KINGSTON is all abuzz (as opposed to being on fire at the Riverton dump) with the news that President Obama is coming to Jamaica on April 9, only the second visit by a sitting US President to Jamaica.

In fact, he arrives exactly in the middle of Carnival week in Jamaica, with some potential revellers already concerned that the enormous security precautions typical of a US President may interfere with some of the major parties planned for that evening.

Of course, no one in the media yet knows if he will actually overnight in Jamaica, so that fear is most likely misplaced. Moreover, it is unlikely that his schedule includes attending one of Jamaica’s soca parties. It is, however, to be hoped that the world press typically travelling with the President will be able to witness, for only one week at least, a joyous, happy Kingston rather than the more typical overseas image of our magnificent, but flawed, capital city.

SOCA

Leaving soca music for Carnival aside, it is the acronym SOCA, or the “Services of the Caribbean”, a joint initiative of the American Chamber of Commerce of Jamaica (AMCHAM), and that of Trinidad and Tobago, whose Trinidadian chief executive officer Nirad Tewarie coined the phrase, that we intend to focus on today.

At their public forum at the Pegasus on March 18, Minister Hylton promised to have this initiative included in the Caricom discussions with President Obama in Kingston on April 9.

The core of this private sector initiative is to press the “reset” button on the relationship of the United States and the Caribbean Basin, which to many observers appears to have drifted “off track” since the admittedly geopolitical heyday of the 1980s. At that time, among the first leaders that then President Ronald Reagan saw at the White House on his election was Prime Minister Seaga of Jamaica, and a few years later the Caribbean Basin Initiative (CBI) was launched.

However, whilst the timing of the CBI initiative helped Jamaicas’s 807 garment industry, that industry has now completely disappeared almost as though it never existed. Jamaica, and indeed the rest of the English-speaking Caribbean (with the possible exception of Trinidad and Tobago) has unfortunately never seemed to be able to take much advantage of this one-way unilateral trade preference deal with the United States.

One of the many disappointments was that the then government appeared unable to take much advantage of the legendary rolodex of David Rockefeller, who was asked by his President to help Jamaica get US investment. It is likely that a major problem for Rockefeller was that Jamaica’s business environment was still extremely weak (other than for those sectors protected by Free Zone status or UK Privy Council-regulated legal incentive agreements), and he did not have that much to work with.

Rockefeller is reputed to have told the late great entrepreneur Maurice Facey that if Jamaica just focused its efforts on the tourism industry, it would provide enough of a livelihood to look after all its people.

We will leave analysing whether this statement is actually true, to another day, simply noting that most informed foreign observers have for a longtime believed the industry could be three to four times its current size, with the obvious caveat that this would require the penetration of new market segments.

A key participant in AMCHAM’s SOCA forum in Jamaica was Rueben Smith-Vaughan, senior manager for the Americas at the US Chamber of Commerce, the largest business federation in the world at over 3 million members. It has 117 American Chambers of Commerce around the world, of which 24 are in the 28 countries in the region. Smith-Vaughan doubles as executive director of the Association of American Chambers of Commerce in Latin America and the Caribbean (AACCLA), the secretariat for these Western Hemisphere Chambers.

An Asian tune

Smith-Vaughan notes that his CEO said, at the first CEO Summit of the Americas in 2012 in Cartagena, before Mexico and Canada had joined the Trans Pacific Partnership (TPP), that “while the United States, Chile, and Peru are taking part in these talks, the TPP is mostly dancing to an Asian tune. I think the TPP could use a little salsa, cumbia, or even samba. Canada, Mexico, and Costa Rica have all expressed interest in joining. We should insist that the TPP bring in the nations of the Americas in a more comprehensive way”.

In his speech, Smith-Vaughan argued that only through a much stronger trade partnership between the United States and the islands of the Caribbean, with a long-term strategy and vision for economic integration in our hemisphere, can the private sector effect real economic change and open opportunities that transform people’s lives.

He noted that while certain countries in the region have managed, in relatively small ways, to take advantage of CBI, intra-island trade remains “remarkably low”, and that without better integration by regional governments, it will be nearly impossible for the region to participate in global value chains, which are based on economies of scale, effective logistics, infrastructure and human capital.

Key areas of possible focus include region-wide promotion of public private partnerships, reducing restrictions for regional capital markets and the associated flows, and increased financial inclusion and R&D.

In short, for years, he observes that “US policy has supported the export of goods from the Caribbean islands to the United States, but the majority of Caribbean islands are now service economies, yet services are not included in the preference programmes”.

He argues that, through the policy and business relationships being developed by SOCA, we can “work to create the framework and regulations required to achieve increased trade and growth”.

Reggae

Of course, it is likely that some Caricom countries, particularly those in IMF programmes like Jamaica, may be hoping that President Obama’s reputed liking for reggae might bring them the prospect of some debt relief, or the relaxation of what may appear to be overly onerous primary surplus targets (a quiet presidential word with fellow recent visitor and Washington neighbour IMF head Christine Lagarde perhaps), or even just encouraging the multilaterals to finance the repurchase of the Petrocaribe debt of certain Caribbean countries at a sharp discount with their low cost money, in his basket of goodies.

But for a variety of different reasons, these ideas appear unlikely.

What Caricom definitely should ask for, particularly in the case of Jamaica, is for a much higher level of low cost funding by the multilaterals to eliminate entirely the need for governments to go to the international markets for financing in the life of their IMF programmes, particularly if the bottom drops out of the PetroCaribe programme.

It is no secret that Jamaica’s IMF programme was badly underfunded, ironically relying on the Venezuelans to fill the financing gap through PetroCaribe, with other smaller regional countries even more dependent on Venezuelan kindness on a relative basis.

Such an increase in low-cost multilateral financing would complement nicely the US offer to export natural gas to the region, possibly in smaller purpose-built LNG ships, the latter having the not insignificant advantage of also helping Puerto Rico. If this was combined with a series of large OPIC funds, designed to also help mobilise currently very scarce domestic regional equity capital, and aimed at the creation of new greenfield industries such as BPO and health tourism, this would have a very real catalytic impact on the Caribbean region within five years.

Finally, if President Obama also assigned the David Rockefeller networking role to a few of his Silicon Valley tech titan supporters (best performers whether regional prime ministers or Valley billionaires get a trip to the White House), this would be a lasting legacy.

The key competitive advantage of an ever-improving regional data superhighway, with Jamaica at its centre, would help offset the advantages that still Internet-isolated Cuba will have in other areas when it finally opens up.

This negotiation, of course, is the real reason President Obama is stopping in Kingston, on the way to face-to-face meetings with Castro at the Organization of American States in Panama. In such a scenario, reggae (and soca) may still be able to compete with salsa in the future ferocious dance of international investment competition.