Mr. Chairman Hon. Kenneth Valley, Minister of Trade and Industry
Mr. Anthony Aboud, Outgoing President of the Trinidad and Tobago Manufacturers’ Association
Mr. Paul Quesnel, newly elected President of the TTMA
Ambassador Jerry Narace, Trinidad and Tobago Ambassador
Other Members of TTMA
Members of Media
Staff Members of the CARICOM Secretariat
Distinguished Ladies and Gentleman
Ladies and Gentlemen, it is indeed a pleasure to be with you this morning at this breakfast session of the 49th Annual General Meeting of the Trinidad and Tobago Manufacturers’ Association and to be given the opportunity to address you on a topic of such importance to us all – The CSME, FTAA and their Implications for Trinidad and Tobago and the Region as a whole. Before doing so however, allow me to convey my appreciation to the outgoing President of the Association, for his leadership, after a most successful year, of this very important private sector body, not only to Trinidad and Tobago but to the wider CARICOM Region.
Allow me also to extend sincere congratulations to the newly elected President Quesnel and to extend the Community’s best wishes for a successful term of office, especially at this crucial state on our Community’s development.
Minister Valley, what a pleasure it is also to see you once again in the thick of things as we move to establishing the CARICOM Single Market and Economy.
Ladies and Gentleman, let us appreciate that when CARICOM Heads of Government decided, in 1989, to establish the CARICOM Single Market and Economy, it was in the expectation that the deepening of the integration arrangements, through the establishment of this single economic space – with the free movement among Member States, of capital, labour, goods and services and the right of establishment – would strengthen and better position the countries of the Region to face the challenges and exploit the opportunities of globalisation and increasing liberalisation.
What may not have been as readily appreciated at that time, was, as the Rt. Hon. Prime Minister of Barbados has alerted us, is that “… The creation of a CARICOM Single Market and Economy will unquestionably be the most complex, the most ambitious and the most difficult enterprise ever contemplated in our Region”. But one which, the Prime Minister goes on to point out is “… an inescapable and historic necessity that must be satisfactorily and successfully met, no matter how massive the task appears, (no matter how meagre the immediate returns may be) or how numerous may be the obstacles and pitfalls that must be overcome”. In that regard, we must never forget Norman Manley’s observation in contemplating the future of a united region, that “Great causes cannot be won by doubtful men (and women)”.
I am therefore happy to be speaking to you on this topic, as Trinidad and Tobago is one of the three Member States which have already completed their commitment to be CSME (Single Market) ready, earlier than the December 2005 deadline originally agreed. The implications of the Single Market for Trinidad and Tobago, are very positive, for among the major objectives of the CSME are the following:
- Organisation for increased production and productivity;
- Enhanced levels of international competitiveness;
- Expansion of trade and economic relations with Third Countries;
- Full employment of labour and factors of production; and
- Resultant improved standards of living and work.
As the country with perhaps the strongest economy in CARICOM; with one of the highest standards of living; as the leader in intra-regional trade; and with a declared government strategy to become a developed country by 2020 (Vision 2020), Trinidad and Tobago is particularly poised to play a critical role in the achievement of these objectives.
THE GLOBAL ENVIRONMENT
As indicated earlier, a critical dimension of the CSME is treating with the global environment. That environment can be:
- hostile as witnessed in our agriculture sector – be it bananas, sugar or rice;
- very competitive, as recently witnessed in telecommunications sector in relation to our Cricket Team;
- artificially competitive as the powerful use subsidies to dominate markets in which they would not otherwise be able to compete – as witnessed in the cotton market;
- dynamic and changing – with enterprises growing larger or smaller, integrating, coalescing, establishing alliances at all levels – requiring our enterprises to be able to adjust as necessary and therefore leaving a trail of lessons from which our smaller countries and entities can learn;
In other words, the global environment can be a virtual jungle! WTO notwithstanding!
In this environment, we require the combined cooperative effort of government, private sector and labour if we are to successfully look after our business. Our Regional Negotiating Machineries, Associations of Industry and Commerce and Congresses of Labour – not solely individual companies – all have a pivotal role to play. This requires their involvement from the ground up.
THE CARICOM SINGLE MARKET AND ECONOMY (CSME)
CARICOM AND THE GLOBAL ENVIRONMENT
So how does CARICOM and Trinidad and Tobago stack up against this backdrop? As we all know, CARICOM comprises fifteen small States – all vulnerable to natural disasters, economic shocks or other such global developments. Some, like Trinidad and Tobago, are termed More Developed Countries (MDCs) and are by and large better positioned than the others – termed Less Developed Countries (LDCs), mainly the OECS – but none is large compared to our competitors.
The 1989 decision of our Heads of Government to move from a Common Market, with a significant focus on intra-regional trade in goods to a Single Market and Economy, was the admission that cooperation primarily in the area of intra-regional trade was insufficient to meet the challenges and grasp the opportunities of the times and bring the necessary benefits to all Member States. For this, integration needed to be deepened.
All integration and free trade arrangements are built on the concept of liberalisation. Liberalisation – global and Regional – brings both opportunities and challenges. The Trinidad and Tobago private sector must be congratulated for having made effective use of the opportunities created by the liberalisation of the intra-regional goods market. A recent IDB study shows that Trinidad and Tobago increased its merchandise exports to the CARICOM market more than fourfold in the past decade, resulting in an increase in the share of intra-CARICOM exports, in CARICOM’s total exports, from 12% in 1990 to over 20% by the end of 2000. Trinidad and Tobago nearly two-thirds of the intra-CARICOM exports (i.e. exports from one CARICOM Member State to the others).
The same IDB study showed that intra-regionally, Trinidad and Tobago specialised in about 40 product groups in the intra-regional market as compared with 26 at the extra-regional level. The intra-regional market has evidently been used as an incubator and learning ground for insertion into the wider market place, including in those countries with which CARICOM has established special bilateral trading agreements – Cuba, Colombia, Costa Rica, the Dominican Republic and Venezuela. In all of these arrangements, Trinidad and Tobago plays a significant role – and in all these regional arrangements, Minister Valley has lead responsibility! Soon, CARICOM’s trading outreach may be extending to MERCOSUR.
It might not be unreasonable to suggest that the example of and success in trade in goods, have acted as a precursor and possible incentive to other cross border activity, such as the provision of financial services and the establishment of cross border enterprises. Our Pan Caribbean Companies might have happened without the promise of the CSME, but much less likely without the existence of a CARICOM. Imagine how much easier and more certain such developments will be, as the CSME becomes fully operational and the Caribbean Court of Justice (CCJ) – which will be inaugurated this Saturday 16 April – becomes fully functional.
There has also been growing understanding in Trinidad and Tobago, of the importance of the Region to its economic prosperity. To its credit, Trinidad and Tobago has sought to share the benefits derived therefrom. This is certainly the basis for initiatives, such as the TT$100 million CARICOM Trade Support Programme, which provides interest free loans to non Trinidad and Tobago CARICOM enterprises with a view to lifting their level of performance and international competitiveness. The Trinidad and Tobago experience provides a valuable example for the rest of the region.
COMPLETING THE CSME
Mr. President, as your letter of invitation to me so aptly put it “When fully implemented, the CSME will permit free movement among CARICOM States for goods, services, people and capital, all ingredients necessary to permit the development of business across borders”. We are all reasonably aware of most of these features. Among the necessary ingredients, not specifically mentioned however, but no less important, are the institutional arrangements without which neither the single market nor the single economy would become realities. These include:
– Competition Law and a Competition Commission;
– Anti- Dumping Legislation;
– The Development Fund for Disadvantaged Countries, Regions and Sectors;
– Government Procurement Procedures;
– Development of common Standards (CROSQ for goods) and accreditation procedures (for services);
– Double Taxation Agreements; and
– Possibilities for Developing Cross-Border Enterprises and Production Integration Arrangements
A particularly relevant requirement, to you as Members of the Private Sector, relates to the changes in corporate structures which must accompany, if not precede this process. These include the transformation of family firms into public firms; and national companies into regional and indeed international enterprises – a process of course underpinned by appropriate and harmonised national and regional tax and company legislation.
The Single Economy dimension will require the implementation of policies for pursuing the process of competitive production in support of the requisite sectors – including agriculture, industry and services. This includes establishing the production and investment environment for achieving competitiveness; making space for more effective public-private sector partnerships and private sector assumption of the lead role where appropriate. It also requires of the Community, harmonization of policies in areas such as exchange and interest rates and company law, common stock exchange and who knows one day, a common currency.
As regards the timeframe for these two dimensions of the CSME – the Single Market and the Single Economy – the former is carded to come into existence on 1 January 2006. The latter, the more in-depth integration process, is now tentatively scheduled to come about in 2008. Should these timelines be met, our Region would have taken some thirty-two years from the Treaty of Chaguaramas in 1973 to achieve this milestone. The only other integration process to have gone this route – the European Union – took thirty-five years – from the Treaty of Rome in 1957 to the Single European Act of 1992!
THE FREE TRADE OF THE AMERICAS (FTAA)
Ladies and Gentlemen, a few words about the FTAA – the Secretariat of which we are of course getting ready to host in Trinidad and Tobago….isn’t that so Minister Valley?
Because of the Region’s heavy reliance on external trade, the FTAA assumes great importance. It in fact has helped to drive the timelines for the implementation of the Single Market by December 2005. However the structure of our economies and especially, because of the relatively narrow range of exports by many regional exporters, the anticipated benefits would be determined by our ability to produce and produce competitively – and hence by the extent of our success in the CSME. The facts are that:
- External trade is an important growth engine for Caribbean Countries since the Region is one of the most open in the world. In case of Trinidad and Tobago, trade to GDP ratio close to 100%.
- The FTAA is expected to create the world’s largest free trade area with a combined GDP of over US$15 trillion, a population of 830 million people and about 40% of the world’s economic activity.
- For Trinidad and Tobago, the FTAA negotiations are the most critical, since over 80% of exports are destined to this market, and 70% of our imports are derived from this source. The FTAA will provide scope for Trinidad and Tobago to take advantage of its geographic location between North and South America. Opportunity to diversify export base and reduce the dependence on petroleum sector and to solidify its position as an emerging manufacturing economy and a commercial platform in the hemisphere.
- The added benefit to Trinidad and Tobago is the potential gains as the Headquarters for the FTAA. This could bring about a greater level of investment in the economy, create additional jobs and have multiplier effects on the rest of the economy. It is an integral part of the Vision 2020 initiative;
However, the FTAA is not without its challenges for Trinidad and Tobago and the rest of CARICOM. Most of the exports to the preferential markets of the United States and Canada as well as in the regional market, will face competition from other larger (though not necessarily more efficient) countries and firms in the FTAA. This is why we have to seek special and differential treatment in a number of areas and where we have to go for the jugular, with the involvement of business, labour, government and Civil society – all.
The hiatus in the negotiations for the FTAA has given the Region and its enterprises opportunity to make themselves CSME ready and therefore more FTAA ready.
CONCLUSION
My presentation has dealt with some of the realities, needs and implications of the CSME and the FTAA. As we are all aware, the landscape is changing. The name of the game is therefore adjustment by all for greater competitiveness all around.
While Governments lead through negotiating appropriate trade agreements, by providing the conducive environment and by supporting promotional activities, it is however, the private sector working in collaboration with labour, that produces and trades. The successful implementation of the CSME is as much dependent on their active involvement and performance as it is on government’s astute leadership. This calls for key private sector organisations – such as the Trinidad and Tobago Manufacturers Association – to ensure that they are sufficiently equipped with adequate technical capacity.
As Member States bring to the Single Space different endowments; become competitive at different rates; implement policies with different timings, the impact of the CSME will differ. Some enterprises will suffer dislocation; some persons will lose jobs; others will gain. From the country perspective, in order to gain some, it will be necessary to give some. Benefits of access to each others markets and resources carry with it obligations to open up your own markets which often have a cost. It is those costs that have to be addressed so that they are not more onerous than can be borne at the particular time by the particular country, notwithstanding the net overall benefits.
The provisions of Chapter 7 of the Revised Treaty of Chaguaramas treating with Disadvantaged Countries, Regions and Sectors and in particular those of article 158 on the Development Fund are designed precisely to deal with this phenomenon. These provisions must be operationalised as a matter of urgency and to that end, initiatives are already underway.
Finally, Mr. Chairman, logic, experience and developments around us indicate that we cannot be better off going forward as individual countries. We must make the change in our mindset from the national to the regional perspective. We are all part of a Regional whole.
The challenge facing us now is to firstly implement all aspects of the CSME and do so as fast as possible. In the end, the CSME is what we all make of it. Our success at this regional enterprise will determine in large measure how beneficial is our insertion in the larger hemispheric initiative of the FTAA.
Thank you, Ladies and Gentlemen.
