MANNING INITIATIVE HAS INVESTOR APPEAL

Prime Minister Patrick Manning’s move to win Most Favoured Nation status from the United States for critical Trinidad and Tobago items, namely petroleum, iron, steel and aluminium products, which today are not included in the Caribbean Basin Initiative (CBI), will have undoubted investor appeal if successful. Although they will not have the duty free access of goods which enter the United States under the CBI, nonetheless, should the Manning plan be accepted the products will be subject to the lowest duty imposed on similar items from any country which today enjoys Most Favoured Nation status with respect to steel or what have you. For example, should the US duty on steel be five percent then this is the duty the item will attract.

This will result in steel majors, whether from the Americas or the European Union or from wherever, seeking to invest here to take advantage of the ability to access the United States market at prices appreciably far below what obtains generally. Whether the United States will grant Most Favoured Nation status to the goods, which the Prime Minister put forward in discussions with Robert B Zoellick, President George Bush’s principal trade policy adviser and chief trade negotiator during his recent visit to Washington, DC is another matter. Indeed, this country first raised the question of Most Favoured Nation entry for petroleum several years ago, but without success. An immediate principal beneficiary will be British Petroleum, which only relatively recently acquired the shareholding of AMOCO Trinidad Oil Company. Perhaps I should explain at this stage that the Government of the United States reserves the right to add products to its list of those referred to above under its Most Favoured Nation process.
But there are Trinidad and Tobago conferred benefits which potential investors will be able to obtain in addition to low duty access to the US. I quote from what has been described officially as the State’s business incentive regime: “Double taxation relief; Accelerated depreciation; Tax holidays up to a maximum of ten years; Investment/Capital allowances; Carry over of losses incurred during the exemption period; Export allowances; Import duty exemptions and Conditional reduced rates of import duty.”

And as former Prime Minister Basdeo Panday pointed out in an address to a trade and investment seminar in Miami in April of 1997, critical elements of his Administration’s measures “designed to generate sustained export-led growth and development” were inter alia the provision of Customs duties, the revision of our investment legislation and the provision of fiscal incentives to foreign investors and local exporters. A key factor in attracting foreign investors to Trinidad and Tobago is the country’s social stability. So that even as we bend backwards or rush to offer potential investors the “Sun, the Moon and the 11 Stars” to set up shop here, what will make the difference between their coming to TT or going to another country is the recognition that their investments will not be subject to unnecessary interruption. Most persons, this columnist included, are for increased investments. But the question must be asked: Is this country obtaining the best deal for what it is offering to investors, and has been since the 1950 Aid to Pioneer Industries Ordinance? Pioneer Aid was a colossal failure where this country was concerned. Some of the foreign investors came with relatively old plant and equipment stayed for the tax free period guaranteed under the Income Tax (Aid of Industry) Ordinance of 1950, dismantled their machinery, shipped it to another country or colony offering Pioneer Aid and left. The process would later be repeated.

Earlier I had referred to the possibility of additional oil companies being attracted to Trinidad and Tobago should this country’s petroleum be accorded Most Favoured Nation status. Government should, as a condition for the granting of licences for them to operate here, insist that they establish refineries in TT as demanded by law, once their production requires it. This was waived for Amoco when it began operations here in the 1960s, but should once again be mandatory. In turn, Government should seriously consider encouraging the expansion of downstream petroleum related industries, as well as passing into law a requirement that all new foreign investments have a predetermined percentage of Trinidad and Tobago shareholding. For even as we welcome new foreign investment, nationals must be seen as partners in the development and rewards of their country’s patrimony.