JIS News

As the December 2005 deadline for the coming into being of the Free Trade Area of the Americas (FTAA) arrangement approaches, there are concerns about the ability of industries in the region to effectively compete and take advantage of trade opportunities.Dr. Rosalea Hamilton, Trade Policy Consultant and Executive Director of the Institute of Law and Economics, is of the view that the region, even with its small size and vulnerable economies, can compete in the FTAA.
She says that the FTAA provides new opportunities, including easier access to the largest markets in the world. “If we have the creative, competitive products, goods and services that we can sell, then we have a real chance of increasing our income and getting out of our economic woes. So, it really does depend fundamentally on how prepared we are and our ability to compete,” she argues.
“The opening up means that there are possibilities of increased investment within the region and the hope and expectation is that with those investment will come employment opportunities, growth opportunities and new technological arrangements,” Dr. Hamilton tells JIS News.
She points out that the creation of the Caribbean Single Market and Economy (CSME) is important to the region’s ability to compete.
“I believe that by forging stronger relationships between our countries, among our peoples, especially with the facilitation of the movement of people provision within the Revised Treaty of Chaguaramas, lies our greatest opportunity to put on the world scene, our creative goods and services. I think if we can do that, building on who we are, our music, our food, our entertainment, our history, our culture, our language, then there are huge possibilities,” Dr. Hamilton says.
The FTAA is essentially an economic arrangement to facilitate free trade among the countries in the western hemisphere from Alaska all the way down to Argentina, with the exception of Cuba. The main thrust of the negotiations is to remove tariffs as far as possible, to facilitate trade in goods and services.
It is a fairly ambitious agenda because of the uneven economic relationship between the countries. For example, the largest economy in the world, the United States (US), would be trading with the smallest economies, such as the countries of the Organization of Eastern Caribbean States (OECS). All these countries have different concerns about what would be in their best interest in the negotiations.
CARICOM’s major position is essentially to create negotiating space to take account of the fact that the region is small with very vulnerable economies. Throughout the negotiations, the concern has been to ensure that there is adequate time to adjust, to cope with the reciprocal trading arrangements that are required, as well as to seek the necessary financial and technical assistance.
Many analysts think that the 2005 time-frame is unrealistic, but there is still the expectation that it can be achieved, given the agreement reached at a meeting in Miami in November of last year, where the Trade Ministers agreed on a two-tiered approach to the negotiations.
The idea is that there will be a core or common tier, which will incorporate all countries, and a plurilateral level, which will allow individual countries to sign on later if they feel that they are ready to be part of the agreement. Prior to that meeting, a very ambitious agenda had been set, to undertake a whole range of negotiations, many of which were very controversial.
Details of the two-tier approach should have been fleshed out at a meeting of the Trade Negotiations Committee (TNC) of the FTAA in Mexico in February, but those discussions were stalled on the conflicting positions around agriculture.
Essentially, the US, with its extensive subsidies and domestic support, has sought to keep agricultural issues out of the FTAA considerations and have argued they can be more effectively addressed at the level of the World Trade Organisation (WTO). Countries like Brazil and Argentina, which have a large agricultural sector and can benefit from increased access to markets such as the US, have been arguing very strongly for the inclusion of agriculture in the agreement.
Recently, the US created a new free trade agreement with Australia and the fear is that this is likely to set a bad precedent because in that agreement, agricultural issues were left out.
Ambassador, Dr. Richard Bernal, Director General of the Caribbean Regional Negotiating Machinery (RNM), in a release after the Mexico meeting, had said that the region was concerned by the fall-out from the impasse. He said the deadlock had forced the postponement of Caribbean roundtable discussions under the Hemispheric Co-operation Programme (HCP) and new dates would be proposed in due course.
The roundtables are a follow-up to initial dialogue held last October between potential donors and countries seeking assistance for trade capacity building for the implementation of the FTAA.
The RNM efforts are being supported by the work of the Ministry of Foreign Affairs and Foreign Trade consultative mechanism, the Jamaica Trade and Adjustment Team (JTAT), which is designed to encourage greater private sector involvement in trade negotiations in which Jamaica is engaged, including the FTAA. A number of business groups, including the Association of Development Agencies (ADA), Friedrich Stiftung and the Jamaica Agricultural Society (JAS), have been attending the meetings and they have helped to increase public awareness of the issues. But even while the RNM continues to seek technical support for capacity building and to prepare industries to compete under the new trade arrangements, Dr. Hamilton says that CARICOM governments must be pro-active in designing a strategic trade policy that would focus on the strengths of the region.
“The writing is on the wall, both in the FTAA as well as in the WTO. people are moving away from preferential arrangements to more reciprocal trade. It means that firms must adjust to do things differently, to be much more competitive and they ultimately have to withstand the competition both at home and abroad in order to sell their goods and services,” she argues.
Dr. Hamilton tells JIS News that the region can also take advantage of its cultural diversity by forging linkages with countries such as India and China that are emerging to be major economic power blocs. “The opportunities we have to harness and create those linkages are real and I think we need to just build on that,” she emphasizes, adding that already there was emerging trade in ‘chutney’ music between musicians in Trinidad and Tobago and India.
The trade expert also points to the need for increased public education on the issue. “We have to recognize that it’s not just business as usual; we have to begin to think outside the box. We need to re-organize the kind of self-confidence that I know we have as a people and do things differently, so that we can effectively penetrate these markets and access opportunities that are opening up. We have to do that to offset the obvious threats that are out there,” she stresses.

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