More room, please

It’s time to move out. Last month, the Caribbean Community (Caricom) and Costa Rica signed a Free Trade Agreement, marking yet another step in the widening process of trade and economic relations. Within days of the signing of the agreement, Trinidad and Tobago manufacturers arrived in Costa Rica on a mission to seek out new business and trading opportunities and expand existing trade relations. Newly-elected president of the Trinidad and Tobago Manufacturers Association (TTMA) Anthony Aboud said in expanding out of the domestic market, manufacturers consider Caricom as their “home” market.

“It is our intention to effect the Caricom Single Market and Economy (CSME) at the level of trade within the region,” he said, noting that  Trinidad and Tobago is a major supplier of products and services to Caricom’s population. “Our strategy is to build on this base, continue to negotiate bilateral agreements especially with those Caribbean countries just beyond Caricom, even as we seek to safeguard our interests as the smallest of the “small states” in the Free Trade Area of the Americas (FTAA).” He noted that local manufacturers were already doing bustling business in Dominican Republic, Costa Rica, St Maarten, and Cuba.

Describing Trinidad and Tobago as being “well located” at the shoulder of South America and at the crossroads of north and south, Aboud said the country has access to the Latin American markets and could be a transshipment point for other Caricom member states to penetrate those markets. “Our other advantages (over other countries) would include price based on energy costs, quality and competitiveness of the particular manufacturer and products. “In general, Trinidad and Tobago is culturally closer to Latin America than the North American giants. It is possible therefore to secure niche markets for Trinidad and Tobago products,” he said. He outlined the country’s disadvantages as potential competition from more developed economies with mass production as the environment becomes more liberalised and the eventual open market of the FTAA in 2005 and beyond.
“The Latin Americas, with Brazil in the forefront, are the counter-balance to the manufacturing giants, USA and Canada, who have already created their own arrangements with Mexico for instance, in NAFTA.

“Aligning Trinidad and Tobago with their groups (the Latins and Brazil) has the potential to position this country as an important trade point,” said the TTMA president. But he pointed to some of the current hurdles to entering Latin America which include transportation and shipping access, different distributor and other consumer based rules, labour costs and language barriers. Commenting on whether the free trade agreements could give regional manufacturers some comfort after FTAA has come into existence, Professor Bryan said perhaps they could but that the technical barriers to trade will have to receive a lot of attention in the Caribbean trade agenda. “Our smaller economies will have to take advantages of opportunities in the Doha Round and the FTAA. We need to address concerns outside of the trade agreements such as the use of “standards” that could effectively be “ntbs” or non-tariff barriers.

During the signing ceremony in Kingston, Jamaica’s Prime Minister who is also the current Chairman of Caricom, PJ Patterson described the latest free trade agreement as an important part of the response by member states to the challenges faced by their small economies in seeking to promote growth, prosperity and progress for their citizens. “It will make an important contribution to our goal of widening and deepening the process of economic integration in the region and provide new opportunities for growth and development,” Patterson said. “It will also improve our capacity to collaborate in the wider trade arena at the hemispheric and global levels, where we are making efforts to move the FTAA process forward and to revive the negotiations in the Doha  Agenda for Development in the WTO.”

But Patterson stressed that it was now up to the farmers, manufacturers,  entrepreneurs and workers in all the countries involved, to ensure that the free trade agreement lives up to its promise of stimulating growth and development. “It is firms that trade, not Governments,” declared Patterson. “So in the final analysis, this is an Agreement for our productive sector.” Apart from Costa Rica, Caricom has also entered into trade agreements with Venezuela, Colombia, Dominican Republic and Cuba, providing an external markets of 84 million for regional manufacturers. With the Costa Rica free trade agreement now installed, the external market of opportunities has expanded to 88 million. Taking into account Caricom’s own market, any Caricom producer faces an opportunity of having access to a market of more than 104 million. Professor Anthony Bryan, Director of the Caribbean Studies Programme at the University of Miami said Caribbean manufacturers, particularly those in  Trinidad and Tobago have been aggressively pursuing the opportunities created by the free trade agreements.

The manufacturers, he said, must play a bigger role in developing the strategy for exports and export promotion, and anticipate the opportunities and threats that exist in foreign markets. Looking at the advantages of the manufacturing sector in Trinidad and Tobago in the external markets, Dr Bryan said among their advantages are the existence of trade promotion, trade development and trade financing agencies such as the Caracas-based CAF (Corporacion Andina de  Fomento) and PROCOMER as well as TIDCO and local banks with Latin American reach such as RBTT and Republic. Noting some of the disadvantages, Dr Bryan said in Latin America, there are  often similar domestic or substitute products, price competition, better quality and better distribution networks than for Trinidad and Tobago’s manufactured products.

Also transportation and distribution charges to get the Trinidad and Tobago products into the Latin American market could be non competitive. “ In short we can secure markets if our manufacturers also include standards and niche export advantages as priority items,” said Professor Bryan, an expert in International Relations and on Latin American affairs. From Aboud’s point of view, the FTAA would preserve the Caribbean Basin Initiative (CBI) with the US and Caribcan trade preferences with Canada and would have no direct impact on bilaterals with Dominican Republic and Costa Rica.

“It would improve the access we have with Venezuela and Colombia,” he added. Trinidad and Tobago’s economic growth is also reflected by the increase in exports of goods and services over the period 1997 to 2002, which increased by approximately 45 percent from US$3.1 billion to US$4.9 billion. The country’s main export products continue to be petroleum, chemicals and manufactured goods. Petroleum accounts for more than half of total exports but exports of manufactured goods have increased by about 22 percent from US$358 million to US$438 million over the period 1997 to 2002. The major imports into Trinidad and Tobago include machinery and equipment; minerals and fuels; manufactured goods and food.