Season of mistrust

‘We were voices crying in the wilderness, deemed heretics to the religion of free trade fundamentalism’ — Belize Prime Minister Said Musa

 ‘Specifically, special and differential treatment provisions must be crafted to facilitate structural adjustment and promotion of the development of small, developing economies, in particular, the small island developing states’ — Jamaica Prime Minister  PJ Patterson
 
For small island developing states, the World Trade Organisation  (WTO) Ministerial  Conference in Cancun, Mexico, being held in September could be  watershed on how they go forward on trade and a litmus test on their economic prospects and survival. For small states such as those in the Caribbean, globalisation - a world without barriers and preferential access - seems bleak and gloomy. Already many of their economies, with perhaps the single exception of energy-based Trinidad and Tobago, are wobbly and their short to medium term economic viability, very uncertain. Caribbean islands, traditionally mono-crop economies either in banana or sugar cane production have relied heavily on preferential trade arrangements for their exports.
But the phasing out of preferential trade arrangements as a result of WTO rulings have left the banana-growing islands in particular, with major economic upheavals.The filing of WTO complaints by Australia and Brazil in respect of the EU sugar protocol which provides guaranteed access to markets, threaten similar damage. Export earnings for the Eastern Caribbean islands have dropped substantially and in the first quarter of this year earnings were put at US$8.48 million down from US$12 million in the comparative quarter in 2002. Economic growth in the eastern Caribbean has been on a downward path over the last decade. In 1999-2000, growth averaged 2.4 percent with further declines registered in 2001 and 2002.

In the 1990s, annual growth averaged about 3.2 percent, compared to 5.5 percent in the 1980s. Strong growth in the eighties was mainly due to a favorable external environment, when preferential market access and strong prices resulted in a twofold increase in banana export earnings; increases in foreign investment fuelled an expansion in the tourism sector and large flows of concessional aid financed investments in infrastructure. But in the 1990s, there was a major reversal of fortunes with the rapid decline of concessional aid flows and the erosion of preferential access for bananas to the important European market. President of the Caribbean Development Bank (CDB), Professor Compton Bourne notes that small states now find themselves in a world very different from what most would have anticipated even in the gloomy 1970s and 1980s with the crippling energy crises, foreign debt crises and structural adjustments. “ Economic and political power has shifted remarkably. New institutional structures are in place. Global governance, global markets, global communications and even global culture are vogue terms,” he said in a recent paper. Dominica’s Prime Minister and Minister of Finance and Economic Planning, Pierre Charles said the region finds itself in the most negotiation-intensive period ever faced. Apart from the WTO, negotiations are also taking place on the Free Trade Area of the Americas (FTAA) and the ACP-EU Cotonou negotiations. “ This poses severe challenges for our countries, which are financially, institutionally and humanly constrained in terms of capacity. It is extremely difficult to follow all the issues in all three arenas fully as we must, hence we must continue to pull our resources together,” said Charles whose island’s economy, one of the hardest hit in the Caribbean is being bailed out by regional countries, including Trinidad and Tobago.

About the up-coming WTO Ministerial meeting, Charles said the region will be pressured to launch negotiations in new areas, but that member Caribbean Community (CARICOM) countries must however be prepared to demonstrate a level of resolve and determination to secure their key interest at the multilateral level. “ We need to secure the maintenance of the preferential margins we enjoy in the developed country markets for our key export. We need to obtain the necessary special and differential treatment that our small, vulnerable developing economies need in all areas. We need the type of policy space to enable us to pursue our development objectives. After all, the impact of our trade at the global level is very, very minimal,” Charles told Caribbean leaders earlier this month at their Summit in Jamaica. Jamaica’s Prime Minister PJ Patterson said in all the negotiating arenas, the region is confronted with the erosion of preferential trade arrangements which encompass a significant share of their exports. He noted that there is relentless pressure from more developed countries to move rapidly to reciprocal trade rules and which is compounded by the attempts to extend the purview and rules of the multilateral trade system and by extension regional agreements which must be compatible with the WTO provisions. This, he said, poses difficult challenges in three related aspects; negotiations, implementation and adjustment, with considerable strain on the human, financial, institutional and political resources of the member states.

“ Our mission must aim to ensure that the rules and the pace of implementation in multilateral, hemispheric and inter-regional trade agreements take full account of the goals and disabilities peculiar to small, developing economies. Specifically, special and differential treatment provisions must be crafted to facilitate structural adjustment and promotion of the development of small, developing economies, in particular, the small island developing states,” said Patterson. Belize Prime Minister Said Musa said for over a decade, the Caribbean has been promoting concepts related to the need to create a human-oriented trade regime that took account of the special circumstances of small and disadvantaged states and which put people first.
“ We were voices crying in the wilderness, deemed heretics to the religion of free trade fundamentalism,” he said. Referring to a UNDP study, “ Making Global Trade Work for People,” he said it provides ample justification of the Caribbean’s position. The study argues for special and differential treatment for developing countries going beyond traditional trade issues to embrace education, health, gender equality, environmental protection, respect for cultural diversity and other human development matters. It urges that WTO rules be made more flexible and development-oriented and should provide the parameters for regional negotiations. He gave an example of the agricultural sector, an economic mainstay that provides a livelihood for some 70 per cent of the regional population.

“ It is beyond irony that in the name of free trade, this livelihood is threatened even as the rich and powerful countries provide agricultural subsidies to their farmers to the tune of over one billion dollars a day. “ This is not a dying phenomenon; indeed, since 1997, such subsidies have increased by over 25 per cent.” Asking where do small states fit in the world of dramatically increasing asymmetries of economic and military resources, power and influence and what role they can play, Professor Bourne said unfortunately small states cannot make international rules of the game. “ This should be evident from the agricultural protectionism of developed countries built into the WTO provisions despite the desire of developing countries to have them dismantled.” He said while small states do not have a voice in some international rule-making forums within the financial world or within the UN system, they have a lobbying role. In other words, for small states to stand a chance of being taken seriously, they will have to speak with one voice and act in concert. Professor Bourne said it is easy to become pessimistic about the future of small states in a world that is tending so dramatically towards agglomeration and concentration of wealth and power. “ However, those of us who inhabit small states and intend to continue doing so, have little alternative to accepting the challenge, however daunting, of finding new ways to resuscitate and accelerate Caribbean economic growth and to arrest the social disintegration of our countries.”