Glenford Millin, Trade Writer

On March 25, Lavern Clarke's article, 'PSOJ wants equitable trade with Trinidad', mentioned a number of concerns which seem to be developing about Jamaica's growing trade deficit with Trinidad and Tobago, and unresolved issues on the liquified natural gas proposition.

Other concerns mentioned include the private sector's perception of barriers to entry for goods and investments in T&T and the suggestion by the PSOJ, "That the problem between both countries ought to be solved through constructive dialogue and action to remove any barriers to harmonious trade."

Widen the debate

Speaking as a former economist with the PSOJ, there is scope to widen the debate.

A study of import trade data is usually a part of the investment analysis that buyers and sellers undertake in their decision-making process about sourcing goods, accessing external markets, undertaking import substitution ventures and in forming manufacturing and distribution joint-venture partnerships.

Jamaica is the largest English speaking country in the Caribbean, with a growing diversified economy that is very dependent on imports to satisfy the growing demand for commodities by residents and visitors.

PHENOMENAL IMPORT GROWTH

Jamaica imports which totalled US$1.94 billion in 1990 has grown by 244 per cent to reach US$4.74 billion in 2005 - a phenomenal level of growth - especially for an economy that for a number of years has been experiencing negative to low levels of growth rates in GDP, export and real income.

The level of imports grew by an average annual rate of 6.4 per cent over the 14 years review period between 1990 and 2004, and for the eight months of January to August 2006, imports amounted to US$3.74 billion - a 20.1 per cent increase when compared to the same period of the previous year.

Jamaica is one of the largest import markets within the Caribbean and probably the most attractive.

The country's imports are supplied mainly by countries within five main trading blocs, which supplied 86.7 per centof total imports in 2001, increasing marginally to 87.2 per cent in 2004.

In 2001, some 50.7 per cent or US$1.73 billion of Jamaica's total imports came from the North American Free Trade Area (NAFTA).

However, NAFTA's share of total imports fell by 4.04 per cent in 2004 to US$1.84 billion.

The Caribbean common market (Caricom) which supplied almost 13 per cent or US$431.5 million of Jamaica's imports in 2001, increased its market share marginally by 1.6 per cent in 2004 to US$562.68 million.

For the same review period the Latin American Integration Association also increased its exports to Jamaica from 10.48 per cent or US$356.4 million to 14.2 per cent or US$560.17 million - a growth of 3.8 per cent between 2001 and 2004.

The European Union was responsible for 8.1 per cent or US$316.9 million in 2004, a 1.2 per cent decline compared to 2001; while the Organisation of Petroleum Exporting Countries (OPEC) supplied 3.97 per cent of total imports, a marginal increase of 0.4 per cent for the review period.

Jamaica's remaining imports were supplied by a multiplicity of trading areas.

BEST PROSPECTS

Geographical and historical factors such as proximity to markets, colonisation, cultural and foreign policy initiatives, competitive prices and quality of goods resulting from technological advancement, have encouraged the Jamaican business class to buy goods primarily from companies within a preferred group of countries in the following regions:

North America (USA & Canada); Europe (UK);

Caribbean (Trinidad & Tobago);

Latin America (Brazil, Venezuela, Mexico and Colombia) and;

Asia (Japan and China).

Exporters from these top 10 trading countries together supply US$3.05 billion or 77.6 per cent of Jamaica's total annual imports in 2004.

Firms within these countries have the best prospects to advance the sale of their goods in the Jamaican market and, therefore, our "dialogue and action" about minimising trade deficits, increasing trade surpluses where possible and promoting more "harmonious trade" should be broadly focused on these 10 countries and not just Trinidad.

Within the group of dominant supplier countries, the United States of America is Jamaica's number one import trading partner, accounting for 40.8 per cent or US$1.61 billion of the country's total imports in 2004.

This compares with a market share of almost one half - 47.7 per cent or US$1.5 billion in 1997; and 43.96 per cent or US$1.49 billion in 2001.

US LOSING SHARE

The United States has been losing market share at a rate of about 1.0 per cent annually within the last eight years. Notwithstanding the decline, the U.S. is Jamaica's leading supplier of all product categories except for 'mineral fuels, beverages and tobacco' for which the U.S. is ranked number 2.

The dominance and wide acceptance of American products in the Jamaican market make U.S. the preferred supplier and its number one ranking will probably always be maintained.

The Jamaican economy cannot function without American imports.

The U.S. is Jamaica's largest export market, largest source for tourist arrivals and remittance flows but it is the country with which we have the largest trade deficit.

Research under way may soon provide some policy suggestions on how to increase our exports to the U.S. in an effort to minimise our existing trade deficit.

T&T THE NO. 2 SUPPLIER

Trinidad and Tobago with a market share of 12.3 per cent is the number 2 ranked supplier to Jamaica.

It exported US$482.64 million worth of goods in 2004 and features prominently in all of Jamaica's import categories maintaining a ranking among the top five supplier countries, except in the import categories of machinery and transport equipment (0.57 per cent) and crude materials.

Trinidad and Tobago is the number one ranked supplier of 'mineral fuels, lubricants and related materials' (37.6 per cent), and 'beverages & tobacco' products (56.98 per cent).

It's investments in the Jamaican market through joint ventures, acquisitions, new startups and strategic alliances in distribution, manufacturing, beverages and banking will play a significant role in facilitating future trade with Jamaica.

Brazil is Jamaica's number three ranked supplier of goods accounting for 4.4 per cent or US$172.43 million of total imports.

It is the number two ranked supplier of Jamaica's imports of 'manufactured goods' (14.51 per cent) and 'chemicals' (5.61 per cent), and the number four ranked supplier of 'machinery & transport equipment' (3.16 per cent), 'food' (2.21 per cent) and 'crude materials' (0.75 per cent).

Brazil is also a dominant supplier of canned food in the Jamaican market, for which it has a competitive advantage.

LATAM TRADE CLIMBS HIGHER

Venezuela is Jamaica's number 5 supplier of goods accounting for 3.7 per cent or US$146.73 million of total imports. Of this value 92.9 per cent or US$136.37 million of Venezuela's exports to Jamaica is within the category of 'mineral fuels, lubricants and related materials'.

Of the remaining Venezuelan goods sold to Jamaica, 5.4 per cent constitutes manufactured goods.

Venezuelan exporters can target Jamaica's agricultural and manufactured goods imports to increase their future sales.

Brazil, Venezuela, Mexico and Colombia supplied 12.2 per cent of Jamaica's imports in 2004 and their market share of total imports will definitely increase in the future.

The economic significance of U.S., Trinidad and Tobago and selected Latin American countries in Jamaica's import trade is evident.

Private sector lobby groups, media executives and the political directorate should promote the current 'dialogue' about Jamaica's trade relationships.

In the medium to long term, minimising our trade deficit for the achievement of a more harmonious trade can only be solved through a significant expansion of Jamaica's export manufacturing output relative to that of our trading partners.

ggmillin@yahoo.com