consumer goods and, in effect,

the metropolitan country gets the money back in the form of sales of consumers

goods that are produced in the metropolitan country.

Suppose that you carry a complete common market through as they are doing now in

Central America, where you raise the tariffs to countries outside the Common Market,

particularly to your own customers, and you reduce the tariffs within the Common

Market. What you are trying to do in effect, is to substitute intra-Caribbean production

for that of the outside. The country selling you the goods before was.essentially the

metropolitan country which has been subsidizing some of your raw material. So it is

73 -

going to be very difficult, much more difficult, let us say, than for the countries of the

Central American or the European Common Market from that standpoint.

Despite the fact that many of you have severed ties completely in the political

sense, like Trinidad and Jamaica, you are still bound economically by various agree-

ments and quotas for some of your agricultural products. So you are still tied to the

metropolitan country. Therefore, before moving into this field and putting too much

effort into it, the problem has to be considered thoroughly to see what can be done.

Instead of attempting to approach the problem of economic integration purely from a

common market standpoint or from a trading standpoint gradually we should look at

the kind of institutions, economic and other institutions that we might develop jointly

which could help each other.

In particular, when one thinks of the possibility of using the principle of risk

spreading in terms of the increase in the capital flows from outside, one soon

discovers that there are certain advantages to be derived if the various countries can

group together to establish certain types of institutions in a broad framework or in

terms of the Caribbean Economic Development Corporation, which might be the mother

corporation for a lot of other activities.

I want to address myself to some of these possible activities, which I have found

are the basis in many respects for the rapid economic development in countries such

as Puerto Rico and Israel. Whenever you find some of these institutions lacking in a

country you usually find a lack of progress in economic development even though other

conditions may be the same.

Thus, in the 3 years that I have been dealing with various Latin American and

Caribbean countries, I have discovered that, generally, the planning documents are

74 -

the least important documents in the country. They very rarely determine what is

going to happen. What does determine what is going to happen is the nature of the

institutions that were developed, such as development banks, the general banking system,

agricultural credit organizations, and so forth and how well are they functioning. These

are going to be the factors determining whether a country will develop rapidly or not.

Therefore, what I propose is that we look at what kind of institutions we can develop

jointly in the Caribbean which will be of assistance. I am trying to develop a few

criteria for the identification of such institutions. One is that the institution must be

focused on solving a problem which is common to all or almost to all of the members

of the Caribbean Community. Secondly, the institution must be able to accomplish the

objective with less resources than if each of the countries tried individually to accomplish

the same objective without the use of this institution. There are several examples of this.

One is the recent agreement that Puerto Rico signed with respect to a fishing survey

throughout the Caribbean. It becomes obvious that if Puerto Rico alone should attempt

to mount such a survey it would be more difficult than if all the Caribbean Islands got

together and worked on this to identify fishing grounds. But that is a rather simple one.

Now.I would like to discuss more permanent types of institutions. And I will first group

the things that are involved in the principle of risk distribution or insurance.

First, one of the problems of economic development is to attract external capital

to invest in both infra-structure and in productive enterprises whether private or public.

Since it is part of the United States, Puerto Rico has had relatively little trouble in

attracting capital because we have the Federal Court system here to guarantee against

- 75 -

expropriation without compensation. But this is not true in many parts of-theworld.

As the Caribbean areas become less tied to metropolitan countries and some of them

are now independent or about to become so one can only look around and, if he were an

investor from a foreign country, let us say the United States or Europe, looking at the

Caribbean and seeing the Dominican Republic, Cuba and Haiti, ask whether he would

be willing to risk his money, even though it looks very profitable, without some sort of

insurance for getting it back. The United States recognizing this, has developed an

Investment Guarantee Fund, which will guarantee an investor, if he pays a premium

for insurance, against the problem of expropriation or guarantee the repatriation of

capital, and so forth. Recently, attempts have been made to extend this kind of

insurance to foreign exchange evaluation.

This is one way in which through the use of an insurance scheme, you can at least

transfer the risks and distribute them among the various countries so that no one

country is bearing the full burden. In general, what happens in these investment

guarantees is that the country receiving the investment has to sign a treaty with the

United States that it will respect and make every effort to return the investment and so

forth. But the investor pays a premium to the United StatesG government which then

extends the guarantee. It seems to me, that if the Caribbean Community itself could

create an investment guarantee fund or corporation it would do two things: first, it

could set its own terms, depending upon the risk. In the United States Investment

Guarantee Program the investor in a sense is paying for the risk that in latin America

may be high, such as the risk that resulted from Cuba and so forth. But in the

Caribbean, if we for the moment exclude the Dominican Republic and Cuba and Haiti, we

- 76 -

really have a relatively stable history in this regard. Therefore, it seems to me that

one could advance insurance at a lower risk premium than in other countries. The

great advantage of the insurance from the point of view of the insurance companies is the

fact that usually they have to build up big reserves that can be invested and, therefore,

they can make money on the investment. This insurance scheme not only eases

generally the flow and reduces the risk to the individual investor but it also creates

reserves which nan be used to re-invest either directly or indirectly by the Caribbean


It seems to me that we can do some pioneering by increasing the. flow of capital

to the Caribbean by grouping together and spreading the risk. The whole principle

of insurance is that you distribute the risk of involvement or of the dangers of let us say

one of the islands becoming communist again or whichever way you want to do it. I

am not proposing it. I don't think you would. But I am just saying it as a case. There

are many times when one is tempted to expropriate without compensation whether you

are a communist or not.

All you have to do is to look at British Guiana Public Electric Company before it

was taken over and you would see. So this is one basis on which one could develop

without having elaborate political organization, without having each Secretary of State

or Foreign Affairs Secretary sign so that he then is in danger of his future. We can

create a financial institution which can be helpful and as a way to extract additional

money out of the investor. Then I would like to discuss a similar project which I

have discussed in a longer paper about a year ago and which may be studied by the

Insurance Department of the Warden School, that of anAll Caribbean Hurricane

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Insurance Company. In the last couple of years I happened to have been exposed, as

part of economic teams, to the aftermaths of several hurricanes in Jamaica and then

in Tobago when the countries were completely unprepared for the hurricane. Nobody

can stop a hurricane, one can only protect himself. There is a great deal of loss of

property, of productive facilities and actual crops when a hurricane hits. Very few

governments consider the problem of taking insurance against hurricanes. However,

we could create a Hurricane Insurance Company System by creating in each of the

Caribbean islands a single hurricane insurance company which would insure both the

private sector up to certain amounts and also the public sector for two things. The

public sector would take out a policy which would deal with facilities such as the infra-

structure of roads or certain power lines or things of that kind which would be

destroyed, and on the other hand it would take out an insurance policy that would

cover emergency relief problems which would help with rehabilitation. This would be

a flat policy that would pay off under certain conditions specified in the policy. The

private sector would have two types of insurance, one for rehabilitation of facilities

like housing, factories and so forth and another for loss of crops. We already have

crop damage insurance, so this would merely be anextension to that. Now the reason

we do not want one country to do this alone is that, if a hurricane hits that country, it

has no way to distribute risks; but if all the islands together would join into an All

Caribbean Hurricane Insurance Company with which each of the islands would be

reinsured,then if Puerto Rico was hit it could draw on the All Caribbean Insurance


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This is particularly attractive when you begin to study the nature of the expendi-

tures required for rehabilitation, particularly for the independent countries with their

own central banking and currency systems, because all they need to reinsure with the

All Caribbean Corporation would be the foreign exchange requirements for rehabili-

tation purposes or to reduce the danger of inflationary pressure as they begin to

rehabilitate the island. Since they have a claim on each of the other islands, the

amount of money that would flow out of the country would be very small. Now, in

Trinidad today, you will find that about six million dollars a year are flowing out of

the Trinidadian economy to outside economies from insurance companies. This would

not happen in this case, because, since most of the rehabilitation cost would be in

terms of local currency, you do not have to deplete this reserve and you can actually

use the collection of premiums to the extent that you want other countries to invest

in your own country's bonds.. Furthermore, the claims that you have on foreign

exchange of the other countries can be the basis for an expansion of your local currency

because these foreign reserves could be the basis for any expansion needed for reha-

bilitation. The system not only provides you with a distribution of risk, but it also

provides you with reserves that are needed for the central banking operation when

the time comes. Like every other insurance company, it must build up reserves,

so the third element is to build, very carefully, a premium structure which is in

excess of the risk so that you create reserves -- possibly more than you really need

-- and you find that you have another investment fund that can be used either for short

time loans, or, as your reserves build up, for a longer period. You only have to

look at the role.that the life insurance companies have played in Great Britain, or

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in New England, as the collector or the source of investment funds both in the private,

public, residential and industrial sectors of the American economy and the British

economy, as well as some of the islands economies.

Very similar to this would be the use of the insurance principle as it has been

used in the United States and in many of the islands -- FHA type of mortgage

insurance. The difficulty again for an FHA Insurance Company for Jamaica, or FHA

Insurance for Guadeloupe or Trinidad, is that it is always in terms of the local

currency and therefore does not really give the protection necessary for an investor.

Therefore, I think that by having an All Caribbean FHA, the investor from Great

Britain or from France or fromUnited States will develop a greater sense of security

when it comes to mortgage financing. This is an extension of the same type of

insurance as the investment guarantee. The reason they are generally separated is

that mortgage funds generally come from different sources and involve different


To follow up on the idea of mortgage insurance it might be good to create, not

only an insurance system at the All Caribbean level, but also a mortgage banking

system with the Central Mortgage Bank being at the all Caribbean level. The central

Mortgage Bank could then discount mortgage loans to insurance companies and to

private investors and be the discount bank for the whole Caribbean, again spreading the

risk. Then this Caribbean Banking system could easily probably sell these

mortgages to other companies.

In the case of the United States, since Congress is partly tied into the banking

system you actually have the organization and the standing which tends to stabilize

- 80 -

the flow of funds by going into open market purchases. I do not think that you could carry

it quite that far here, but you might be able to if you have sufficient money. In all of these

insurance schemes not a great deal of money passes around. What happens is, in effect,

that various countries have to make a commitment that can be drawn upon and that line

of credit may never be actually used, unless some disaster occurs.

Then of course there are the more direct types of institutions such as the Develop-

ment Bank. I know there was a study on the Development Bank for the Caribbean which

indicated that it was not feasible. But you are trying to develop the economies in

each of the islands through the use of investments that an All Caribbean Development

Bank would give. What I would like to see. of course is a system whereby the All

Caribbean Development Bank really becomes a discount bank rather than a direct

investor except in the case of inter island projects.

In a talk which I gave to the Caribbean Organization two and a half years ago,

I outlined the problems of getting financing from an international organization. It

is difficult to obtain the funds unless you do careful studies and these are studies

that an ordinary person cannot do, it takes an expert. But youomust provide the

kind of detailed information they want.

Therefore, I propose that another form of cooperation in the Caribbean is to

develop a team for technical assistance in project development.

I think the best way that the Caribbean economies can get financial assistance, or

other kind of assistance, from the International Agencies is to create institutions

like the Central American Bank for integration or other kinds of institutions that can

deal directly with the AID and other international institutions with projects that are

81 -

already prepared and that meet the requirements and also meet the political problems

that AID faces. Thus I think that one of the advantages of economic cooperation lies in

that the Caribbeans themselves take the initiative. If you come up with well thought

out projects with institutions that would administer them, and so forth, I think that

there is no question, with the developments that are occurring in the Caribbean, that

you can accomplish a great deal.

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of the


The Committee of the Whole met for a discussion of the plan submitted by the

Puerto Rican delegation. Dr. Passalacqua was asked to elaborate further on the

thesis presented at the opening session by Dr. Lastra, Dr. Passalacqua's state-

ment is included below:

"This is our view of what we call a loose form of Caribbean cooperation. The
basis for it is a Regional Working Committee, such as we have here today.

We envision that as the Working Committee studies the problems of the region,
it will come up with, as we have, and as the Committee reports will show, a series
of problems and a series of projects that have to be considered. The Regional
Working Committee would be the only formal body in the sense that it would necessa-
rily have to determine when and where it was going to meet. It shouldalso have a
reasonably stable membership on the various delegations so as to facilitate and
encourage an informal give and take. The Regional Working Committee would report
to their respective Heads of Government on the decisions that we have taken here,
on the problems that we have found and on our recommendations. The Heads of
Government, if necessary, or their Ministers could meet in a Council. This could
be done at their own determination, without any regularity at all but whenever they felt :
that it was necessary. I will come back to this later.

Within each government we should have some agency that would serve as the
liaison for Caribbean cooperation. In the case of Puerto Rico, we propose CODECA.
CODECA is being created as a public corporation under Puerto Rican law, which means
that the only financial support available for its administration and management will have
to come from the Puerto Rican treasury other agencies can contribute to the cost of
its services but not to its internal operation.

We envision CODECA as a service organization to serve in general in the capacity
of a secretariat for.our region until such a time when the region may determine that
there is a need for a formal organization and that it would be feasible to have one, if
such a time should ever come. CODECA, serving more or less as a secretariat would
be a clearing house of information for all of the area. In other words, statistics and
data would be funneled through this agency where they would be collected, assembled,
and redisseminated.

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The relationship of CODECA to the Regional Working Committee would be not only
that of Puerto Rico's representative at Regional Working Committee level, and Puerto
Rico's contact with all the other governments for the purpose of regional development but
also that of its research and information office. CODECA will have additional powers,
under the law, which will permit it to serve as a channel for funds coming from other
agencies including international agencies. If we can succeed in getting funds from
various sources for a project of regional interest in the Caribbean, this is an excellent
way to pull it all together, and make all the little rivulets come into one big stream.
That is the theory of CODECA as a fund channelling system. It would mean,also, that
CODECA would have to seek the funds for regional projects. Serving as an agent for
the entire region, it would seek out funds for regional development but not for individual
cases. One of our big problems in the past has been that we always seek out the develop-
ment funds for individual cases. In the case of agricultural credit in the area each
country has gone seeking its own agricultural credit. Tnis may have certain advantages but
we believe that you can get more when it is sought on a regional basis. I think this is
generally agreed upon.

CODE CA will have the power given to it by the government of Puerto Rico to
invest in or to initiate subsidiary corporations for particular purposes. Some have
already been mentioned. One is CARINCO. If the establishment of CARINCO had to wait
until every government had discussed and determined whether it could participate in the
formation of a Caribbean Investment Corporation, it might take quite a while. But if one
of us, and it does not really matter which one, can take the initiative, the Caribbean will
have gained an advantage in time. Initially, it will be Puerto Rico that can do it because
we will have the agency to do it. A subsidiary can start to operate and the other govern-
ments can invest in it.

In another case, another government might have plans for a corporation that could
be of regional value. It could start it and all the other governments could then come in.
In each case CODECA would come in for the Puerto Rican Government.

Which agency in each government would serve as our liaison and contact is, of
course, a matter for that government to determine. Somebody has suggested that a
series of CODECA's be set up around the region. This might be a way; but I do not
think that every country really needs a CODECA and I am- sure that the law as prepared
by us may not suit any other country. This is not what we propose. Our idea is that
CODECA will be Puerto Rico's agent in Caribbean cooperation and that each government
will have its own agent in Caribbean cooperation which will work in parallel with CODECA.

Rather generally, the idea of the Technical Committees would be to consider
solutions to our problems. In transportation, for instance, we need to determine
what are the problem areas and what approaches can be taken to solve them. Since
this could be a continuing process, we could, if we need to, appoint a Technical
Committee or regional Working Committee to continue the study3: In this :Teehnical
Committee Whichever countries were interested would be represented This is'the
basis for informality, the basis of the possibilities presented by this approach that

-84 -

we suggest., A Technical Committee could be formed on tourism. If a country is not
interested in tourism; if tourism is not one of its problems, then, it wo uld not be
expected to be represented unless its government so desired and there would be no
contribution assessed for this. This would be a working committee. It would determine
whether or not there is need for an agency to foster tourism. If it is determined that
an agency may be needed, Puerto Rico offers that CODECA will carry out the study.
The interested countries would be asked to contribute to the cost of the study. The
Government of Puerto Rico would participate whether or not it is directly interested
in the particular question. Then, once the study is prepared and we know how we are
going to approach the solution, if we need a subsidiary corporation, we can form one.
If we need a subsidiary, then with the help of CODECA and the other agencies designated
as agent of regional cooperation -- the Ministry of Finance in one country or the Develop-
ment. Administration in another -- will operate to create or to establish these subsidiaries.
The subsidiaries can be wholly government owned, or mixed government and private. We
can encourage a whole private corporation in which the government could buy shares:
any type of corporation that we need to carry out the development of this area, on the
basis that those who are interested and who will benefit will take part and the others only
if they wish.

The only body that we need to act as a regional body to meet on occasion at specified
times, however often we decide it is needed, is a regional committee such as this one.
This system does not require a large secretariat. The staff of the secretariat can be
provided by the host country, wherever the Regional Working Committee meets, out
of its own office forces with someone, perhaps from CODECA, who has a reasonable
amount of experience in handling these things to supervise the operation of the adminis-
trative service. This is all we need. This does not require an elaborate organization,
a treaty or anything else. It requires merely a decision to meet and discuss our
problems as has been done at this Conference.

The Council of Ministers would, within the constitutional processes of each
country, be the court of last resort. It would be up to them to meet and discuss or
decide upon the legislative requirements of certain projects recommended. Thus,
meetings of the Council of Ministers would have no predetermined periodicity. The
function of this body would be to meet in cases of special necessity or on spei&Il
occasions. In the meantime, the Regional Working Committee could approach govern-
ments at the ministerial level or at the head of government level to determine the
action the governments wish to take in a recommended situation.

In some cases it would be, perhaps, correct and necessary only for the
Regional Working Committee or one of the Technical Committees to refer back to
the Agent in Caribbean Cooperation of their governments. In other words, if the
Technical Committee on Trade determines that we have to make a new and thorough
study of the tariff situation in the area to determine where it can be altered to meet
the needs of regional trade, the Technical Committee does not need to go to a Head of
Government or to a Minister. They can go to the Agents and say we need that you

- 85 -

supply CODECA, who will do the research, with this information. CODECA, in its
turn, with this responsibility thrust upon it, would seek the experts to do the study.
It would seek them preferably within the area, because one of our great untapped
resources is the expertise that we have within our own area. Failing that, CODECA
would seek them outside. If it is not a high cost study, the governments can contribute
the total cost. If it is a high cost study, the governments can contribute to the extent
of their abilities and CODECA can seek the rest of the funds from private foundations,
from international organizations, from other governments. We in Puerto Rico know
that the job that has to be done in the Caribbean can be done by the Caribbean through
this type of an arrangement. It takes two things to do it. It takes the willingness and
the recognition of the need. This recognition of need is the reason Puerto Rico is
making this offer.

Dr. Lastra mentioned in his presentation, at one point, that Puerto Rico did not
need help in its development. He is right in the sense that we do not need loans from
a Caribbean development bank or private investment corporation. We do not have to
expand trade with other regions, we could expand it with the United States instead.
We have a common market with the United States. The same is true in the case of.-
others present here. What then is our interest in the Caribbean? It is this. We are
an Island entirely surrounded by other islands -- one member of a scythe-shaped
archipelago ending in the Guianas. And anything that happens in one of those islands
or on the mainland affects us. It affects our economy, it affects our politics. It
affects each of you. If there is trouble in British Guiana, the investors do not stop to
consider that Netherlands Antilles is not in the Corantyne River estuary and they do
not remember that Puerto Rico is not sitting there too. They do'not know this. There-
fore, if anything happens in British Guiana, it affects Puerto Rico. If anything happens
in the Dominican Republic it affects British Guiana. This is the simple truth. If we
allow ourselves to drift into a million fragmented little pieces without doing something
to help each other -- to help ourselves -- and only wait for a great power to come and
save us, then God save us because He is the one we are going to need most. We need
each other even more than we need our various metropolitan friends.

This is one reason they were not invited to this conference. Caribbean economic
development must be first and foremost a Caribbean project. When we Caribbeans
know that we have done what we can, then and only then should we go looking for help.
This must be the spirit of the Caribbean. We work for each other first and foremost.
We have spent too much time sitting around tables wondering what the metropolitan
powers were going to do for us. Now we must undertake to do it ourselves in the
Caribbean manner with the Caribbean unity and Caribbean ingenuity for we are all
Caribbeans and, to paraphrase John Donne:

No one of our islands is entire of itself; every island is a piece of the
whole, a part of the main; if one of the islands is washed away by
instability, the Caribbean is the less;... the failure of any one of us
diminishes the rest for we are involved in this region and therefore never
send to know for whom the bell tolls, it tolls for us all."

- 86 -

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