Switch from goods to services - Marks
JAMAICA NEEDS to switch its export priority from goods to services in order to take full advantage of the changing dynamics of the modern global economy. This was the view articulated by Audrey Marks, former ambassador to the United States, last Thursday during an Editors' Forum hosted by The Gleaner at its North Street, downtown Kingston head office.
"The world has changed somewhat and, if you look at the statistics, the Caribbean now is not exporting enough goods for the focus to remain on a product-based agreement. So the focus now should be more on where we can compete, and in this knowledge-based world and economy, it is going to be services," Marks insisted.
She explained that the Caribbean Basin Initiative (CBI), which was developed in the wake of the visit of United States President Ronald Reagan to Jamaica April 7-8, 1982, had long run its course and urged policy-makers to change tack, during their talks with sitting US President Barack Obama.
losing the advantage
The CBI, which came into effect on January 1, 1984, was designed to provide several tariff and trade benefits to many Central American and Caribbean countries. However, after the development of the North American Free Trade Agreement in 1994 with Mexico, for which export of products to the United States became easier, Caribbean countries lost their advantage.
"Unfortunately, since then, outside of standard diplomatic, security and immigration issues, we have not seen that sort of hands-on involvement by the US in the affairs of Jamaica and the wider Caribbean," Ambassador Marks argued. "This, of course, is as a result of shifting geopolitical realities that saw the end of the Cold War, the rapid rise of China, the rise of other big emerging economies like Brazil and India, the rapid spread of free trade, and a post September 11 multi-polar world reality. And now, we have the added component of an imminent easing of relations between the United States and Cuba that will result in a range of new economic and geopolitical realities."
She pointed out that the value of CARICOM goods exports to the US in 2012 totalled US$12 billion, down from US$32 billion in 2005, while US goods exports to CARICOM in 2012 were US$19 billion, down from US$40 billion in 2005. On the other hand, for 2012, CARICOM exported US$9.6 billion in services to the world while importing US$6.6 billion, showing a clear competitive export edge for the region's services sectors.
A former president of the American Chamber of Commerce (AMCHAM), the business woman who now serves as a director is actively involved in pursuing an initiative aimed at advancing executive, legislative and business-to-business (B2B) initiatives between CARICOM businesses and the US to expand trade and investment in services between both markets under a refocused CBI-titled Services of the Caribbean (SOCA). Launched in Washington, DC in 2013, SOCA will focus on creating opportunities to significant competitive benefits for service industries, including lowering of the current restrictions to Caribbean firms looking to expand their markets to the US.
This initiative is being piloted, interestingly, not by governments of the region, but by the private sector - the Chambers of Commerce Jamaica and Trinidad and Tobago, with the support of the AMCHAMs of Barbados & the Eastern Caribbean; US Policy & Advocacy, US Chamber of Commerce and a coalition of service industries.
The SOCA argues for a refocusing of the CBI towards services as the dominant sector of CARICOM economies and of US-CARICOM trade and investment, after 30 years of a goods-based preferential trade regime which no longer reflects the economic reality of the region or of the bilateral trade and investment relationship.
eight key sectors
SOCA's business-facilitation focus is centered on eight key services sectors for expansion in trade and investment with the US under the preferences of the CBI: financial and insurance; education and training, including medical /nursing, as well as wellness/ medical tourism; ICT/call centres and e-commerce; energy services; logistics and transportation; entertainment and film/ music/audiovisual and creative industries; advertising and marketing and professional services.
However, before Jamaica can access and benefit to any great extent from this vast market potential, it must get some fundamentals right, which it is yet to, according to Ambassador Marks, who also spoke to the need to better leverage the country's competitive advantages.
She told the forum: "Jamaica is near shore, we speak English (but) I still believe we have not put the focus at structuring ourselves to be the preferred choice, the preferred destination. So I go back to the outsourcing industry just to say, if we can just focus on being the best, we can be with even that industry alone, we could have much more employment which could impact the economy. So its an area that is there, its available, you don't need much more work, in that we haven't structured ourselves to be the best player in the region for that industry."
The former ambassador to the United States cited the information, communications technology (ITC) sector as an area for Jamaica to place a focus on becoming a destination for reinvestment from the diaspora.
"We know that we are naturally creative people, we see all the sorts of things that Jamaicans can do with anything that we give them, but we have never really put a policy in place to channel that into using modern technology to create a niche in the ICT area," she lamented.