40 SAINT VINCENT, THURSDAY, 1 FEBRUARY, 1951.-kjNo. 7).


 No. 60.
 Despatch from the .Secretary of State for the Colonies
 dated 22nd December, 1950.

 71295/19/50 Colonial Office,
 The Church House,
 JAMAICA No. 276 Great Smith Street,
 BRITISH HONDURAS No. 121 London, S.W.1.
 BRITISH GUIANA No. 163
 TRINIDAD No. 259 22nd December, 1950.
 BARBADOS No. 121
 WINDWARD ISLANDS No. 127
 LEEWARD ISLANDS No. 103
 Sir,
 I have the honour to refer to the Report of the Commission on the
 Establishment of a Customs Union in the British Caribbean Area, which is to be
 published on the 1st February, 1951.
 2. This Report, which is a worthy companion to those of the Standing Closer
 Association Committee and the Commission on the Unification of the
 Public Services, merits the most careful and serious consideration. For it
 will be recalled that, in paragraph 10 of the Memorandum on Closer Association of
 the British West Indian Colonies, which formed an enclosure to my predecessor's
 circular despatch of the 14th February, 1947 (Cmd. 7120), it was stated that
 "probably no other single reform would bring such benefit to the colonies
 concerned as the establishment of a full customs union, or at any rate a common
 customs tariff". Furthermore, the Standing Closer Association Committee
 expressed the view that a customs union is "the foundation of a federal
 structure (paragraph 30 of the Committee's Report).
 3. The fiscal Sub-Committee appointed at the Montego Bay Conference in
 1947 to submit proposals on the question of customs union recorded, in paragraph
 12 of its Report, that the establishment of a customs union would result in :-
 (a) the encouragement of inter-colonial trade, which would naturally be
 duty-free within the union;
 (b) the establishment of uniformity in tariff rates and customs
 administration;
 (c) increased efficiency in the collection of revenue;
 (d) the strengthening of the position of the British Caribbean territories as
 far as bargaining power is concerned in relation to international trade
 agreements;
 (e) the encouragement of local industries.
 The Commission readily subscribes to the Fiscal Sub-Committee's views,
 observing that "Freer commercial exchange between the British Carribean
 territories would undoubtedly foster a more varied economy throughout the area".
 It also expressed the view that the establishment of a customs union is not
 dependent on political federation but that it would "inevitably tend towards
 creating conditions inviting closer political unity (paragraphs 11, 12 and 63 of
 the Report).
 4. Although the Commission indicates a method by which a customs union
 might be achieved in stages,, it feels that since the obstacles to be overcome in its
 establishment are so few and the desire for an early measure of fiscal and
 economic unity so general, anything in the nature of a transitional period is
 neither necessary nor expedient. It recommends, therefore, the establishment at
 the earliest opportunity of a customs union embracing all the British Caribbean
 territories, with the exception, for the time being, of the British Virgin Islands and
 the Jamaican Dependencies of the Cayman and the Turks and Caicos Islands
 (paragraph 71 and 136-140).
 5. One of the most valuable of the Commission's achievements has been the
preparation of a common tariff structure and a common classification for trade
statistics (paragraphs 32-43). In this connection, however, I must draw your
.attention to the following points. The Commission took as its framework for its
tariff structure and statistical classification (Part I of the First Schedule to the
Draft Ordinance at Appendix B), the Minimum List of Commodities for
'Intern.tional Trade Statistics published by the League of Nations in 1938,
anticipating that the revised version of it, on which the United Nations Statistical
Commission was engaged when the Commission was at work, would emerge with