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                                                                                                                                                                                                                                             DEVELOPMENT STUDIES

                                                                            Copyright © 2000 International Development Options

                                                                                               All Rights Reserved



Volume Two                                                                      Winter 1999-Spring 2000                                                           Numbers 1-2.



                                           THEME: CARIBBEAN DEVELOPMENT STRATEGIES: ISSUES AND OPTIONS




         Vincent R. McDonald

        John Sumner

        Department of Economics

        Howard University

        Washington, DC 20059

        Published Online: December 15, 2016





The conclusion of the Uruguay Round (UR) of negotiations on reforms to the General Agreement on Trade and Tariffs (GATT) has stimulated much discussion, analysis, and interest relative to the expected impact of the changes in the world trading system.  While analysts differ on the impact of this agreement, international trade theory supports the thesis that countries can overcome the limitations of size of the market through trade; hence the removal of trade barriers is a desired principle in world trade.  An outgrowth of the UR is the introduction of two primary institu­tional instruments: The World Trade Organization (WTO) and the dispute settlement procedures set forth in the Dispute Settlement Understanding (DSU). In the case of the Caribbean, the imposition of the WTO has had almost an immediate negative impact with respect to its ruling regarding bananas. The Caribbean Community (CARICOM) was established in 1973 with the objective of promoting economic integration and stimulating trade in the Caribbean region.  This article, then, is an attempt to assess the argu­ments, pro and con, regarding the likely impact of the interpretation of the provisions of the UR on CARICOM in its dealings with a major developed country-trading partner, the United States.  As such, the article empirically examines bilateral trade statistics between the U.S. and selected members of CARICOM.  The basic objective is to estimate the potential welfare impact of the proposed tariff and non-tariff provisions of the Uruguay Agreement as it relates to US-Caribbean trade.  The article concludes that tariff reductions proposed under the Uruguay Agreement will lead to welfare gains by both trading partners over the short and long run periods—although the major trading partner, the U.S., will be the primary beneficiary.

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