Re-invigorate Caricom-Canada trade

by ALICIA NICHOLLS ON MAY 5, I had the opportunity and pleasure of being a panellist on the Canada Caribbean Institute (CCI)’s webinar entitled Canada-CARICOM Relations In The Trump Era. While the United States (US) remains an important partner for Caribbean Community (CARICOM) countries, over-reliance on any single market or partner increases exposure to geopolitical, economic and other shocks emanating in that partner.

Diversification entails not only expanding south-south ties with Africa, China, and Latin America, but also strengthening partnerships with long-standing allies like Canada. In this storm of uncertainty, Canada stands out as a stable and values-aligned safe harbour.

Today, our trade is anchored by the Canada Caribbean Trade Agreement (CARIBCAN) – a non-reciprocal preferential trade arrangement established in 1986 under which Canada grants unilateral duty-free access to eligible goods from Commonwealth Caribbean countries and territories.

CARIBCAN beneficiary countries or territories are Anguilla, Antigua & Barbuda, Bahamas, Barbados, Belize, Bermuda, The British Virgin Islands, the Cayman Islands, Dominica, Grenada, Guyana, Jamaica, Montserrat, St Kitts and Nevis, St Lucia, St. Vincent and the Grenadines, Trinidad & Tobago and the Turks and Caicos Islands.

Despite this favourable arrangement, CARICOM’s trade performance with Canada has seen signs of stagnation. According to data gleaned from International Trade Centre’s (ITC) Market Access Map, bilateral trade between CARICOM and Canada was valued at just US$1.2 billion in 2024. CARICOM’s share of Canadian imports has declined, from 0.17 per cent in 2014 to just 0.09 per cent in 2024. Conversely, Canada’s share of CARICOM’s imports also dropped from 2.5 per cent in 2014 to 1.5 per cent in 2024.

CARICOM’s leading exports to Canada include gold, aluminium, methanol, rum and spirits, root crops and seafood. Canada exports oil, wheat, iron ores, medicines, and meats to the Caribbean. According to ITC’s Export Potential Map, there remains significant unrealised export potential – estimated at around US$1.4 billion. Gold alone, in its unwrought, non-monetary form, represents a good portion of this untapped potential. There may also be scope to expand exports of products like Caribbean rum, especially as Canadian consumers seek alternatives to US products, including spirits and other alcoholic beverages.

On the services side, tourism, commercial services and transportation services form the bedrock of the Canada-CARICOM relationship. Canadian banks have a long history in the region and for Barbados, Canadian firms are the major players in its global business sector. Travel remains one of the most vital service links, with Canada emerging as the region’s second-largest source market in 2024, sending 3.3 million visitors – a four per cent increase from 2023, although still below pre-pandemic figures. With Canadians travelling less frequently to the US due to geopolitical tensions between these two countries, there is real potential for the Caribbean to capture more of this outbound market through targeted marketing, improved airlift, and creative offerings such as multidestination packages. The education link is also noteworthy. Many CARICOM nationals study at Canadian institutions, bolstering ties through Mode 2 (consumption abroad) services trade.

Some concrete recommendations

First, we need to better understand and address the reasons behind the low utilisation of CARIBCAN by firms in beneficiary countries and territories and ensure evidence-based interventions to remedy this. This might involve empirical research in partnership with institutions like the University of the West Indies. Technical assistance to help exporters meet rules of origin, the simplification of customs procedures, and the creation of digital trade platforms or business missions could strengthen small and medium-sized enterprise (SME) readiness. As most CARICOM countries’ exports now face additional ten per cent tariffs in the US market where they might have entered either duty-free or reduced rates of duty under the Caribbean Basin Initative (CBI) programmes, some CARICOM exporters will be seeking alternative markets for their products and Canada’s market of 40 million people and where most CARICOM goods can enter duty-free under CARIBCAN, beckons.

Second, the question of whether CARIBCAN should be modernised or replaced with a reciprocal but development-sensitive agreement must be considered seriously before it is up for renewal of the waiver in 2033.

While negotiations for a reciprocal trade agreement began in 2007, they eventually stalled due to divergent priorities. Today’s changed global landscape may offer a window to revisit the idea, possibly with a WTO-compatible trade and development agreement better tailored to CARICOM and Canada’s current needs.

Third, Canada and CARICOM could benefit from updating their bilateral investment treaties (BITs) to reflect contemporary standards. Most are older generation BITs which prioritise investor protection over promoting and facilitating investment for sustainable development. In the absence of the negotiation of a free trade agreement with a comprehensive investment chapter, Canada and CARICOM countries with which it has BITs should consider renegotiating their BITs and integrating developmentfriendly provisions, environmental safeguards, and mechanisms that encourage responsible investment. Fourth, greater attention should be paid to emerging sectors like digital trade, creative industries, financial technology, scientific research and development, and digital health. These are areas where Canadian and Caribbean firms can collaborate meaningfully, and where mutual capacity-building could lead to innovation and job creation. I am always reminded of and inspired by the story of Barbadian-born scientist, Dr Juliet Daniel, who is doing significant cancer research in Canada. This shows that the possibilities do indeed exist, especially given the strong ties between many Canadian universities and The UWI here in the Caribbean.

Fifth, Canadian tourism is on a growth trend towards its pre-pandemic levels but could be boosted not just through more aggressive marketing in Canada, but through product innovation and better coordination across the region. Multi-destination tourism packages, for instance, could offer Canadians a richer Caribbean experience while distributing tourism benefits more evenly within CARICOM.

Finally, the new Canada-CARICOM Strategic Partnership should also be used as a platform for closer multilateral coordination, including on WTO reform to strengthen the rules-based multilateral trading system. Although the Liberal Party in Canada won the elections in the just concluded election, there is a new Prime Minister and it remains to be seen to what extent he will continue some of the work of his predecessor.

In all of this, the Caribbean diaspora in Canada and the Canadian community in the Caribbean serve as vital bridges that can drive trade, investment, cultural exchange, and policy dialogue, and are important players and allies as we seek to strengthen this relationship.

In a world increasingly shaped by geopolitical unpredictability and economic volatility, deepening our economic relationship with Canada is not simply a reactive response. It is a logical and strategic one. Canada is already a valued partner with shared values, historical ties and a demonstrated commitment to inclusive and sustainable development. But the current level of trade and investment does not yet reflect the true potential of this relationship. There is considerable scope for deeper growth.

Let me thank the Canada Caribbean Institute for the great work it is doing on fomenting this relationship. In these headwinds of global uncertainty, we should view Canada as not just a buffer in times of crisis, but as a cornerstone in our efforts to build a more resilient, prosperous, and sustainable CARICOM. Strengthening this partnership is more than a policy option – it is a strategic imperative.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is an international trade and development specialist with more than 15 years experience and is the founder of the Caribbean Trade Law and Development Blog.