Editorial | Tapia’s road to redemption?
After his crude attempt at lecturing Jamaica on foreign policy, Donald Tapia, America’s ambassador in Kingston, may well have rehabilitated himself and turn out to be a credible envoy who adds value to US-Jamaica relations. Rather than warning us about the dangers of being close to China and accepting their investment, Mr Tapia is now talking about how more American capital might flow to Jamaica, and more of our goods exported to the USA.
The pivot is important, especially if it represents not only a genuine recognition of Jamaica’s sovereignty, but appreciation that maintaining a strong friendship with the United States doesn’t mean a diminution of partnerships with other countries. International relations isn’t a zero-sum game.
Last week, in a speech to business leaders in Montego Bay, Mr Tapia acknowledged the gains that Jamaica has made over the last seven years in stabilising its macroeconomy, without that advance, which he didn’t say, translating to substantial growth. Despite reducing the size of the country’s debt as a proportion of national output, by more than 50 percentage points, balancing the budget and lowering inflation, growth this year will likely be below one per cent, the anaemic range in which it has struggled for four decades.
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But the macroeconomic stability, along with the lessening of regulatory obstacles to doing business, have “paved the way for more foreign investors to become attracted to Jamaica”. While he didn’t say so explicitly, an obvious presumption is that he meant American capital to be near the forefront of such inflows to Jamaica. Indeed, when Mr Tapia previously talked public about such matters, in an interview with this newspaper, it was to tell Jamaica to beware of the Chinese and the US$3 billion in loans and foreign direct investment (FDI) they have poured into the economy over the last decade.
Mr Tapia’s observation is timely, given the level of investible capital it will require to achieve the transformative growth desired by most Jamaicans, but isn’t available domestically. At the same time, there has been a slowdown in FDI, whose US$775 million in 2018 represented a 13 per cent decline on the previous year’s. Moreover, the US$888 million in FDI in 2014 was a four per cent decline in 2016.
Mr Tapia’s focus on increasing Jamaica’s exports to the United States and narrowing the trade balance between the two countries is, in this context, also significant. Indeed, the US$379 million worth of products Jamaica exported to the United States in 2018 was only 14.5 per cent of the value of its imports from the United States. The trend is on a similar trajectory for 2019.
“We have got to change the balance of goods being traded back and forth,” the ambassador told his Montego Bay hosts. A major shift in the balance of trade anytime soon is unlikely. But it doesn’t need massive numbers for it to be important to Jamaica. In any event, we get Mr Tapia’s point.
How much Jamaica can bank on next month’s visit to the island by Tom Gilman, an assistant secretary in the US Department of Commerce, in which Mr Tapia seems heavily invested, is left to be seen. For, it is not our sense that Mr Gilman’s and Mr Tapia’s boss, the mercurial and bloviating president, Donald Trump, is keen on small countries, whose populations look like the majority of Jamaicans, even if those countries happen to be next-door neighbours.
But perchance Messrs Gilmour and Tapia can seriously gain the attention of Mr Trump, they might wish to reprise an idea from the 1980s, when Ronald Reagan sought to steer American investment to Jamaica. President Reagan named a committee of Fortune 500 companies, led by David Rockefeller, to work with Jamaican counterparts to identify opportunities into which Americans might put their money. The macro environment is now much better than it was then.