No need for a Trade War between Jamaica and Trinidad and Tobago

The state of the Jamaican economy and the increasing hostility to trade with Trinidad and Tobago by Jamaican manufacturers are matters that should concern all of the other 13 member countries of the Caribbean Community and Common Market (CARICOM).

It may be that in some form of quiet diplomacy unknown to the publics of 15-nation CARICOM, the Secretary-General of the CARICOM Secretariat is already engaged in behind the scenes activity to try to end the verbal slogging that has characterised the recent relations between Jamaica and Trinidad and Tobago. If that is so, then hopefully his efforts will result in an understanding of how the two most populous English-speaking countries in CARICOM can resolve the differences that have arisen. If no such initiative has as yet been taken, then consideration might be given to doing so.

The intra-CARICOM trade figures reveal two important facts. Trinidad and Tobago is the most outstanding beneficiary of intra-CARICOM trade. For example, the value of its exports to CARICOM in 2011 was US$2 billion while the value of its CARICOM imports was US$140.9 million. By the same token, in the same year, Jamaica was the biggest market for CARICOM with imports valued at US$1 billion. However, the value of its exports to CARICOM was US$67 million.

The bulk of Jamaica and Trinidad and Tobago’s trade relationship in CARICOM would be between each other.

At a recent Investment Conference in Trinidad and Tobago, the Minister of Trade, Industry and Investment, Senator Vasant Bharath, stressed the importance to Trinidad and Tobago of the health of the economies of neighbouring countries which, combined, represent the second largest market for Trinidad and Tobago’s exports after the United States of America.

He made the telling point that Trinidad and Tobago has a vested interest in the health of Caribbean economies since, if their economies decline, so too does their capacity for buying goods and services from Trinidad and Tobago that contribute to sustaining revenues and employment.

By extension of the Minister’s insightful observation, Trinidad and Tobago should have a keen concern about the economic circumstances of Jamaica. So too should all CARICOM countries that recognise the size of the Jamaican market as important to their own exports.

To be fair, manufacturers in Trinidad and Tobago are alert to the troubling financial circumstances of Jamaica. The majority of them want the Jamaican economy to improve so that Jamaica can continue to purchase their manufactured goods. For this reason, many of them are anxious to see the allegations in Jamaica against some Trinidad and Tobago products dealt with and settled satisfactorily. They also want the accusation that unfair non-tariff barriers are being applied by Trinidad and Tobago to some Jamaican products to be investigated and resolved.

These are issues that are now crying out for urgent attention in the spirit of “community” that is the purpose of the CARICOM Treaty. One thing is for sure and it is that if Jamaica follows the call of the lemmings to withdraw from CARICOM, it will do no more than go over the cliff. For CARICOM is much more than about intra-regional trade – important though it is. No one throws away a motor-car because one of its tyres is punctured.

The imperative, therefore, is to fix the puncture, inflate the tyre and get the motor-car back on the road. To do so, in this case, may require a mix of innovative approaches which could include the deeper integration of the factors of production between Jamaica and several CARICOM countries, particularly Trinidad and Tobago; investment by Trinidad and Tobago financial institutions and companies in the productive sectors of Jamaica to help promote economic growth and more employment; and, maybe even an “aid for trade” component given that Trinidad and Tobago has enjoyed a consistently high balance of trade surplus with Jamaica.

Another factor to be considered is that the recent effective devaluation of the Jamaican dollar, which makes US$1 equal JAM$100, means that the cost of Jamaica’s imports of goods from CARICOM would have increased making them less competitive against Jamaican-produced goods, and Jamaica’s labour cost of production would have decreased re-balancing the higher costs for energy that Jamaica pays, and making the cost of their exports cheaper. This is now an advantage to Jamaica.

With regard to the fact that Trinidad and Tobago companies pay less energy-costs than do other companies in CARICOM making them more competitive, this is simply a reality. If Jamaica or Guyana or any other CARICOM country were to discover oil and gas tomorrow and could begin production, every government would pass on the benefit to its domestic and commercial consumers to make them more competitive in the international market and to reduce prices for their people. Many of the difficulties of price differentials for oil and gas between Trinidad and Tobago and other CARICOM countries might be overcome in a CARICOM Single Market to which regional governments have said they are committed. But the single market is still to be completed.

In this connection, Trinidad and Tobago’s advantage of being a significant oil and gas producer should be acknowledged for the reality it is, and further ways should be explored of how a portion of the revenues earned by Trinidad and Tobago, through oil and gas sales to CARICOM countries, might be utilised for concessionary loans or budget support for countries such as Jamaica.

At the end of the day, neither Trinidad and Tobago by itself nor CARICOM as a whole can cure Jamaica’s present difficulties, but they can be helpful in easing the burden through creative approaches worked out and implemented jointly with Jamaica.

The complaints of Jamaican manufacturers should be taken seriously and dealt with expeditiously and thoroughly. If their present concerns about competitive access to the CARICOM market, including Trinidad and Tobago, can be addressed, perhaps the discussion can be taken to a higher level of how the factors of production can be integrated to sell joint CARICOM goods and services in the global marketplace and so accelerate economic growth, increase foreign exchange revenues and expand employment for the region as a whole.

Myriad reports exist on how to integrate CARICOM production to sell globally. What is needed is the will to implement them.

(Sir Ronald Sanders is a Consultant, Visiting Fellow at London University and former Caribbean diplomat. Responses and previous commentaries: www.sir ronaldsanders.com)