For better or worse

While some businesses intend to revamp operations, others are still scratching their heads trying to formulate a plan. Businesses all over TT are bracing themselves for the impact of the FTAA.

With its 34 participating countries currently looking to implement the FTAA treaty in 2005, manufacturers and traders are adopting varying approaches to the impending trade rules. Jeremy Matouk, CEO of National Canners Ltd, who has chaired several seminars over the years on FTAA, argues for special treatment. “Unless the Caribbean is given special treatment and substantial time to adjust it could mean hell. I refer to it as neocolonialism.” he asserts. He confirms that in principle, globalisation can generate greater wealth but he feels that the current terms of the FTAA are unacceptable. “I have great misgivings about it. I don’t go for unbridled capitalism. It’s going to mean problems for the poor,” he says. It is also going to mean a severe cut in earnings for other countries, such as Dominica which earns a large portion of its revenue from tariffs.

Matouk predicts that other negative effects to be anticipated from the FTAA treaty, should it remain in its current form include, severe unemployment and a widening of the divide between rich and poor.  He recalls that successive TT governments have committed themselves to trade agreements without consulting the business sector. “The business sector has been misrepresented by the governments which have rushed blindly into agreements. Globalization flies in the face of history. No developed country got wealthy because of free trade. They all became developed because of protection,” says Matouk. Ashmeer Mohammed, Corporate Secretary of KC Confectionary feels that the FTAA is definitely going to affect that business because countries with cheaper products are going to be able to enter TT markets. His recommended defence tactic is to ensure that the cost of raw material is such that it allows everyone to play on a level playing field. For the last three years, in anticipation of the FTAA, KC Confectionary has been engaged in a cost-cutting and efficiency exercise which includes sourcing raw materials from different countries. “Seventy percent of exporters will continue to work the export market. The wider problem is that other companies may run into trouble and this may cause a ripple effect in the economy. Remember, we operate in a synergy system,” says Mohammed.

Kelvin Mahabir, General Manager, International Business and Marketing, Trinidad Cement Ltd, notes that TT continues to negotiate market access and services. On completion — at the end of next year — there will be new regimes for imports, he says. Mahabir points out that, at present TT’s products are placed in basket B. It means that there is to be no reduction in duties until the year 2010. He says, “We are preparing as a result of the opening of the market to further improve competitiveness. We have to ensure we negotiate the best possible scenario with the private sector playing a key role.”

Trinidad Cement Ltd has had to increase expenditure on new capital and has already started to improve plant capabilities in TT in order to meet the challenge. Mahabir predicts that many other businesses will have to step up their capital expenditure as well, in addition to paying increasing attention to human resource training and progressive thinking. Regarding the larger picture, however, the disparity between the countries of the Caribbean with diverse economic bases continue to be prohibitive. “Marketwise, hopefully the CSME comes into place before the implementation of the FTAA. That will allow certain preferences that are within Caricom to stay within Caricom, and Caricom will be a stronger negotiating force,” he contends. Alan Fitzwilliam, Director of Finance and Business Development at FT Farfan and Sons, said distributers will not face the brunt of the anticipated fallout. “The manufacturing sector is going to be under a lot of pressure. People in the distribution field may have it a lot easier because as far as the methods of trading, there will be lower duties.” He relishes the idea of increased opportunity for distribution that accompanies the rise in competition but doubts that manufacturers can thrive without preferential markets. John Moses, Managing Director, A Moses and Sons, feels that the removal of duties and the resulting low price of foreign products would lead to greater variety and affordability in the market. “This is great for TT but bad for the manufacturing sector in that many of them manufacture for TT, but not for export.”

Dass Ramlal, CEO of Consolidated Appliances Ltd feels that the impact of the FTAA on his business will be minimal. “We are already competing with the major brand names and we will have more competition. As tariffs go away we will have to be careful of dumping but in general it should redound to our benefit.” He remains doubtful, however, that the treaty will be implemented in 2005. Ronald Dos Ramos, Director of Parts World Ltd, is unable to predict the impact of the FTAA on his business, stating that his knowledge of the implications of the treaty is deficient. Harry Seeram, Marketing Director of Caribbean Chemicals Trinidad Ltd, feels that it is not unusual for businessmen to be uninformed in this matter and that it indicates a pervasive lack of preparedness.“There are many barriers and rules and regulations which will come into play. In fact we are now asking for more time because we aren’t ready.”