Withdrawing from the CSME will not Correct Trade Deficit- Patterson


Prime Minister P.J. Patterson has said that withdrawing from the Caribbean Single Market and Economy (CSME), which is set for full implementation in 2005 will not correct Jamaica’s trade deficit.”The trade balance will not be corrected by staying out of the CSME. Were that to be the case, Jamaica would have to stay out of all groupings with which it is experiencing trade deficits. That is a recipe for isolation and perpetrating economic inefficiencies,” the Prime Minister said in his contribution to the Budget Debate in Gordon House today.
He was responding to the Opposition Leader Edward Seaga’s caution against Jamaica deepening ties with CARICOM through its participation in the CSME. Mr. Seaga in his contribution to the 2004/05 Budget Debate last week, had said that, “participation in the proposed extension of CARICOM to create the CSME, would expose the vulnerability of the economy to even greater importation and dislocation of local production without compensating exports”.
“The Leader of the Opposition’s analysis of the CSME portrays a misunderstanding about the CSME. It focuses on Jamaica’s trade deficit with CARICOM and indeed, with the world as a whole,” the Prime Minister said.
He explained that the difference between CARICOM (and its precursor CARIFTA) and the CSME, is that the former provided for the liberalization of trade in goods, while the latter provided for the removal of barriers to trade in both goods and services, as well as the freer movement of capital and the rights of establishment, and similar provisions for the movement of management and skills.
Pointing out that Jamaica had a lot to gain from participating in the CSME, Mr. Patterson said that, “Jamaica will be able to exploit those areas in which it has a strong advantage for example, entertainment, financial services, information and communication services, construction, professional services and business services”.
“It is a platform for Jamaica to strengthen its capabilities to export to other regional groupings in the world, in a situation where contemporary trade agreements for market access require commitments that go beyond just the lowering or abolition of trade barriers, but also include the liberalization of a number of trade-related areas, such as investment, intellectual property rights, government procurement and trade facilitation,” he stated further.In addition, he said that Jamaican firms would be able to form strategic alliances and partnerships with other firms and strengthen both their regional and international competitive positions.
Jamaican skilled and semi-skilled workers will have the opportunity to establish, or seek employment in the rest of the region, while firms can draw on personnel from other countries. The integration of business and skills represent the heart of the single market and economy, Mr. Patterson said.
He noted that the CSME was not the final horizon. “It is only a necessary step to compete in the global marketplace. The central point is that the CSME creates a single economic space,” he added. Citing some of the detriments the country would face if it withdrew from the CSME, Mr. Patterson said, “we will be under pressure to grant more favourable terms to the hemisphere and Europe than we grant to each other in CARICOM, unless we move to the CSME and that would include rights of establishment and government procurement.”
Addressing the single currency concerns raised by the Opposition Leader, Mr. Patterson said, “as far as a monetary union is concerned, this is not part of the arrangements for the CSME. At the inter-governmental level, it has been agreed that it is unfeasible for the foreseeable future, largely because of the preconditions, which our Central Bank Governors put forward in 1990.”

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