Alicia Nichols
On May 5, 2025, I had the opportunity and joy to become a panelist Canadian Caribbean Institute (CCI)’s A webinar entitled “Caricom Relationships between Canada and Trump Era.” In this blog post I share and expand on some of the reflections I have done in this session on the subject of revitalizing trade in CARICOM Canada with this current global distribution.
The United States remains an important partner in Caribbean Community (CARICOM) countries, but in a single market or a circle of international trade and development that relies on a partner, it increases exposure to geopolitical, economic and other shocks poses to that partner. For the small island developing countries (SIDS) of CARICOM, whose economy is already very open and vulnerable, diversifying trade and economic relations is not a luxury, but a need. Diversification will not only expand South-South ties with Africa, China and Latin America, as CARICOM countries are increasingly doing, but also involve strengthening partnerships with long-standing allies like Canada. Amid this storm of uncertainty, Canada stands out as a safe port that matches its stable value. This is strengthened by the presence of a considerable Caribbean diaspora in Canada and the presence of a Canadian diaspora here in the Caribbean, and by making a bridge between the US.
The foundations of the Canada CARICOM trade relationship date back to colonial times when trade between the British West Indies and British North America (now Canada) involves the exchange of Canadian fish, timber, flour sugar, molasses and rum. While its historical trade has evolved in structure and content, the essence of mutual respect and cooperation remains. Today, our trade is fixed by the Caribbean Canada Trade Agreement (Caribbean). This is a non-cooperative priority trade agreement established in 1986 that allows Canada unilateral tax-free access to eligible goods from the federal Caribbean and territory. This covers most CARICOM countries’ exports to Canada. This excludes products in harmonized systems (HS) chapters 50-65 (mainly textile products) and products subject to customs duties in the most preferred countries (MFN) that exceed 35%.
The beneficiary of the Caribbean is Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, BVI, Cayman Islands, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kit & Nevis, St. Chan, St. Vincent & Trinading Ducazin & Trinadine, Trinadyne, St. Chow, St. Chow, St. Chow, Island. In particular, CARICOM member countries Suriname and Haiti are not beneficiaries of the Caribbean.
The arrangement is one-sided, meaning that by lowering Canada’s import obligations, it is not necessary for the beneficiary state and territory to return and travel, reflecting the basis of the agreement’s original development orientation. It is to enhance the export capacity of the region, promote economic development, and stimulate regional integration. This arrangement is subject to World Trade Organization (WTO) exemption. This was recently extended to 2023 for another 10 years (until 2033).
Despite this favourable arrangement, CARICOM’s trade performance with Canada has seen signs of stagnation. Data collected from ITC’s market access map shows bilateral trade between CARICOM and Canada was valued at just USD 1.2 billion in 2024. This is relatively modest when compared to CARICOM’s trade volume with other partners. In particular, CARICOM enjoyed a trade surplus with Canada until 2019, but that dynamic has since been reversed, with Canada now enjoying surplus in the region. The margin of preference for CARICOM countries in the Canadian market fell as Canada concluded an agreement with other partners and its tariffs fell. Furthermore, the utilization rate of Caribbean preferences varies widely from country to country, with some taking advantage of key stock preferences in exports and others not able to access obtained. CARICOM’s Canadian imports fell from 0.17% in 2014 to just 0.09% to 0.09% in 2024. Conversely, the proportion of Canadian imports fell from 2.5% in 2014 to 1.5% in 2024.
A deeper dive into the data will reveal even more about what is being traded and where opportunities are. CARICOM’s major exports to Canada include gold, aluminum, methanol, rum, spirits, root crops and seafood. Conversely, Canada exports oil, wheat, iron ore, medicine and meat to the Caribbean. According to ITC’s export potential map, there remains a significant unrealized export potential estimated at around $1.4 billion. Gold alone represents a significant portion of this undeveloped possibility in its unwrapped, non-financial form. There may also be a range of expanding exports of products like the Caribbean, especially as Canadian consumers are looking for alternatives to US products, including spirits and other alcoholic beverages.
On the services side, tourism, commercial services and transportation services form the bedrock of Canada-Caricom relationships. Canadian banks have a long history in the region, and for Barbados, Canadian companies are key players in the global business sector. Travel remains one of the most important service links, with Canada emerging as the region’s second largest source market in 2024, sending 3.3 million visitors. As Canadians are less frequent to the US due to geopolitical tensions between these two countries, the Caribbean could potentially win more of this outbound market through creative products such as targeted marketing, improved air transport and multi-destination packages. Educational links are also worth noting. Many CARICOM Nationals research in Canadian institutions and strengthen their ties through trade in Mode 2 (overseas consumption) services.
In addition to bilateral trade and services, Canada and CARICOM share the values ​​that emerge in a joint position at the multilateral stage on issues supporting climate action, support for the Sustainable Development Goals (SDGs), and the continued and severely necessary reforms of rules-based multilateral trading systems. These alignments become even more important as global multilateralism is on the rise.
Some specific recommendations
2023 Canada – CARICOM Strategic Partnershiplaunched at the Ottawa Summit and marked an important milestone. This framework creates permanent mechanisms for structured dialogue and coordination. This is a platform that needs to be used more ambitiously. There are some immediate and medium-term actions worth considering.
First, there is a need to ensure evidence-based interventions to better understand, address and improve the reasons behind the low use of the Caribbean by beneficiary and territorial businesses. This may include empirical research in collaboration with institutions such as the University of the West Indies. Technical assistance to help exporters meet rules of origin, simplify customs procedures, create digital trade platforms or business missions, may enhance the preparation of small and medium-sized enterprises (SMEs). As most CARICOM exports (excluding those exempt from baseline tariffs) face additional 10% tariffs in the US market that may have entered either tax exemption or reduced service rates under the Caribbean Basin Initiative (CBI) program, some CARICOM exporters are seeking alternative markets to take on product and Canadian market duties in Canada.
Second, the question of whether the Caribbean should be modernised or replaced by a mutually sensitive agreement should be seriously considered before it arises in 2033 for the exemption renewal. Today’s changing global landscape may provide a window into revisiting ideas, perhaps with WTO compatible trade development agreements tailored to current needs of CARICOM and Canada.
Third, Canada and CARICOM can benefit from renewing the Bilateral Investment Treaty (BITS) to reflect modern standards. Most are older generation bits that prioritize investor protection over promoting and promoting investment for sustainable development. Without the FTA’s comprehensive investment branch, negotiations with Canada and CARICOM countries, we should consider renegotiating bits and integrating development-friendly provisions, environmental protection and mechanisms that promote responsible investment.
Fourth, there is a need to pay great attention to emerging sectors such as digital trade, creative industries, fintech, scientific research and development, and digital health. These are areas in which companies in Canada and the Caribbean can work meaningfully together, and mutual capacity building can lead to innovation and job creation. I am always inspired by the story of Dr. Juliet Daniel, a Barbadian-born scientist who conducts important cancer research in Canada. This suggests that possibilities actually exist, especially given the strong relationship between many Canadian universities and UWI here in the Caribbean.
Fifth, Canada’s tourism is growing towards pre-pandemic levels, but could be boosted not only through more aggressive marketing in Canada, but also through product innovation and better coordination across the region. For example, a multi-destruction tourism package can distribute tourism benefits more evenly within CARICOM, while providing Canadians with a rich experience of the Caribbean.
Finally, the new Canada-CARICOM strategic partnership should also be used as a platform for close multilateral coordination, including WTO reforms to strengthen rules-based multilateral trading systems. The Canadian liberals won the election just finished, but with a new prime minister, it remains to be seen how well he will continue to work on his predecessor.
In all this, Canada’s Caribbean Diaspora and Canadian communities in the Caribbean act as important bridges to promote trade, investment, cultural exchange and policy dialogue, and are key players and allies seeking to strengthen this relationship.
In a world increasingly shaped by geopolitical unpredictability and economic volatility, deepening economic ties with Canada is not simply a reactive response. It’s logical and strategic. Canada is already a valuable partner with values, historical ties and proven commitment to inclusive and sustainable development. However, current levels of trade and investment do not yet reflect the true potential of this relationship. There is a considerable range of deeper growth.
We thank the Caribbean Institute of Canada for the incredible work they are doing in promoting this relationship, including advances in thinking about forging. Deeper Canada – Caribbean ties It is a background to Trump 2.0 and some of the specific policy recommendations highlighted in a recent blog post. With these headwinds of global uncertainty, we should not only see Canada as a buffer of times of crisis, but also as a cornerstone of our efforts to build a more resilient, prosperous and sustainable CARICOM. Enhancing this partnership is more than a policy option, and is a strategic obligation.
Alicia Nicholls, B.Sc., M.Sc., LL.B. He is an international trade development specialist with over 15 years of experience and founder of the Caribbean Trade Law and Development Blog.
