'Mamaguyed' into poverty

Published: Sunday | December 15, 2013 Comments 0
An animated A.J. Nicholson, Jamaica's foreign minister, tried to mend fences with T&T counterpart Winston Dookeran during trade and immigration talks recently.  - Gladstone Taylor/Photographer
An animated A.J. Nicholson, Jamaica's foreign minister, tried to mend fences with T&T counterpart Winston Dookeran during trade and immigration talks recently. - Gladstone Taylor/Photographer

Claude Clarke, Guest Columnist

In recent times, Jamaicans have had to endure the indignity of being lectured by Trinidadians about why CARICOM is good for us, how to further our own interests, and the fact that our uncompetitiveness in CARICOM is only a small indication of our uncompetitiveness with the entire world. Maybe it is what we deserve.

I have long held the view that the failure of Jamaica's economy is the failure of Government to focus squarely on the central goal of economic development and to organise its policies around a clear and coherent strategy to achieve this. It has been many years since a government of Jamaica has taken such an approach to governance.

As a result, instead of steering a steady course towards economic development, Government has been unfocused and prone to distraction by every passing politically titillating issue.

In recent times, Government has huffed and puffed over restrictions on patties entering Trinidad. It has fulminated over 13 young Jamaicans being denied entry into the twin-island republic. And it has been sent into rapturous celebration by the legal victory delivered by the CCJ to Shanique Myrie.

But despite the symbolic significance of these issues, they pale into insignificance compared to the deep harm that has been caused to the Jamaican economy by CARICOM.

TRADE SURPLUS

In 1982, Jamaica had a 30 per cent trade surplus with CARICOM, which was reflected in a healthy growing economy. Since the early 1990s, this has degenerated into economic stagnation and a negative CARICOM trade balance of more than US$1.5 billion in 2008.

Our manufacturing sector has lost half its capacity, substantially because of competition from CARICOM. Seventy-five thousand manufacturing jobs migrated, largely to other CARICOM countries. Yet none of this was enough to move our Government to demand any action from CARICOM or to call for any special CARICOM ministerial meetings to address this economically devastating issue.

But the political potency of 13 Jamaican youth being refused entry to Trinidad was enough to cause our Government to spring into action. Trinidad's foreign minister was summoned. Meetings were convened. Yet for more than two decades, the severe economic pain inflicted on the Jamaican people, and the billions of dollars sucked from Jamaica in its trade with CARICOM, were not enough to stir our Government from its slumber.

I recently recommended that Jamaica suspend the Common External Tariff of CARICOM in order to stem the economic haemorrhage it is causing Jamaica and to allow us the time to prepare ourselves to compete within a free trade regime. As long as five years ago, I had proposed that the Government re-evaluate Jamaica's relationship with CARICOM.

I suggested then that Government determine what CARICOM trade costs the Jamaican economy and compare it to the gains that we derive from it. If, as is most certainly the case, the costs exceed the benefits, we should develop a strategy to correct the imbalance.

In the five years since I made that recommendation, hardly anything has been done or said by the Government to suggest that this determination has either been made or acted on. A government focused on economic development would certainly have acted by now.

A government focused on economic development would also have recognised that as much as $15 billion of state revenue is given up annually, for no other reason than to make goods produced by other CARICOM countries more competitive in the Jamaican market than similar goods produced extraregionally.

Unlike the duty relief given in respect of raw material and machinery imports, which serves

the purpose of making Jamaican production more competitive, the duty forgone on CARICOM imports hurt Jamaican producers and Jamaican jobs by making our goods less competitive. Unless Jamaica can export a comparable level of products to CARICOM, there is no corresponding benefit to Jamaica. Jamaican exports to CARICOM were fewer than seven per cent of imports from the region in 2011.

A Jamaican Government focused on economic development should realise that billions of US dollars are squandered when Jamaicans pay higher prices for CARICOM imports than would be paid for less expensive extraregional alternatives.

Government would know that much of the economic hardship the Jamaican people face is caused by Government's inability to properly finance the services they need, because of the revenue it must forgo on imports from CARICOM. And that the increased competitiveness given to those CARICOM imports by sacrificing this revenue has contributed to the loss of thousands of Jamaican jobs.

To be sure, Jamaica's economic woes cannot be laid entirely at the feet of CARICOM. That distinction goes to unfocused Jamaican governments and their inept handling of the country's economic and trading affairs.

Five years ago when I pointed out the damage that CARICOM was doing to the Jamaican economy, I also suggested some steps that might have been taken to address the problem.

CHANGE IN ATTITUDE

Among them was a change in our attitude to regional trade from one of romanticism to the hard-nosed business approach taken by Trinidad, and that balanced trade must become the central objective of our participation in CARICOM.

I also asserted that Jamaica should review its fiscal policies to ensure that incentives available elsewhere within CARICOM are also available to Jamaican producers, and that our fiscal, monetary and exchange-rate policies do not have the effect of disadvantaging our producers.

I suggested that Jamaica require CARICOM to establish a special, high-level committee to develop a mechanism to bring equity and fairness to CARICOM trade, including the rationalisation of incentives, to the region; and I pointed out that in order to avoid disadvantaging non-oil-producing countries, there must be a CARICOM energy policy, which provides, among other things, for consistency in the pricing of energy within CARICOM.

Finally, I suggested that the application of the CET to petroleum-based products be discontinued; as neither the subsidy to CARICOM nor the additional foreign exchange used to purchase these products from CARICOM can be justified.

The Government, while ignoring these practical steps to improve our competitive position in the region, hyperventilates over CARICOM issues, which might generate popular fervour but are ultimately insignificant: Jamaican patties and the 'right' of Jamaicans to enter Trinidad and Barbados.

Meanwhile, other CARICOM countries have been happy to keep Jamaica distracted from the issues that really matter to our economic interest. The well-known Trinidadian practice of 'mamaguy', or flattering to deceive, has been put to effective use.

Jamaica's leaders have won high honour and praise from CARICOM; even as we are disadvantaged in our trade with the region. We are sold the noble objectives of Trinidad monitoring its imports; and it is used as an embargo against Jamaican products. We receive a grand promise of natural gas at concessional prices; but could never get Trinidad to seal a deal. And now Trinidad's foreign minister seemingly submits to the demand for a meeting with his Jamaican counterpart and both emerge triumphantly, preaching platitudes about "upholding the dignity of our Caribbean citizens" and committing to "resolving differences through constructive dialogue".

Continuous 'mamaguying' has perpetuated Trinidad's economic dominance of Jamaica ever since it became worried about a perceived threat from Jamaica's improving competitiveness in the early 1980s.

Mamaguying Monopoly

But Trinidad by no means holds a monopoly on mamaguying Jamaica's political leaders.

We were equally deluded by our negotiating partners of the Economic Partnership Agreement (EPA) and surrendered much of our economic interests in the process. Like CARICOM, the EPA exposed Jamaica's economic uncompetitiveness to be exploited by countries whose economic policies provide more competitive environments for their producers.

The Government's continued failure to implement policies which can improve our competitiveness might be explained by the number of influential Jamaicans who benefit from the status quo and are prepared to mamaguy it into believing that its economic policies are sound. This has not only ruined our economy but has widened the income disparity in the society.

US President Barack Obama pointed out in a recent speech that a society disfigured by the degree of income disparity which exists in Jamaica and Argentina retards economic development.

Such an unflattering reference to Jamaica by the United States' first black president must have rattled the graves of the founding fathers of the People's National Party and irked a prime minister whose calling card is 'love for the poor'.

The conspicuousness of our extreme income disparity to outsiders leads one to wonder if our own leaders could have failed to notice it, and more important, why they have failed to do anything about it over all these years.

It is not beyond Jamaica's capacity to build an economy capable of providing equitable prosperity for our people and attract the respect, rather than the derision, of others. But the Government must will itself to focus on the goal of economic development and build a steely resistance to 'mamaguy' from any quarter.

Claude Clarke is a businessman and former minister of industry. Email feedback to columns@gleanerjm.com.

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