Globalisation and the Caricom external trade maze Guyana and the wider world Stabroek News December 3, 2000 The Old Order Last week we began our examination of globalisation and international trade by referring to two important features of that trade, of which we should all be aware. One is the transition underway from the old trade order to what is called the emerging new liberal trade order. We saw that the old order was based on treating countries at different levels of development differently, so as to reflect their different capacities to benefit from international trade. Thus trade preferences, non-reciprocal obligations and rights, aid linked to trade, and a heavy reliance on protection through quotas and import licences characterize trade policies in the old order. The New Order The new liberal trade order rejects all such types of trade policies. Preferences and non-reciprocal obligations are expected to give way to full reciprocity, and a situation where all countries are treated as equals in trade. The only barriers to trade should be "price barriers" or tariffs. Administrative barriers like quotas and import licences are prohibited. Moreover, as we shall see, specific pledges have already been made by countries at the end of the Uruguay Round of trade negotiations (1994) for the progressive reduction of tariffs over time. Before we can evaluate the new liberal trade order and appreciate therefore, the significance of all this for us in Guyana and the Caribbean, we need first to have an idea of the structure of our external trade relations. Preference - dependent There is not enough recognition among the public at large of the complexities of our external trade relations. The Caricom region is probably the most preference-dependent region in the world. The production and export of some of our best known products, like rice, sugar, rum, and bananas depend on preferential access to markets in Europe and North America. Without this access, these products will not survive. For many years we have also enjoyed the benefits of the linkage of preferential trade to aid. Much of the aid went into the same export industries we were selling in preferential markets. A lot also went into infrastructure such as schools, hospitals, roads, and drainage and irrigation networks. The result of all this is that Guyana (and Caricom) have the most complex and tortuous network of external trade relations imaginable. It is a virtual maze that revolves around at least ten separate clusters of agreements. Not surprisingly these clusters combine both principles of the old and the new liberal trade order. For the rest of this week's article I shall briefly identify the features of this maze. The maze The maze begins with our obligations to the World Trade Organisation (WTO). This is the overarching umbrella under which the new liberal trade order will develop. There are also WTO related matters such as the Generalized System of Preferences (GSP) and matters related to the special and differential treatment of size and vulnerability through the Small Island Developing States (SIDS) initiative. Second, since the mid 1970s we have been a signatory to the Lomé Convention with the European Union. This in many ways has been the main bulwark of our preferential trade. Recently it was re-negotiated as the Cotonou Agreement in June 2000. In the series we shall discuss this at some length. Third, we are also involved in negotiations for a Free Trade Area of the Americas (FTAA), which among other things hopes to establish a hemispheric free trade area. Paralleling this, there are also ongoing negotiations for the extension of the Caribbean Basin Initiative (CBI) and the North American Free Trade Agreement (NAFTA) to give Caricom some parity. President Clinton gave assurances at the US/Caricom Summit in 1997 that the US government would facilitate this. A recent agreement, in part pertaining to textiles was put in place in October. Fourth, since 1986 we have been a signatory to the Canada Caribbean Trade Agreement (CARIBCAN). This provides non-reciprocal duty free access for some Caribbean exports into the Canadian market. Fifth, Caricom has benefited from non-reciprocal trade agreements with Venezuela (1993) and Colombia (1996). In addition it has recently concluded separate trade agreements with the Dominican Republic and Cuba. This is therefore the sixth cluster. Seventh, Caricom is also exploring trade arrangements with other regional integration schemes like the Central America Common Market (CACM) and Mercosur Eight, Caricom is part of the wider Caribbean grouping of the Association of Caribbean States (ACS), and has trade relations with it. Further, within Caricom we find the ninth cluster in the sub-regional grouping of the OECS and the proposed, but now dormant, Manning Initiative coming out of Trinidad. Finally, there are several special bilateral external trade and business relations that we have with countries like India, Japan, and Brazil. Next week we shall examine the economic rationale behind the promotion of the new liberal trade order, which many portray as the best guarantor of global progress and efficiency. Follow the goings-on in Guyana in Guyana Today