Jamaica must be aggressive

Gov't will fight trade breaches, but says show proof

Arnaldo Brown, GUEST COLUMNIST

Below are excerpts from junior foreign minister Arnaldo Brown's Sectoral Debate presentation to Parliament on July 10.

Jamaica is indeed intricately linked to the global economy and tremendously impacted by its ebbs and flows. The world economy continues to struggle to recover from the global financial crisis.

The World Bank has downgraded its forecast for economic growth not only for 2012, but also for 2013. Critically, this downgrade applies to both developed and developing countries. Historically, anaemic global growth has meant a decline in the growth of global trade and a reduction in commodity prices. These negative forecasts raise the spectre of even greater trade restrictions, as countries seek to manage the fallout and protect their vulnerable industries, as well as jobs.

Jamaica's trade with the world has declined substantially since 2008, as a direct result of the global financial crisis. Our trade deficit with CARICOM was approximately US$957 million in 2011. More than 90 per cent of this deficit was with Trinidad and Tobago, from which we import petroleum products that account for some 88 per cent of our bilateral trade with that country.

Nevertheless, as the CARICOM member state with the largest population, after Haiti, we remain a prime export market not only for Trinidad and Tobago, but also for Guyana, Belize, Barbados, and the Bahamas, which is not participating in the CARICOM Single Market and Economy (CSME).

Within CARICOM, Jamaica has trade surpluses with Haiti and most of the members of the Organisation of Eastern Caribbean States.

Our deficit with CARICOM is often presented as a structural or institutional deficiency of our integration movement. However, even as we focus on our deficit with CARICOM, as we must, we cannot lose sight of the fact that our overall trade deficit with the world remains high, reaching above US$4 billion in 2011.

Jamaica's trade deficit with the United States of America, our primary trading partner, was more than US$1.3 billion in 2011.

In fact, we registered trade deficits with all our major trading partners, except Canada, Norway, the Netherlands, Russia and Iceland, with which we had increasing surpluses primarily because of the resumption of alumina exports.

Increasing Exports

As the minister of foreign affairs and foreign trade, Senator A.J. Nicholson, articulated in his remarks to the Senate, there are markets still to be explored in our traditional trading partners and in the emerging economies. As also stated by the minister in his presentation to the Senate, the CARICOM market, though small, remains important for Jamaican exports and has scope for expansion.

As a country, we have to do an assessment and implement a deliberate strategy to increase our exports to the CARICOM market, as well as to all other trading partners. It is noteworthy that Haiti represents the second-largest export market for the Dominican Republic, yet CARICOM exports to Haiti remain at comparatively low levels, suggesting that despite geographic proximity and other advantages, we are not doing enough to explore and penetrate this market of almost 10 million people.

We are encouraged, however, by the foray of Jamaica Broilers into the Haitian market, and encourage other private-sector entities to follow suit. The ministry, as well as Jamaica's honorary consul in Port-au-Prince, is ready to provide assistance and advice to interested entities.

Indeed, in CARICOM, we need to look also at what investment opportunities may exist in other member states, particularly in Guyana, Suriname and Belize, which have large territories, good water supply, fertile lands, abundant natural resources, and a low-population density.

I believe there are opportunities here for our private sector to explore, taking advantage of the CSME, including the right of establishment, to partner with these and other countries in the development of goods for exports both within the region and to external markets.

In elaborating a strategy for addressing the trade deficit, we must give priority to increasing our exports to all markets. The Jamaican private sector, including our micro, small and medium-sized enterprises (MSMEs), must be encouraged to further seek out the possibilities in these markets in which they could have a competitive advantage.

The Ministry of Foreign Affairs and Foreign Trade will work at the bilateral level with individual CARICOM member states to see concretely what the opportunities are and to get some clarity on the potential terms and conditions, so that our private sector can make informed choices. We must, as a Government, continue to facilitate our private sector in terms of trade and market-access information, marketing tools, facilitation of trade missions, enhancement of productive capacity and improvement in standards.

We note that the Ministry of Industry, Investment and Commerce is working on an MSME policy. As a country, we have to do an assessment and implement a deliberate strategy to increase our exports to the CARICOM market.

Jamaican producers will have to be more aggressive in their bid to access regional and international markets. In this regard, when faced with obstacles in those markets, they should not quietly concede and withdraw.

If there are clear indications of non-tariff barriers being mounted or violations of agreed trade rules, they must defend their position, whether through diplomatic or legal channels to retain their market access. The Ministry of Foreign Affairs and Foreign Trade (MOFAFT) stands ready to assist in this regard.

Defending Jamaica's Trade Interests

The Ministry of Foreign Affairs and Foreign Trade is prepared to use the tools available to us under the Revised Treaty of Chaguaramas to defend Jamaica's trade interests under the CARICOM Single Market. In any free trade area, be it NAFTA, MERCOSUR, ASEAN or the EU, disputes and disagreements will arise from time to time.

What is also true, however, is that in a mature trading arrangement, member states must be prepared to utilise dispute-settlement procedures to resolve trade rows. It is for this reason that these provisions were negotiated.

There is considerable anecdotal evidence about obstacles to Jamaica's trade with CARICOM.

Concrete evidence

However, in real terms, the first stage of dispute settlement requires concrete evidence. Such information must be reported formally to the MOFAFT, with supporting documentation. The matter can then be raised bilaterally with the offending member state or at the Council for Trade and Economic Development (COTED), which is the appropriate organ of CARICOM for such issues.

In fact, at the 34th COTED held in March 2012 in Georgetown, where I led Jamaica's delegation, we addressed issues related to the operation of the single market, the suspension of the Common External Tariff, free movement of nationals, and matters arising in external trade negotiations.

I wish to assure Jamaicans that the ministry has considerable experience and expertise in handling difficult trade issues in the regional context, and will continue to address any grievances of the private sector once they are brought to our attention.

The second stage of dispute settlement arises when there is failure to receive any redress from the bilateral approach or through COTED.

The Revised Treaty of Chaguaramas outlines clear procedures to address any dispute arising from the "interpretation and application of the treaty".

An aggrieved member state can, under Article 187, choose to resort to dispute settlement under the following circumstances:

(a) Allegations of actual or proposed measures by member states which are inconsistent with the treaty;

(b) Allegations of injury suffered or likely to be suffered, as well as impairment of benefits expected from the establishment and operations of the CSME;

The MOFAFT is prepared to use the tools available to us under the Revised Treaty of Chaguaramas to defend Jamaica's trade interests under the CARICOM Single Market.

(c) Allegations that the purpose or object of the treaty is being frustrated or prejudiced.

The modes of dispute settlement provided for in the treaty are many and varied. According to Article 188 (1), they are: good offices; mediation; consultations, conciliation, arbitration and adjudication by the Caribbean Court of Justice in its original jurisdiction. The treaty also encourages that each mode of dispute settlement be exhausted before proceeding to another mode.

The decisions from arbitration and adjudication are binding on all member states party to the dispute.

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