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Jamaica needs the CSME
published: Sunday | May 2, 2004


Delano Franklyn, Contributor

IN HIS budget presentation of April 22, 2004, the leader of the Opposition, Edward Seaga, gave what he described as a comparative analysis of Jamaica's trading relationship with other CARICOM countries, and in doing so, made the following three observations regarding the CARICOM Single Market and Economy (CSME):

"Jamaica's weak export performance is at the heart of queries now being raised by scholarly studies as to whether Jamaica can overcome its anaemic export record, and, if not, whether there is any purpose in extending its CARICOM involvement by participating in the proposed CSME." (Finding A Fresh Wind - p. 15)

"Current conditions of economic frailty and little evident prospects for overcoming non-competitive performance, would expose the Jamaican economy to still greater displacement of local production with no greater ability to expand Jamaican exports. The trade gap would widen and the crisis in the economy worsen with participation in the CSME under these conditions." (Finding A Fresh Wind - p. 22-23)

"In this non-competitive scenario, participation in a CSME is of little or no value to the future prospects of development of the Jamaican economy. Indeed, it could be detrimental by opening the door wider to greater imports without compensating exports". (Finding A Fresh Wind - p. 29)

Mr. Seaga then concluded that, "Jamaica should regard the proposed CSME as a 'wayward journey'". Mr. Seaga was heard on radio the morning after his budget presentation to say, that his position on the CSME must not be interpreted as a rejection of the CSME. Readers can determine if Jamaica's relationship with the CSME being described as 'a wayward journey' is really different from a 'rejection of the CSME'. The question however, that must really be asked is, whether or not Jamaica can afford to turn its back on the CSME. I do not think so.

NO QUARREL WITH FIGURES

Let me say upfront, that I have no quarrel with the trade figures used by Mr. Seaga. They are CARICOM figures and it is true that: "In 1973, exports from Jamaica to CARICOM were 6.3 per cent of Jamaica's total exports and 5.2 per cent of total imports and that by 2001 Jamaica's exports had declined to 4.1 per cent and imports from CARICOM had increased to 12.7 per cent." (Finding A Fresh Wind - p. 9)

Equally, I have no difficulty with the observation made by Bentham Hussey, Dennis Chung and Dillon Alleyne that 'low productivity' has contributed to the lack of competitiveness of Jamaica's goods and services. (Finding A Fresh Wind - p. 22).

Contrary to what some people may think, the Government is very conscious of the current level of trade between Jamaica and our CARICOM partners and is also equally conscious of Jamaica's productivity levels. Any reasonable person would agree that everything must be done to increase our trade output and increase our level of productivity, but Mr. Seaga is mistaken in his views that a rejection of the CSME will ipso facto lead to increased trade or increased productivity.

On the contrary, our involvement in the CSME will compel the productive sectors to provide more goods and services at competitive levels, if they are going to survive. This is true not only of Jamaica's involvement in the CSME but also of the Free Trade Area of the Americas (FTAA) and the other free trade arrangements in which CARICOM is engaged. This includes the current free trade arrangements with Venezuela, Colombia, the Dominican Republic, Cuba and Costa Rica.

PREPAREDNESS IS KEY

It is important to recognise that neither the Government nor the private sector is folding hands on the issue of competitiveness. At the private sector level, many firms have embarked on strategies to improve productivity and competitiveness with an eye on the regional and global marketplace. In fact, the JEA is spearheading an ambitious cluster competitiveness project, which targets the agro-business, tourism and entertainment sectors. Moreover, JAMPRO and the Ministry of Agriculture are promoting initiatives to encourage regional partnerships and facilitate the sustainable growth of non-traditional and value-added exports to the CSME and other target markets.

The reality of international trade and trade relationships is far different in 2004 from 1980 when Mr. Seaga became Prime Minister. In 1994, there were about 33 regional trading arrangements in the world. Today, they are over 100 regional and sub-regional trading arrangements and the numbers are growing.

Companies and individuals, for their own continued survival and growth, are not waiting on the creation or expansion of regional trading arrangements to move outside of their own borders. Already, there are quite a number of companies in the Caribbean region, as well as hundreds of workers who are moving across borders and who are not prepared to sit and wait on the CSME or the other free trade arrangements. To some extent, CARICOM by creating the CSME, is only moving to regularise what forward thinking businesses and skilled workers have already started to do in response to the new global environment. The decision, therefore, to establish the CSME, is a response to the deepening of the globalisation process. Jamaica cannot afford to stand aside and not get involved, because it has a trade deficit or the challenge of low productivity. If that were the case, Jamaica would not be trading with many countries today.

BENEFITS OF THE CSME

In light of Mr. Seaga's views on the CSME, I never expected him to speak to the benefits of the CSME to countries such as Jamaica. Of course there are many benefits. These include:

Enhanced trade dispute mechanism via the Caribbean Court of Justice (CCJ)

Pooling of resources for multilateral negotiations

Increased inflows of new capital, entrepreneurship and innovation from other member states through the establishment of new businesses, acquisitions, mergers and joint ventures.

Free movement of people

Increased production and trade in goods and services in a consolidated market of more than 15 million persons

Improved services including transportation and communications

Greater opportunity for travel, study and work in CARICOM countries

Harmonised quality standards across the region

Enhanced regional competition policy to reduce instances of unfair distribution and pricing practices.

Improved access to sources of raw material

Legal right to acquire property in CSME member states

Jamaica will only be able to access these benefits if it becomes a member of the CSME and if it implements the necessary measures in preparation for the country's participation. I will mention two such measures.

MEASURES TO BE IMPLEMENTED

The first is that it is necessary to develop a 'coherent trade and export PROMOTION strategy'. In this regard, the Ministry of Foreign Affairs and Foreign Trade, on behalf of the Government, adopted in October 2001, a Revised Trade Policy (Ministry Paper No. 69 of October 29, 2001). This Trade Policy was developed after broad consultation with the Opposition, Private Sector, Civil Society, Academia and Labour. With specific reference to the CSME, the Trade Policy: "Recognises the importance of speedier implementation, acceleration of the free movement of people, greater co-operation among the regional private sectors and strengthened trade links with the wider Caribbean."

The second issue has to do with the establishment of the necessary domestic legislative framework to enable Jamaica to effectively participate in the CSME. While there is still a lot of work to be done in this area, it is important to note that in March 2004 Jamaica took a major step toward when both Houses of Parliament passed the Caribbean Community Act, thus setting the stage for the Revised Treaty of Chaguaramas to be enacted into our domestic law.

The Revised Treaty of Chaguaramas constitutes the fulcrum of the CSME. It is important that this document be read by those who would wish to know what the CSME is all about. It should be noted, however, that while the Act implements general obligations under the Revised Treaty, additional legislation will be required to facilitate specific obligations such as the Caribbean Court of Justice (CCJ), movement of labour, capital & services; measures relating to the Regional Competition Commission as well as consumer protection, among others.

CONCERNS OVER READINESS

The Government in general and the Ministry of Foreign Affairs and Foreign Trade in particular, are aware of the expressions of concern by leading Caribbean scholars such as Havelock Brewster and Norman Girvan about the state of preparedness by CARICOM for the inauguration of the CSME by December 2005. Jamaica, Barbados and Trinidad and Tobago have agreed that they will be CSME ready by December 2004. The challenge is a formidable one but there is nothing at this stage to suggest that there is a need to adjust the timeline.

The fact that Mr. Seaga placed the CSME at the heart of his budget presentation has triggered another round of much needed public debate on a most fundamental issue. However, his conclusion that the CSME is a 'wayward journey' and that Jamaica should 'reconsider' becoming a part of this regional economic structure, is not in keeping with the reality of today's global trade environment.

Delano Franklyn is the Minister of State in the Ministry of Foreign Affairs and Foreign Trade.

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