CommentaryInternationalLettersOpinionsPrintReader Bites

OPINION: Improving Caribbean Trade in a Rapidly Changing Global Landscape

by: - May 19, 2017
68 Views   no discussions

Deodat Maharaj, Deputy Secretary-General, Commonwealth Secretariat

By Deodat Maharaj
Deputy Secretary-General, Commonwealth Secretariat

The Caribbean is at a crucial crossroads at a time when there is a global slowdown in world trade. Global trade expanded by just 1.9% in 2016, following an already weak 2.4% growth the previous year. It is a stark comparison to the annual average growth rate of 6% experienced between 1980 and 2007.

This slowdown is affecting the Commonwealth including its African, Caribbean and Pacific (ACP) member countries – and is having a higher impact on small and vulnerable countries such as those in the Caribbean. If the projections are accurate, 2012 to 2021 could be the slowest period of trade expansion since the Second World War. Growing protectionism sentiments and climate change add to the slowdown challenge, as it impacts trading capacity, productivity and income growth.

The current reality is exacerbating a situation where we see continued decline of Caribbean trade as a percentage of global trade. The CARICOM Caribbean’s contribution to world trade in goods declined from 0.16% in 2008 to just 0.09% in 2016 (and without Trinidad and Tobago, it remained unchanged at 0.04%). The share in global services exports during the same period has slightly improved from 0.28% to 0.35%. However, without Trinidad and Tobago, the share has fallen from 0.25% to 0.20%.

Effective participation in global trade is an essential prerequisite for sustainable development. We know that it is good for jobs and growth in our member countries including those in the Caribbean. We need to have in place policy measures and mechanisms to reverse the situation, creating an enabling environment that will draw out the full potential of trade among our member countries and for trade to be one of the main drivers of growth in our regions.

As we strive to achieve this, we recognise the inherent characteristics of small states in the Caribbean in terms of their access to markets, limited productive capacity and supply-side challenges towards diversifying their economies. This is exacerbated by low productivity and weak levels of competitiveness in the region. The impact of external shocks such as natural disasters have further eroded the capacity of Caribbean countries to effectively participate in world trade. For example, tropical storm Erika wiped out 90% of Dominica’s GDP in a matter of hours, exposing the vulnerability of Caribbean small island developing states.

Building resilience of Commonwealth small states to safeguard their future is essential with trade playing a vital role. Strengthened multilateralism is the best possible approach to protect and promote the trade interest of this vibrant region with strong human capital. In addition to advocacy at the international level, concrete and practical steps are required at the national level to build the capacity of Caribbean countries to effectively participate in global trade.

One such example is the Hub and Spokes Programme, an ‘aid for trade’ initiative which is a quadripartite partnership of the European Union, the ACP Group Secretariat, the Commonwealth Secretariat and the Organisation internationale de la Francophonie. The programme’s trade advisers are placed in the field with CARICOM and the Organisation of Eastern Caribbean States (OECS) and in Belize, Guyana, Jamaica and St Vincent and the Grenadines. They have been instrumental in supporting much needed trade negotiations, in implementing the region’s trade agreements, and in encouraging trade development.

This programme addresses a challenge common to Caribbean countries and indeed many African and Pacific countries – the need to build and reinforce the capacity of key trade institutions such as Ministries of Trade and regional trade organisations. This is a sine qua non condition for any trade strategy to be successful. Addressing this need is critical in ensuring the sustainability of the Commonwealth’s trade development interventions and that of other donor organisations.

The programme has been instrumental in supporting the region in the implementation of its key trade agreements, including the CARIFORUM-EU Economic Partnership Agreement (EPA) and Trade Facilitation Agreement (TFA). Trade Facilitation has the potential to reduce trading costs for Caribbean countries. We are also working towards the establishment of a Regional Trade Facilitation Committee, preserving the benefits of integration in the region.

Similarly, and with a view of supporting countries to derive benefit from the global trading system, the programme is assisting St Vincent and the Grenadines’ Bureau of Standards establish a bar coding system to ensure compliance with international standards and specifications. Linked to these efforts, the programme funds training workshops to strengthen capacities and ensure effective implementation of the various tools and policy developed to support trade and development.

It should be noted that whereas building trade capacity is an essential condition to advance human development and create prosperity in the region, other actions are required to help build resilience. Like Africa, it is important that the Caribbean comes up with and rallies around a cogent and compelling long-term vision for the region we want by 2050.