The CARIBCAN trade agreement - what is the OECS strategy?

By Ian Francis


Within the next year, the much touted CARIBCAN trade agreement tinkering will be concluded. CARICOM, OECS and Canadian trade negotiators will take credit for a job well done after the signing ceremony.

It will be interesting to see where the signing ceremony takes place. If it is in the depth of winter, the Canadian negotiators are likely to push for a Georgetown or Bridgetown signing ceremony only to escape Canada’s brutal winter. On the other hand, irrespective of the cold and soggy winter in Canada, our Caribbean negotiators who are so embedded in the per diem culture will prefer an Ottawa signing ceremony in order to maximize their per diem incomes.

Once the revised agreement is signed, the burning question remains. How can the Caribbean trade and export sectors maximize opportunities in Canada through the CARIBCAN agreement?

It is not a new agreement and has been around since the Mulroney days. Unfortunately, its failure was well known when Caribbean governments took ownership and locked up the policies and tariffs in the cupboards of local ministries of trade and industry. Exporters and investors from some CARICOM states remained disengaged and could not seize the opportunity to penetrate and sustain markets within Canada because there was no information, no market intelligence and no encouragement of partnerships through joint ventures and other initiatives.

It is hoped that, this time around, Caribbean governments will understand that a successful trade and investment partnership must be realized through strong and effective institutional collaboration. To put it bluntly, the Caribbean and Canadian governments are not involved in trade exports. However, through the agreement and sensitizing of officials on both sides of the spectrum, it is quite likely that barriers will be minimized and officials will become more informed about the free movement of goods and tariffs that have been eliminated.

In objective and realistic terms, trade collaborative efforts and sustainability between CARICOM nations and Canada require more than dependency on the “tiny bob” consular missions established in Canada. With fairness, Jamaica, Trinidad, Barbados and Guyana maintain very effective consular missions with a strong trade arm.

Therefore, if the OECS is serious and committed to a trade and investment strategy between Canada and member states, the current regional approach and strategies for market penetration cannot be successful in its current form. Caribbean trade and investment initiatives cannot be achieved through obscurity or ineffective marketing networks.

The OECS must recognize that they require planning assistance to formulate, implement and sustain an effective trade strategy in Canada. It is achievable but there must be a willingness to understand the need for planning and collaboration.

An effective trade and investment strategy between Canada and the Caribbean within the context of the CARIBCAN trade agreement must extend beyond rum and nice beaches. Certainly, Caribbean rum imports in Canada will continue to be very important. However, those responsible for such products reaching Canadian shelves must understand that it is a competitive environment, as Trinidad, Cuba, Guyana, Jamaica and Barbados have already saturated the products.

Therefore, while the Europeans continue to fund the OECS Dominica-based Trade Unit, staff at this unit must understand that the import tariff on Caribbean rum will be affected within the new agreement and OECS nations need to introduce more than rum and hot pepper sauce to the Canadian market.

A few years ago, Michael Astaphan of Dominica and some other OECS colleagues began the process of establishing a private sector export organization. The concept had merit and received much needed assistance from the Europeans. Unfortunately, the concept died and a very valuable opportunity was lost. It is hoped that the concept can be revived because such an organization is of necessity, since most Caribbean exporters and investors are private sector persons.

Both CARICOM and the OECS must recognize that trade and exports should be private sector driven and not given the appearance that it is state sector driven. It is time to support and assist the private sector in their quest for new markets.

Another perception that must be dispelled with is the belief that regional chambers of commerce are the prime export movers in the region. While some chamber members might be exporters, we need to ask why Guyana, Barbados and other MDC Caribbean nations have strong and effective export agencies. The OECS needs to adopt a learning chapter from these organizations and support a strong OECS private sector export agency.

Another issue on Caribbean trade initiatives seems to be the duplication of regional agencies that purport to promote Caribbean trade abroad. There is the Barbados-based, CARICOM-funded agency Caribbean Exports, which continues to find successful niches with only hot pepper sauce promotion. Frankly speaking, this is another serious area that CARICOM’s new secretary general must address.

Maybe it is time to eliminate this agency and find some form of new organizational accommodation with the OECS that will witness the following three concrete outcomes: 1) Development and sustainability of a strong OECS private sector exporting agency to maximize opportunities and success through the CARIBCAN trade agreement; 2) strong and sustainable trade partnerships between private sector institutions in Canada and the OECS; and 3) moving the OECS trade initiative in Canada beyond the Trade Facilitation Centre.

Finally, successful trade implementation initiatives by OECS exporters to Canada require reliability, effective communications, utilization of information technology tools and seriousness. Canadian importers are not interested in stories and excuses as to why a product did not arrive.

The CARIBCAN trade agreement will provide excellent opportunities but its success will only be realized if the regional export private sector players are allowed to play their role. Once the agreement is signed, both regional multilateral agencies need to delimit their involvement.

The trade and investment process between Canada and the Caribbean must be private sector driven.

August 22, 2011

caribbeannewsnow

Bahamas Blog International

Chinese take away?

By Sir Ronald Sanders


Problems have emerged in the Bahamas over the number of Chinese workers on a project funded in part by the Export-Import (Ex-Im) Bank of the People’s Republic of China.

The original number of Chinese workers appears extraordinarily high – 8,150 even though there is an undertaking from the owners of the project that the peak number of foreign workers, at any given time, will not exceed 5,000 non Bahamians.

Rightly, Bahamas’ Prime Minister, Hubert Ingraham, has raised concerns about the large number of Chinese workers. His concerns are particularly relevant against the background that, according to the International Monetary Fund “tourist arrivals declined by 10 percent and foreign direct investment fell by over 30 percent, leading to a sharp contraction in domestic activity and a large rise in unemployment” in the Bahamas in 2009.

Construction is a critical engine of growth in any economy, but especially so in small economies where payments to local workers and suppliers keep money in circulation over a wide area including supermarkets, transport providers, clothing and footwear stores, real estate rentals and banks.

If 8,150 Bahamians – or close to it as possible – could be employed in this project, it would definitely be a fillip to the Bahamian economy and help to expand domestic activity and create jobs directly and indirectly.

The issue troubled Ingraham enough for him to travel to China to raise the matter with the Chinese government and return to the Bahamas with the news that he had succeeded in securing $200 million dollars more for construction workers and for Bahamian sub-contractors, raising the total that would be allocated to them to $400 million.

How this translates into jobs for Bahamians and a reduction in the number of Chinese workers is unclear, but note should be taken that, not surprisingly, the opposition Progressive Liberal Party (PLP) has characterised Ingraham’s journey to China as “a failure”. To be fair, it should also be pointed out that it was the PLP which introduced this project, known as Baha Mar, when it served as the government.

Baha Mar, projected to cost $2.5 billion, is a very large tourist project. On completion it is expected to rival the Bahamas’ biggest tourist plant, Atlantis, which was developed by Kerzner International. The operator behind Baha Mar is Caesars Entertainment Inc, a private gaming corporation that owns and operates over 50 casinos and seven golf courses under several brands. Prior to November 18, the Company was called Harrah’s Entertainment.

Ceasar’s, like every commercial business, puts its profitability first. In seeking financing from Ex-Im Bank of China, they apparently agreed that the work force, in effect, would be 71% Chinese and 29% Bahamian – a bitter pill to swallow in the best of economic times and certainly indigestible in the present economic climate.

No one in the Bahamas or elsewhere doubts the contribution that Baha Mar will make to the Bahamas economy in the short and long term, but the conditions of the Chinese loan rankles on the requirement for such a large number of Chinese workers.

After all, this is not aid. It is not even emergency or disaster aid when a high component of Chinese material and people would be acceptable. It is purely and simply a commercial contract, lending money that will have to be repaid.

The only reason one can surmise for the insistence on such a large number of Chinese workers, vastly outnumbering Bahamian ones, is that the Chinese will work for less and trade union conditions, and rights, would not apply in their case thus reducing the cost of the project.

This commentary is less concerned about the local politics of the Bahamas that are involved in this issue; more qualified people can comment on them. It is more concerned with the present and future relations between Caribbean Community (CARICOM) countries and China.

The experience of African countries, notably Angola recently, in relation to China’s use of an overwhelming number of Chinese workers, shows a strain in their relations with China. In 2006, the former President of South Africa Thabo Mbeki famously remarked: Africa must guard against falling into a "colonial relationship" with China.

I have long argued that CARICOM countries should negotiate with China at least a long-term framework treaty that covers aid, trade and investment. It should be a treaty along the lines of the Lomé and Cotonou Agreements that existed with the European Union.

As in all their bargaining with third countries, the CARICOM states would secure better terms if they negotiated with China as a collective than if each of them tried to bargain alone. And, if they succeeded in settling a treaty with China, issues such as the paramountcy of local labour in commercial projects and in loan-funded projects could be settled upfront, as would issues such as the supremacy of labour laws and respect for human rights in the countries where such projects are undertaken.

To negotiate such a Treaty with China, however, CARICOM countries have to do one of two things: those who now recognise Taiwan over China will have to drop that stance so that there is a united CARICOM recognition of China only; or those that recognise China should proceed to negotiate the Treaty with China leaving the others to join when they can.

There is a small window of opportunity left to negotiate a meaningful treaty with China. As China grows more powerful economically crowding out CARICOM’s traditional aid donors and investment partners, it will become very difficult for small Caribbean countries to bargain for the best terms even on commercial projects.

Beggar thy neighbour policies will get CARICOM countries nowhere in the long term and the time is right for all CARICOM countries to strengthen their relations with China on the basis of a structured and predictable treaty.

My friend and fellow writer, Anthony Hall, wrote recently that Hubert Ingraham’s “challenge to China” on the issue of the 8,150 Chinese workers “is precedent setting... and it behoves all leaders in our region to support, and be prepared to emulate, the stand he’s taking: for together we stand, divided we fall”.

China has itself faced the challenges of division; it might – just might - respect Caribbean unity.

November 19, 2010

caribbeannewsnow

Bahamas Blog International

Caribbean globally uncompetitive: Time to get serious

By Sir Ronald Sanders:


Only one Caribbean Community (CARICOM) country made the top 50 countries in the World Economic Forum’s “Global Competitiveness Report 2010-2011”. Barbados is rated at 43 of 139 countries that were surveyed. Trinidad and Tobago, Jamaica, and Guyana were rated 84, 95, and 110 respectively.

No other CARICOM country was rated because of a lack of survey data.

This is not good news for the CARICOM area already beset by severe economic problems including high debt to GDP ratios, increasing unemployment, and contracting economies.

Barbados’ higher ranking over the three other CARICOM countries surveyed is due, according to the Report, to its better health and education facilities and technological readiness, but it got poor marks for inefficient government bureaucracy, access to financing, a poor work ethic among the labour force and foreign currency regulations.

Crime is rated highest among the problems that beset Trinidad and Tobago followed by an inefficient government bureaucracy and, surprisingly, access to financing. None of its rankings – not for basic requirements, efficiency enhancers or business sophistication and innovation - matched Barbados.

However, Barbados’ ranking in the specific areas of business sophistication and innovation at 52, suggests that there is need for the business community to improve its performance if Barbados is to continue to be a leader for the region in maintaining global competiveness.

The Report highlights University-Industry collaboration in Research and Development as a strong point for Barbados. With a ranking of 40, this is an area that Barbados could further develop, and that other CARICOM countries should emulate across a broad area of economic activity.

Like Trinidad and Tobago, crime was identified as the biggest problem facing Jamaica’s competitiveness. An inefficient government bureaucracy, access to financing and an inadequately educated work force were also identified among its major setbacks.

High tax rates headed the list of Guyana’s problems, followed by crime, and inadequately educated work force and access to funding. The enrolment rate for secondary education and hiring and firing practices were Guyana’s two most notable competitive advantages with rankings of 16 and 20 respectively.

So, who are the top ten most competitive countries in the world for business? In order of priority, they are: Switzerland, Sweden, Singapore, United States, Germany, Japan, Finland, Netherlands, Denmark, and Canada.

The inclusion of Singapore, a small island state, is significant. It shows that small size is not a barrier to being competitiveness in business. Singapore, incidentally, was the top recipient last year of investment of every country in the world.

And, what distinguishes these top ten countries from the other 129 nations in terms of their ability to be competitive globally and attract businesses? The World Economic Forum identifies 12 interrelated pillars for competitiveness, among them are: the strength of institutions and laws, political stability, the quality of infrastructure, public health, and education, and levels of technology and innovation. The Forum makes the point that “the pillars are not independent; they tend to reinforce each other and a weakness in one area often has a negative impact on other areas”.

In the case of Singapore, a physically small island state, it is ranked “number one for government efficiency; second for its financial market sophistication ensuring the proper allocation of these factors to its best use”. It is also ranked fifth for its world-class infrastructure with excellent roads, ports, and air transport facilities. In addition, it has a strong focus on education, providing individuals with the skills needed for a rapidly changing economy.

Singapore’s accomplishments are greatly to be admired particularly when it is considered that both Guyana and Jamaica at the time of their independence in 1962 and 1966 respectively were more prosperous than Singapore.

Clearly there are lessons to be learned by Caribbean states from Singapore’s success. Not all of them will be transferable because of the different work culture that exists between Singapore and the Caribbean, but there are other basic experiences and knowledge that Singapore could offer, among them: how to make government more efficient and institutions stronger.

Lessons might also be learned from Malaysia, which, like 13 of the 15 CARICOM states and Singapore, is a member of the 54-nation Commonwealth. Apart from Taiwan, China, and a few oil-rich Arab states, Malaysia is the highest ranked developing country in the competitive index at number 26. In business sophistication and innovation, it is ranked at 25 and 24 respectively of the 139 surveyed countries. Were it not for its security situation, Malaysia would have been higher up the list.

CARICOM countries have to do much better if they are to emerge from their present economic morass and rise up to claim a significant share of the world’s opportunities for investment and business.

Bringing crime under control has to be a top priority for CARICOM countries and they can best do so together. The sooner governments explore the establishment of regional machinery for collectively tackling crime within each country, the better.

Establishing the Caribbean Single Market also should be accelerated with mergers and acquisitions between Caribbean countries being facilitated by legislation. This will improve business sophistication, enhance efficiencies, and strengthen institutions. Taxation levels in many countries also have to be reviewed to make them more competitive globally. Importantly, access to financing should be a high priority that should be tackled by governments and the private sector collectively devising ways to do it.

The government bureaucracy that slows down investment also has to be overhauled rapidly. Inordinate delays and red tape that slow investment cost Investors money. They don’t hang around; not with a world eager to lure them.

A series of meaningful consultations between governments and the University of the West Indies; between governments and the regional private sector organizations; and the creation of task forces drawn from all three could offer implementable solutions to the problems of competitiveness that beset the Caribbean region.

It is time to get serious, or get left behind.

September 10, 2010

caribbeannewsnow

Bahamas Blog International

Don’t abandon Caricom, fix it

jamaicaobserver editorial:



THE one thing everyone in the Caribbean agrees on is that the regional grouping, the Caribbean Community (Caricom), has been an abject failure.

The process of regional integration has stalled in most respects, notably the Caribbean Single Market and Economy (CSME) and is in reverse on many other areas such as freedom of movement of Caricom citizens. The inability to accomplish freedom of movement is a classic illustration of the failure of the grouping.

Ironically, during the colonial period people were free to move from one colony to another. But immediately after the attainment of political independence, governments began instituting a system of work permits.

While welcoming tourists with only a driver's licence, immigration officials subject passport holders from other Caricom states to hostile interrogation. In the Bahamas and Barbados, citizens of Jamaica, Guyana and Haiti are treated as personas non grata.

The state of Caricom is the equivalent of a bankrupt company that has been losing money for well over a decade. But since there are still obvious benefits to be realised from regional integration and cooperation, abandoning Caricom is the option of the faint-hearted. The only viable course of action is fixing it.

A diagnosis of the cause of the malaise reveals myriad problems, some natural and some anthropogenic. The natural barriers, such as the lack of a contiguous land mass and the separation by hundreds of miles of sea can be rendered manageable by better logistics and modern communications. The several centrifugal tensions such as the lack of a genuine sense of community and petty nationalism can be mollified by leadership.

The crisis of Caricom is a crisis of leadership, the essence of which is a lack of vision and an incapacity for mobilisation of the people of the region in support of lucidly articulated strategy. This crisis of leadership exists at two levels: the political and the managerial.

The political leadership is comparable to the board of directors which sets goals and approve broad policy on the advice of management. The current heads of government are not without ability, but they lack unity without the keen intellect of Mr Owen Arthur and the calm statesmanship of Mr P J Patterson.

In addition, they have avoided addressing the unpleasant issue of not holding management responsible for its failure to implement their instructions.

The real problem of Caricom is the comprehensive failure of the management, specifically the leadership of the Secretariat. The performance of the Caricom Secretariat over the last 10 to 15 years has happened on the watch of the current secretary-general and whether it is his fault or not, the record points to the need for a change of leadership. This is what would be done in any bankrupt company or non-performing organisation.

The heads of government abhor the unpleasantness of changing a manager but, in any event, we would prefer to see the manager opting to resign. There is nothing dishonourable in resigning, especially if one has served well beyond normal retirement age. Caricom, we believe, is an indispensable cause but no one is indispensable to that cause.

This newspaper salutes the selfless work of the current secretary-general, however, his resignation now at the heads of government meeting in Montego Bay, would dramatise the need for a fresh start, without which Caricom will drift aimlessly on to certain death.

July 06, 2010

jamaicaobserver editorial

Bahamas Blog International

The CARICOM Single Market and Economy (CSME) is A Work In Progress

CSME "A Work In Progress" 

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

6th June 2005

There are a number of elements of the CARICOM Single Market and Economy that have yet to be worked out, but the Caribbean Community hopes that The Bahamas will come onboard and sign the Revised Treaty of Chaguaramas before the end of the year, according to CARICOM Secretary General Edwin Carrington.

While on the Love 97 programme, "Jones and Company", on Sunday, Mr. Carrington was unable to provide specifics on certain aspects of CSME, noting that the details are something that the heads of CARICOM will have to come up with.

"The CSME at the moment is a work in progress and the CARICOM countries that are involved are constructing this arrangement," he said.

Mr. Carrington indicated that there is still a whole lot to be worked out as it relates to the single economy.

"If you look at the treaty, you would see that the single economy has hardly been sketched out in the treaty document," he said.

"It has set out broad guidelines as to what would be involved in the single economy.  Essentially, the single economy is a process to move the economies of the region to certain common approaches in a number of areas that will enhance their competitiveness so that their productive capacity would be such that they can compete better in the international marketplace.

"That's the broad objective.  How you do that, what are the steps that you have to take, these are matters we are working on."

Another aspect of the CSME that has not yet been clearly worked out is the regional development fund which will be established to cushion the economic fallout that may result from the formation of the CSME, Mr. Carrington indicated.

He could not say specifically what contribution The Bahamas would have to make to the development fund.

Asked what this country's future with CARICOM would be if it does not sign the revised treaty, Mr. Carrington said it was a "political question".

"I'll tell you why," he said.  "The legal advice which we have is that this instrument, the revised treaty, including the single market and economy, does not provide as the previous instrument [did] for you to join the community and not the common market.  It is one integral product and joining it commits you to the entire product subject to, of course, reservations.

"So, if The Bahamas signs on, let's say, without reservations then it is committed fully to that.  If it wants not to participate in certain aspects of it then it would have to put forward reservations and get those accepted."

Mr. Carrington was also asked whether other CARICOM states could later challenge the reservations The Bahamas intends to secure.  He stressed that CARICOM is not a "fly by night" organization and if the sovereign states have signed certain reservations with The Bahamas, they stand and "no one can challenge them."

The Bahamas government has said that it wants to sign the revised treaty, but only if it is able to secure certain reservations against the free movement of people, the monetary union, the Caribbean Court of Justice at the appellate level, and the common external tariff.

"Let us assume that they have agreed to those reservations," Mr. Carrington said.  "That's it.  If you did not get the agreement that you wish, then I presume you would sit down and determine [whether you should] go in nevertheless or [whether you should] on the basis of not receiving these reservations not go in."

He again indicated that The Bahamas would be able to keep its reservations for as long as it sees fit.

"I'm not a head of government, but I would find it difficult to believe that [the heads] would not give them sympathetic consideration...They would not be changed without The Bahamas' agreement."

Echoing a familiar sentiment in the CSME debate, The show's co-host, Godfrey Eneas, asked the CARICOM Secretary General why The Bahamas with a per capita income of between $15,000 and $17,000 should be "saddled" with other countries with low per capita incomes.

But Mr. Carrington took issue with the use of the word saddled, saying it was unfortunate that Mr. Eneas would choose that word "because no one is saddled with any country."

"If I follow your argument, [The Bahamas] is seeking to enter the Free Trade Area of the Americas.  Then why should the rich U.S. saddle itself with a poor [Bahamas] in relative terms?  It seems to me first of all, the notion of saddling is wrong because you seem to suggest that you have to carry those countries.  That is not the case."

The show's host, Wendall Jones, then asked, "How do you answer the complaint of the criticism that the CSME is premature given the divergence of the states of the Caribbean, economically and socially.

Mr. Carrington responded, "To say that it's premature seems to suggest that there is some better time to come when you can do these things."

During the show, Mr. Jones also indicated that there are many Bahamians who have concerns about the right of establishment provision of the treaty.

Mr. Carrington explained that, "First of all, the principle of a right of establishment is that a national of a CARICOM member state has the right to establish a business in another member state in the community in the context of single market and be treated as a national of that particular country.

"My understanding is that a number of countries have identified areas in which they cannot accept [this].  I believe every country has certain exceptions.  I don't know that the exceptions that you are talking about would be acceptable or otherwise.  It's an area I hope that discussions would take place."

Mr. Jones asked, "Can you say if there is anything in the revised treaty that states that the right of establishment will not apply to the retail and wholesale sectors?"

The secretary general said, "No. I don't think that there is anything in the treaty which is that specific...Let me just remind you [that] The Bahamas would be seeking in my view a political situation.

"It may well be that in putting that in a document to the heads they may say, "Sorry, we can't accept that one.  In other words, I'm saying don't limit yourself to what the treaty says because we are talking about a political arrangement which The Bahamas government would seek with a view to implementing the treaty."

Mr. Carrington was also asked why he thinks the CSME is so unpopular in The Bahamas.

"I can see no rational reason for the widespread unpopularity as you've said," he answered.