Deadline for trade pact with Canada will be missed
CARICOM won't meet the June 30 deadline for wrapping up negotiations over a trade pact with Canada, which would continue to provide Jamaica with duty-free access to the North American market.
"Will we meet the deadline? I think it's highly unlikely," said Brian Pengelley, recently re-elected president of the Jamaica Manufacturers' Association. "Canada could accept duties on our exports if they choose to go down that road, but I highly doubt that Canada will, given the relationship between the two countries."
Caricom and Canadian officials entered talks for a deal to replace the Caribbean-Canada Trade Agreement (CARIBCAN), a preferential arrangement under which most regional items enjoy duty-free access to the Canadian market. The trade pact had been deemed unfair by the The World Trade Organisation (WTO) and it expired at the end of 2013.
Negotiations broke down last year due to a confluence of sticking points, including issues around market access late last year. As a result, the parties received a short-term extension of the existing arrangement until the trading partners became WTO compliant.
The extension comes to an end on Monday.
"It is a negotiation, which means that there are many issues that both countries will take hard lines on," said Pengelley. "However the commitment must be there
to conclude a free trade agreement which is mutually beneficial to both our economies and people.
"With that being said, we ask that as the negotiation process continues in good faith, Jamaican goods continue to be granted duty- free entry into the market."
Jamaica enjoys a trade surplus with Canada, having exported US$200 million worth of goods there compared to the US$120 million it imported from the North American market
Exports from Jamaica largely consist of alumina (US$150 million) followed by rum and beer (US$25 million), according to statistics from the International Trade Centre, while imports from Canada are mostly food items.
But for the rest of Caricom, grave concern surrounds the future of regional exports of rum, sauces and other food items, according to the
"We will have no choice if Canada decides not to extend the date and starts applying duties and I know some companies will not continue to sell or trade into that market," Pengelley told
the Caribbean Business Report.
A new trade agreement with Canada will thus have to consider market access for goods, cross-border trade in services, investment, temporary entry, labour, rules of origin, information and communications technologies, customs procedures, competition, monopolies and state enterprises for the countries involved.
In the meantime, Jamaican manufacturers are looking at capitalising on the trade compensation mechanism under the PetroCaribe arrangement with Venezuela.
Under the deal, through which Jamaica has borrowed over US$2.4 billion, exports can be used to service the loan. That is, the Government can opt to pay manufacturers for goods supplied to Venezuela instead of paying the cash over to Caraca, once a trade deal is met.
Presently, that debt service figure totals US$100 million annually, and it is growing as the debt accumulated from the conversion of 50-60 per cent of oil imports from the South American country continues to rise. .
"It's a large market so it's worth going to after if you have the right products and what they are looking for," said Pengelley. "It certainly is good because it helps
to reduce the foreign exchange that Jamaica owes Venezuela."
The Venezuelans have provided a comprehensive list of goods and services
that qualify under the programme. The list includes building equipment, cement, chicken, black beans, rice, and animal feed.
Caribbean Cement Company has already exported 100,000 tonnes of clinker, valued at US$8 to US$9 million to Venezuela under the deal, and is on the verge of inking another deal to supply 240,000 tonnes.