Keep an eye on those critical trade deals

Editorial

Keep an eye on those critical trade deals

Sunday, January 19, 2020

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If one is to judge by the number of comments made on editorials in this newspaper, Jamaicans appear to be more substantially glued to local events, perhaps understandably so, as local developments touch closer home.

Still, it is important that we keep an eye on international developments over which we might have no control but which can have serious implications for our country, particularly the economy.

Two trade deals were concluded and signed into effect recently which could have a positive effect on the lagging economic growth of the global economy which is important to small, highly open, developing economies like Jamaica's.

Our economic growth is influenced by tourist arrivals, the price of oil, remittances and foreign investment. Note the decline in the price of bauxite that reduced our economic growth to one per cent.

Part of the slowdown in the global economy was caused by the trade disputes involving the United States, Canada, Mexico and, of course, China.

The North American Free Trade Agreement has been renegotiated and the new agreement passed after a delay by the Democrat-controlled Congress. Hopefully, this will provide a fillip to these economies, two of which are very important to Jamaica.

Incidentally, Jamaica needs to give more attention to Mexico as an untapped tourism market.

An interim, phase one of the US-China trade deal has been signed by these two economic rivals. This does not remove all the uncertainty but it does provide a calming arrangement because it forestalls further tariff escalation by Washington and Beijing and reopens China's purchase of agricultural products, easing pressure on US farmers.

The prolonged negotiations will continue on a range of technically complex issues, the remedies for which are difficult to enforce for example, intellectual property rights and forced technology transfers.

While these agreements will be good for the global economy, there are trade matters of direct concern to Jamaica. For example, the Caribbean Basin Economic Recovery Act (CBERA) comes up for renewal this year in the US House and Senate.

CBERA provides some preferential access to the US market for most products exported from designated beneficiary countries. The Government of Jamaica will likely want to get a feel of US attitude when Secretary of State Mike Pompeo visits this week.

The US Government officially launched the expanded Growth in the Americas initiative on December 17, 2019 in Washington. At the same time, the Administration engaged key business leaders and has high-level officials from Latin America and the Caribbean at the White House.

The Americas seek to facilitate economic prosperity, security, and good governance but face a shortfall in infrastructure investment, which drags down economic growth.

The region needs US$100- US$150 billion in new annual infrastructure investment. The approach depends on catalysing private sector investment in energy and other infrastructure projects across Latin America and the Caribbean.

This sounds promising but it does not have any aid money. The Government of Jamaica must seek to exact a deal specifically for the Caribbean from our good friends to the north.


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