Edward Seaga

The dispute between Jamaica and Trinidad over the supply of Liquid Natural Gas (LNG) is reminiscent of the row between the two countries over the establishment of the Esso Oil Refinery, in Kingston, in 1958.

On that occasion, Jamaica was accused of ignoring the spirit of the Treaty of Chaguaramas to establish a Caribbean Free Trade Area. In this case Trinidad as the territory with petroleum as a natural resource would be the country to pursue development of the petroleum industry to supply the region. An oil refinery was, however, being established in Jamaica. A consumption duty would be placed upon the purchase of petroleum products in Jamaica, but refunded to Esso in order to make the cost of products refined in Jamaica cheaper than imports from Trinidad and elsewhere.

This would be contrary to the concept of a free trade area, that is, an area of trade with nodiscriminatory tariff barriers. Jamaica was accused of playing a game of "putting Jamaica first". As a result of this inter-territorial dispute, Norman Manley and Eric Williams, as respective leaders of both countries, hardly spoke to each other again when they met at conferences.

Some damage was done to the cohesiveness of the Federation, which strengthened the opposition to Federation, in view of the federal view that Jamaica should not pursue its own course in this matter by acting in its own interest.

bitterness lingered

The dispute was eventually approved, but the bitterness lingered. Jamaica got the Esso refinery with the signed approval of the Deputy Prime Minister of Trinidad, while the Prime Minister was abroad.

The same problem has arisen again. This time Jamaica is peeved with Trinidad for not honouring a commitment to supply LNG for the introduction of LNG as a fuel in the Jamaican energy mix. More particularly, to supply LNG to be used as the least-cost option in doubling the capacity of the Alcoa Alumina Refinery. Without LNG, the expansion of Alcoa would not proceed, depriving Jamaica of substantial revenue and foreign exchange.

Prime Minister Portia Simpson Miller has taken a strong position with Prime Minister Patrick Manning who continues to claim that Trinidad will honour its obligations despite the view of the technical officials that it cannot.

The signal being sent is that despite all the agreements which have taken 30 years to pull the participating countries together, every country is still going to put its own interests first. This negates the "all for one and one for all" concept of CARICOM.

another area of dispute

Trinidad is protecting both its energy and manufacturing sectors as CARICOM matters of priority. The energy sector does not want to sell LNG to Jamaica, which is claiming entitlement to a CARICOM discount in price. This is another area of dispute because the entitlement is in keeping with the provisions of CARICOM. Trinidad prefers to sell its LNG to other countries such as The U.S.A., for full market price. This course avoids any squabble with Jamaica and earns more from the marketing of the product.

But beneath all this is the interest of the manufacturing sector which thrives on LNG, which is much cheaper than other fuels. This is the magnet that draws Jamaican manufacturers to establish operations in Trinidad, at times abandoning Jamaica in the process. In this way, Trinidad will continue to be the manufacturer of CARICOM and Jamaica the supermarket. This has given rise to a US$700 million import bill for Jamaica in the purchase of Trinidadian goods which are all over the supermarket shelves here. Indeed, Jamaica imports 60 per cent of Trinidadian manufactured exports. This should make Jamaica a preferred customer with special treatment, but it has not. That is the realistic nature of the Caribbean Single Market into which P.J. Patterson and other idealists have plunged Jamaica.

But all this is myopic because, there is a bigger global picture which is being lost in the small-time thinking prevalent in the region.

The world market is hungry for the limited supply of LNG. World trade is some US$30-40 million. The United States is the major user because, in part, LNG is both a cheap and clean fuel with no carbon emissions to pollute the atmosphere. Supplies reach the eastern coast of The U.S. by tankers travelling directly from suppliers. This opens the possibility of building a storage facility in Jamaica to step up supplies to The U.S. by transhipment. This facility could contract LNG from Nigeria or Qatar, or elsewhere, ending the dispute with Trinidad and opening the door to new opportunities for Jamaica.

Going this route would position Jamaica as an independent supplier instead of a dependent user.

Edward Seaga is a former Prime Minister. He is now a distinguished fellow at the UWI. Email: odf@uwimona.edu.jm.