Strategic markets you ain’t

A US company, he said, might be willing to struggle for several years in China to come to terms with a major project because it views China as a strategic market "but the Caribbean and Central American countries are typically not strategic markets."

Total US trade with the Caribbean Basin nations topped US$50 billion in 2004.

Caribbean Basin nations, he said, needed to make their markets as "friendly as possible."

At the same time, he urged US companies to think "creatively" on how they can "calibrate" their operations to make them work in the smaller markets of Central America and the Caribbean.

Lavin emphasised that successful US companies should not abandon markets because they are smaller or poorer than their strategic markets.

He said while the countries of the Caribbean Basin deserve "high praise" for enacting a free-trade agreement with the US, such a trade pact represents only a starting point for those nations to overcome their economic and political challenges.

His comments were made during the 29th Miami Conference on the Caribbean Basin held in Miami last week attended by hundreds of civic and industry leaders in the western Hemisphere, including several from Trinidad and Tobago.

Lavin acknowledged that in a booming world economy, it is sometimes difficult to get US companies to focus on what they might perceive as smaller markets. The Commerce Department official said the challenge for each country in the Caribbean Basin is to make its port and customs operations more efficient, to provide better and cheaper phone service, and to ensure that the tax code does not impede economic growth.

Although the FTAA is all but dead, there was excitement though over the DR-CAFTA (Dominican Republic- Central America Free Trade Agreement) with the US.

Governments throughout Central America and the Dominican Republic spent more than two years negotiating and approving their free trade deal with the United States, aimed at boosting the profile of their area for investment.

Speaking at one of the morning sessions of the conference, Lavin said agreements such as CAFTA-DR were "wonderful policy tools — but by themselves they are not likely to solve the problems each country in the region faces.

Even with legislative passage of free-trade pacts such as CAFTA-DR, "there is no magic wand we can wave," he said. "The path to a better society is taken step by step — improving the economy, attracting investment, helping business expand, making sure that workers can receive a better education, and creating a better life for all."

If a country’s trade infrastructure is deficient, "removing tariffs and other barriers will not be particularly helpful," Lavin said. "If your society is plagued by corruption or bureaucracy, removing trade barriers will not get you very far."

Lavin said transparent legal systems, government accountability, and companies that "play by the rules" are important for "translating the opportunity of open markets into benefits for the region’s residents."