H.E. Robert Ameerali, Vice President of Suriname,
Hon. Stephen Cadiz, Minister of Trade and Commerce of Trinidad and Tobago,
Hon. Anthony Hilton, Minister of Industry, Investment and Commerce of Jamaica,
Secretaries-General of integration and cooperation systems,
Representatives of international and regional organizations,
Chairmen and CEOs of Caribbean and Central American Countries,
Members of the Corps Diplomatique,
Specially invited guests,
Ladies and Gentlemen,
I am honored by the invitation of the Government of Trinidad and Tobago to address this important audience, as we recognize the strength of the Caribbean and its potential to become the launchpad for business and investments in the Americas.
I congratulate Minister Cadiz and the Ministry of Trade of Trinidad and Tobago on the organization of the overall Caribbean Investment Forum, the Trade and Investment Convention and the support they have provided to the OAS in joining with my office to host the Meeting of CEO’s and Chairmen from Central America and the Caribbean. All of these events recognize the billions of dollars in existing and potential business in this part of the Western Hemisphere.
Ladies and Gentlemen, every day we witness the continuing shift in the balance of power in the global economy as it undergoes far-reaching changes. New and emerging dynamics are already having an impact on our governments, the way we do business, our people and our future.
The crisis of finance and governance in parts of Europe, the emergence of new powers in China, India, Brazil, and the developments in the Middle East, will continue to impact people, products and flows of capital. So how is the Caribbean region positioned to face of these changing dynamics, and how can it adjust to benefit effectively from these changes?
One of the most important drivers of economic development in the last three decades -not only in the Americas but also across the globe- has been the continuous reduction of barriers in the movement of goods and financial assets.
As it stands, the reality is that in global terms, the Caribbean as an export market is not immediately or obviously viewed as a commercially viable option. To be able to respond and benefit from the global and regional developments effectively, economic interests must be closely linked to foreign policy execution. Now, more than ever, the Caribbean's foreign policy must be pro-active, principled, pragmatic, strategic and intelligence based. In the current global dynamic, the sub-region cannot afford to respond with short-term, ad-hoc, emotional and unprepared responses.
Ladies and Gentlemen: In my view, the Caribbean region holds significant potential. The time has come, however, to move past simple potential, and maximize the opportunities before us. Our Caribbean region is well-positioned to take advantage of new opportunities offered by the transformation of trade in the 21st century. As a launch pad to the Americas, we offer:
o Prime Geographic location: between two major markets, the richest and the emerging one, in total almost 400 million people;
o Proximity to the largest and richest economy in the world; as well as to the Panama Canal;
o Effective functioning democracy that guarantees political and social stability;
o Relative financial and economic stability and regulatory framework;
o Professional and educated civil service;
o Engaged civil society;
o Attractive climate: sun, sand and sea.
Today, most countries in the Americas have implemented sweeping trade liberalization measures and have slashed barriers to foreign direct investment (FDI), a clear signal of the importance of trade, integration and cooperation in their development strategies. For example, at the time of the first Summit of the Americas in December 1994, few countries in our hemisphere had signed free trade agreements (FTAs) with other partners.
Since 1994, 75 new FTAs have been signed by OAS Member States, of which 65 are now in force. The success of intra-regional trade agreements signed by OAS Member States is such that by 2015 these agreements will have freed more than 95 percent of the covered products at the regional level. To expand their trade opportunities, OAS Member States have also reached out to countries beyond their borders negotiating FTAs with non-hemispheric partners, including China, the European Union, India, Japan, Singapore, and South Korea.
Now, if we look at the Caribbean region, CARICOM is a relatively new player with respect to fully reciprocal free trade agreements. In fact, the CARIFORUM-EU Economic Partnership Agreement (EPA) of 2008 is the first comprehensive trade agreement ever signed by CARICOM Member States. The trade and development agreement with Canada being negotiated since November 2009 will undoubtedly also be far reaching and comprehensive, covering not just goods but also services, investment, and intellectually property, among other issues.
Traditionally, CARICOM has negotiated and signed trade agreements with countries in the Caribbean Basin (Colombia, Costa Rica, Cuba, Dominican Republic, and Venezuela) where in most cases only CARICOM’s more developed countries (MDCs) are required to grant market access concessions for goods.
Partial scope agreements between Belize and Guatemala, in force since April 2010, and the negotiation of a new partial scope agreement between Trinidad and Tobago and Panama, and Guatemala will also help increase trade between CARICOM and Central America.
Ladies and Gentlemen: Although CARICOM trade agreements have been in place for some time, the exports to countries with which CARICOM has signed trade agreements have not increased as much as anticipated. Opportunities do exist but CARICOM business people must be aware of them, and ready to take advantage of them.
A recent joint study prepared by ECLAC and the OAS on the “Relations between CARICOM and Central America and the Dominican Republic” shows that CARICOM goods exports to Central America grew at an average rate of 5% between 2000 and 2010. The study also identifies 20 products where there is a growing demand in Central America. For example, fresh or chilled fish is a product for which demand has jumped sharply in the last nine years in the Central American market and which countries such as Belize could export to the sub-region in greater quantities. Trinidad and Tobago, and perhaps other CARICOM countries, could also take advantage of rising demand for prepared chemical products in the Central America.
Market intelligence is fundamental if the Caribbean is to take advantage of trade agreements and trade opportunities. Trade agreements provide market access and opportunities to the private sector but not market presence.
Let me repeat the point I made at the beginning of my presentation. CARICOM has the potential of being the launch pad for trade in the Americas, however, to get there we must address a number of challenges:
o First, it is imperative that we become more “private sector savy,” and identify mechanisms which will provide information to our private sector on the opportunities that exist in our region and beyond. What are the opportunities for CARICOM producers and service providers in Central America, the Dominican Republic and in the fast growing markets of Brazil, Chile, Colombia, and Peru? How can we take advantage of the EPA signed with Europe? What sectors? What countries?
o That is why my office this week is bringing together some of the top ceo's and chairmen from the Caribbean and Cental America to discuss trade and investment opportunities.
o We also need to modernize our trade agreements so that they all cover services, investment, intellectual property and innovation.
o Equally the Caribbean needs to invest more in language training, connectivity and security to support regional and international business' presence in the Caribbean, whether it is international headquarters, regional offices or production and/ or makeryng centers.
o We must strengthen the political and economic institutions assisting our micro, small and medium-sized enterprises (MSMEs), a sector which accounts for 90% of the jobs and more than 70% of GDP in the Caribbean. With the right support and structure, these businesses can play an even more important role in the production network offering opportunities for increased prosperity and poverty alleviation throughout the CARICOM region. This is why at the OAS, following a regional consultation with CARICOM stakeholders, which took place this past September, we are implementing in five pilot countries (Barbados, Belize, Dominica, Jamaica, and St. Lucia) the Caribbean Small Business Development Center Project, which seeks to help build the capacity of Caribbean MSME support institutions so that they are capable of providing the specialized counseling, training, and mentorship programs that will guide businesses in growing and becoming more competitive, paying special attention to youth and women entrepreneurs. We will also be organizing this coming September [Sept. 10-11] in New Orleans a Hemispheric Dialogue of High-Level Authorities Responsible for SMEs to share successful experiences from the region and beyond.
o We also need to help foster a culture of entrepreneurship and focus on youth entrepreneurs. They have less capital in the form of skills, knowledge, experience, savings, and access to credit. They also have limited business networks and less access about job vacancies. What can be done?
Partnerships between education and training institutions and the private sector would help ensure that school curricula match the skills demanded in the labour market. Internships, apprenticeships and one-the-job training should be built into university and vocational training programs to facilitate school-to-work transitions.
It is also important to ensure that young people are trained in non-technical or “soft people” or “life” skills, such as communication, leadership, teamwork, professionalism, and time management.
Facilitating finance via venture capital and angel investment, complemented by mentoring for promising entrepreneurs, can boost small business creation and overall economic growth.
Create incentives, reward innovation and allow for broad participation.
Ladies and Gentlemen: When it comes to youth, I must acknowledge that here in this room, there are several “young” businessmen, under the age of 40 already operating multi-million dollar companies in the Caribbean and Central America. For the future of our economies to be secure, we must encourage more opportunities for entrepreneurs of all ages.
Finally, let me address another major important issue. Most current economic, social, education and trade policies in CARICOM and elsewhere in the world are designed with the view that goods are made in one nation, put on ocean cargo ships and sold to customers in another nation. But let’s remember that starting in the mid-1980s telecommunication advances united with vast strides in computing power, transmission capacities, and software to create the ICT revolution. It became increasingly economical to unbundle the factories spatially, and once feasible, scale economies and comparative advantage made separation inevitable. This made it easy for firms to combine their high technology with foreign workers. The first examples came in 1985 across the US-Mexico border and within East Asia. This created an important distinction – what might be called 20th versus 21st century trade. 20th century trade is the selling of goods made in factories in one nation to customers in another. 21st century trade involves continuous, two-way flows of things, people, training, investment, and information that used to take place within factories and offices in one country. This has deep implications for a wide range of policy questions.
Of course, 20th century trade is still with us, and is very important in our region, but the most dynamic aspect of trade today is the development of global value chains (GVCs). This means that business has come to rely on the trade system when making things (international value chains). As a result, business cares about a much broader range of policies and barriers – many of which are not typically considered to be trade issues since they didn’t hinder selling things internationally. Examples of today’s ‘trade barriers’ range from unreliable electricity supplies and unobtainable short-term business visas, to capital restrictions and anticompetitive behaviour of state-owned enterprises.
In closing, let me ask the following question: How can the CARICOM private sector and our neighbours in Central America and the Dominican Republic join international production networks? The increase in international fragmentation of production has opened new opportunities for developing country producers and service providers. Fragmentation and vertical specialization eliminate the need for a national economy to gain competency in all aspects of production and allow developing countries to enter into networks of cross-border production by focusing on just one (or a few) facet(s) of production activities involved in making a final good.
The challenge for us in CARICOM is clear. Countries with strong, accountable and responsive political and economic institutions, adequate transportation and logistics infrastructure, good-quality telecommunication and information services, and institutions that respect and protect contracting relations with entrepreneurs located in other countries, are more likely to join global value chains and creat economic success.
So the Caribbean has to be realistic and pragmatic to make 21st century trade create sustainable and prosperous societies. The option of commercial protectionism and economic nationalism does not apply to this region. Tough choices will have to be made. This region has to be open to business and Governments must facilitate that. Keep what is good and what has worked. But eliminate what is counter productive to doing business. It cannot be business as usual, but business it must be !
I thank you for your attention.