The empty promises of free trade
published: Sunday | September 14, 2003

- Reuters
Protesters carry placards during an anti-World Trade Organization (WTO) march in Tokyo, yesterday. The WTO has put pressure on the United States, the EU and Japan by demanding rich countries slash about $300 billion a year in agricultural subsidies.

Leonardo Blair, Staff Reporter

JAMAICA IS among 34 nations currently working towards the establishment of the Free Trade Area of the Americas (FTAA) which is described as an extension of the North American Free Trade Agreement (NAFTA), a conglomeration of the trading markets of the United States, Canada and Mexico which was implemented in 1994.

The aim of the FTAA is gradually to eliminate existing barriers to investment and trade among the countries, to increase prosperity and development for all parties involved. It is expected to take effect by January 2005.

Recently however, several local manufacturers, farmers, and producers in other sectors of the economy have been airing their fears regarding the impact of so-called free trade on their operations and the wider society.

They have cited differences in certain regimes of the various countries and pointed out inequalities they believe will put Jamaican producers and workers at a disadvantage.

David Gaynair, managing director of JGJ Products Ltd., charged in a recent Sunday Gleaner report that most local manufacturers will be forced out of business when the FTAA takes effect in 2005.

In another report, managing director of La India Cosmetics, Charles Henderson-Davis, said he had "no hope" in the free trade being touted.

"Our import duties are not the same, our foreign exchange rates are not the same and our interest rates are not the same," he said.

LARGEST POPULATION

"If you are from Trinidad then it is a great idea. If you are from Barbados it's a stupendous idea, if you are from Jamaica, it's a waste of time. Every country in the English-speaking Caribbean loves Jamaica because we have the largest population and the biggest market. That's why they are lobbying for the single market. Jamaica just falls in because it sounds good. We are not ready for Caribbean Single Market Eeconomy or FTAA in 2005," he added.

The fears of the manufacturers are not without merit.

Last week in an interview, executive director of the Jamaica Employers Federation, Jacqueline Coke-Lloyd, admitted that Jamaica was certainly behind Trinidad and Barbados in terms of its readiness and for the implementations of these new trade agreements.

At the same time, the Government's decision to increase the pace of liberalisation of the local economy seems to have done the country more harm than good in the short term.

The data suggest that the decision to open our borders has resulted in a worsening trade deficit which at the end of 2001 stood at US$2.199 billion. Of additional concern to people in the productive sector is the lack of information about what is being said and done in their name in negotiations.

"I don't understand how you can have people negotiating on our behalf and they have never published anything in the paper to tell us anything. I have seen nothing broken down in a way that we can understand these negotiations," said Lloyd Heath, managing director of Lloyd's Sales & Marketing in Old Harbour, St. Catherine.

As things now stand, there are currently glaring disparities between the trade practices of CARICOM countries and Jamaica.

The recent International Monetary Fund staff report on Trinidad and Tobago (T&T) for July 2003 showed that that country posted a net trade surplus of US$834 million with the CARICOM region and while its total merchandise imports were US$3.7 billion only US$93 million of that amount came from CARICOM.

In the last five years also Jamaica's exports to Trinidad have amounted to just US$93 million. Total exports from Trinidad to Jamaica however as indicated by retired senior World Bank official Zia Mian in a recent article amounted to US$1,463 million.

But while Trinidad has been saturating the Jamaican market with its goods, they seem committed to support their own manufacturers.

UNIFORMS

A report in last week's Sunday Gleaner, for example, on the decision of local firms to import uniforms for their employees noted that the local branches of the Trinidad-headquartered RBTT bank, import their garments from Port-of-Spain.

But as Mr. Heath argues, what's the use of saving a few dollars today at the expense of the livelihoods of hardworking Jamaicans?

Perhaps Jamaicans should demand that all Government agencies which bought uniforms for their workers overseas tell us exactly how much money they actually saved by abandoning our local manufacturers.

Obviously the Free Market doctrine has been pretty overpowering for the players in our economy, but it appears that our trading partners have learnt to play the game much better than we have.

Meanwhile a Ministry of Foreign Affairs and Foreign Trade official said last week that CARICOM will be "batting solidly" in upcoming trade negotiations for special and differential treatment on the basis that we are a group of smaller developing nations.

At this very moment several voices across the globe (and recently in Jamaica), have been crying foul at the trade practices of large multinationals. And many more have cited the damning effects of the trade policies of the World Trade Organisation (WTO) on the economies of developing nations like Jamaica. And as international leaders gathered for the fifth WTO ministerial meeting in Cancun, Mexico this week, the voices have become louder.

In fact in an address to the conference on Thursday, Minister of Foreign Affairs and Foreign Trade Minister, K.D. Knight, called on representatives of the World Trade Organisation (WTO) to begin dealing with inequalities being faced by developing countries as a result of agreed trade policies.

In his address to the world representatives at the fifth ministerial conference of the WTO being held in Cancun, Mexico, Minister Knight lamented the 'empty' promises of the global trade system and urged the ministers to begin to make way for more inclusive talks at the meetings on how to protect the interest of smaller nations like Jamaica.

"The global trading system has not served developing countries as a whole well... when the share of least developed countries in global trade is smaller today than it was 50 years ago, then an unmistakeable challenge is posed to the World Trade Organisation," he told ministers in attendance.

Mr. Knight argued that more powerful members of the WTO were still insisting that some countries make their borders more open despite the stark disparities in trade between nations of the developed and developing world. For many countries in the region, he argued, trade in goods and services exceeded 100 per cent of gross domestic product.

"We might be forgiven for asking those who insist that we should open our economies to more imports, what are they talking about?

"Our regional reality was that the trade deficit with the rest of the world increased three-fold from US$978.6 million to US$2,898.7 million between 1990 and 2002," he added.

Speaking specifically to the Jamaican situation, Mr. Knight pointed out that imports here had increased by 91 per cent between 1994 and 2002 while exports had declined by 8.4 per cent.

The Trade Minister noted that while as a region the Caribbean only accounted for 0.27 per cent of world trade, Jamaica would be uncompromising in making sure the WTO understood the need to address the disparities.

He also pointed to the WTO's lack of clear and predictable procedures for the preparation and conduct of Ministerial Conferences.

"It is now time for the WTO to put in place procedures and organisational modalities for its Ministerial Conferences which serve to ensure transparency, inclusiveness and effective participation," he said.

In a cry for increased fair trade in the global economy, the Baltimore Sun in an article this week called for leaders to make free trade fair pointing out that the "WTO mode of forcing poor countries to open markets to wealthy nations is not working."

It explained that in the 10 years since NAFTA was signed, 1.7 million jobs have been lost in the Mexican countryside.

"FAILURES

The failures of the WTO are nowhere clearer than in agriculture policy," the article states. "In the United States and around the globe, rural economies and farmers have been devastated by artificially low prices in almost every commodity. Large, multinational corporations now control trade in major commodities by selling below the cost of production on the global market," it further cited.

While there may be some persons willing to take the word of the guiding principles of the FTAA negotiations to ensure fair trade, others will be sceptical.

In the Document on Methods and Modalities for Negotiations in the FTAA it is noted that under the FTAA: