The Caricom trade imbalance — Jamaica/T&T

Anthony GOMES

Wednesday, May 15, 2013

Print this page Email A Friend!

Recently, there have been a number of rash and, in some instances, derogatory letters, describing Jamaica's perceived relationship with Trinidad & Tobago (T&T). Some were whimsical and others simply vacuous. Generally, they demonstrate a lack of understanding regarding the consequences that would result if Jamaica were to demit membership of Caricom, apart from the forfeiture of the considerable amount of investment in time and money related to developing the regional union that is Caricom.

The current difficulties are common when trying to meld together disparate entities as evident with other similar groups, the principal one being the European Union (EU), on whose architecture the Caribbean Community was initially structured based on the Treaty of Rome 1957.

First, the comment: "Trinidad sees Jamaica as a dumping ground for its inferior goods and services and for the duty-free concessions that this farce called Caricom affords it."

T&T retooled in the 1980s, a process that included a wage freeze and accelerated depreciation on equipment imported duty-free for export production. That has been reintroduced for a two-year period in their latest national budget. The result of these innovations is internationally competitive products and services that can be seen in the management of Jamaican companies now owned and operated by T&T and Barbadian interests.

The foregoing is to illustrate Trinidad's internationally competitive strength which Jamaican manufacturers and exporters have to deal with, while there are domestic products of equal quality to be purchased at home. However, there is the outstanding issue of the Trinidadian manufacturing sector being the recipient of subsidised electricity. That is a matter for the Jamaican Government to resolve through negotiation or, in the event of an unsuccessful result, by referral to the Caribbean Court of Justice (CCJ). The Revised Treaty of Chaguaramas embodies all essential remedial mechanisms for a possible resolution to this fundamental anomaly.

The duty-free aspect of Caricom goods entering Jamaica is a benefit not to be understated. If similar merchandise was imported from a country outside of Caricom, import duty would be applied. Likewise, if countervailing import tariffs were levied on Trinidadian products, the landed cost would be increased accordingly. Private sector lobbyists estimate that if applied; countervailing duties on Caricom goods would have earned $17 billion on imports in 2011, but at higher prices to consumers.

Relinquishing Jamaica's Caricom membership would not provide any advantage as, with its present economic crisis, the country has been severely weakened, thereby unable to compete effectively and independently in the international trade arena. The prudent way forward is to resolve the outstanding issues with T&T and appoint an Executive Commission to enforce the decisions of conference, as recommended by the West Indies Commission in their prognostic work Time for Action.

The Jamaican Government is now at a point where it is prepared to engage T&T on the issue of the trade imbalance, in collaboration with the private sector, and Minister Anthony Hylton was expected to make a statement in Parliament yesterday regarding the inequitable trade situation. Both Mr Audley Shaw and Dr Peter Phillips appear to have concurring views as reported in The Gleaner of April 30, 2013: "Mr Shaw is clearly in line with vocal members of the island's private sector who want a 'timeout' from Jamaica's single market obligation to the community. The 'timeout' lobby argues that the move will help Jamaica overcome its fiscal crisis and provide a fillip to the country's limping manufacturing sector."

Such a move would not assist Jamaica as it would have to import goods from outside Caricom at higher prices. To achieve a 'timeout' would necessitate applying countervailing duties to T&T goods. The trade deficit with Caricom of close to US$1 billion would still ultimately have to be settled.

In the hope of discouraging the "Caricom withdrawal" lobbyists, some of the likely resulting constraints are here described. With Jamaica's proposed exit from Caricom, the remaining 14 member states would retain their identity as a Regional Trade Agreement (RTA), with a Customs Union and duties applied on Jamaican goods imported into Eastern Caribbean territories. Jamaican visitors to Caricom states would require entry visas, while similar reciprocal visas would apply to Caricom nationals visiting Jamaica.

Caricom companies located in Jamaica would have to be recalibrated for tax purposes, regulations regarding the movement of capital, repatriation of profits would be reviewed under Articles 30 to 40 in the Revised Treaty of Chaguaramas, Chapter 3: "Establishment, Services, Capital and Movement of Community Nationals", that would have to be reconfigured to suit the redundant treaty to form the basis of Jamaica's new trade policy with third countries and the restructured Caricom.

The Cave Hill and St Augustine campuses and UWI Mona, with its newly commissioned regional headquarters, along with other tertiary institutions reflect on their diminished roles, the spectre of lower funding, and increased travel bureaucracy due to stricter Eastern Caribbean Customs and Immigration regulations, as well as a reduced number of inter-regional airline flights, all militate against a brighter future for an independent Republic of Jamaica.

In the unlikely event of Jamaica leaving Caricom, the lofty goals prescribed in Vision 2030 -- The National Development Plan -- become needless along with the much-vaunted Project "Huba-Huba" referred to by some pundits as a 'Midsummer Night's Dream'.

It's best to fix Caricom and move on to the Caricom Single Market and Economy (CSME) with speed and determination, while ramping up manufacturing and exports to their highest capacities.




1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed:

6. If readers wish to report offensive comments, suggest a correction or share a story then please email:

7. Lastly, read our Terms and Conditions and Privacy Policy

comments powered by Disqus



Today's Cartoon

Click image to view full size editorial cartoon