- The Bill paves the way for implementation of an asymmetric bilateral trade agreement between the 15-member Cariforum and the UK to ensure there are continued trade benefits for the region post-Brexit.
- It is asymmetric because Cariforum nations get duty and quota-free privileges to the UK, but UK exporters would get similar privileges over a period of time.
- There could be no reasonable opposition to an economic agreement with duty-free benefits between the region and the UK.
- But when you scratch the surface, there are some unsatisfactory trade realities.
- The Economic Partnership Agreement is similar to that between Cariforum States and the European Union.
- But if the existing 13-year agreement between Cariforum States and the EU is an appropriate guide, then the EPA with the UK would not lead to an enhancement of trade.
- The region has a negative balance of trade with the EU, with a reduction in exports over the years.
- T&T has under-performed in trade with EU countries, especially with petroleum products, as domestic production and world prices have fallen.
- As a bloc, the EU is the world’s largest economy, accounting for 20 per cent of GDP. The EU’s GDP is 14 trillion euros.
- Yet Trinidad and Tobago has only nominal trade ties and a balance of trade deficit with EU nations.
- The UK is the fifth largest exporter and fifth largest importer in the world. T&T is the UK’s 90th largest trading partner, accounting for just 0.1 per cent of total UK trade.
- A May 2019 report of the UK Department of International Trade said 1,286 VAT-registered UK businesses exported goods to T&T, and 96 VAT-registered UK companies imported into that country.
- So, while the EPA is great paperwork and a positive trade initiative, on its own , it cannot provide a fillip in exports.
- To weigh the likely results from the UK EPA, we must examine the current state with respect to T&T in the existing Cariforum-EU EPA.
- While the agreement creates preferential market access, Cariforum has slipped from a trade surplus to a deficit with the EU.
- Since 2008, when the Cariforum-EU EPA was launched, European exporters have done better than their regional counterparts.
- In 2019 – the most recent year for which statistics are available – the Cariforum nations exported 4.6 billion euros worth of goods and services and imported 7.04 billion euros. That was a trade deficit of 2.44 billion euros.
- So, even with the removal of tariff barriers, the region – including T&T – could not register a positive balance of trade. The region is currently exporting less petroleum products, sugar, bananas, alumina, rum and other products.
- The EPA between Cariform and the EU had some other objectives. Since the UK EPA is modelled in a similar manner, the objectives would also apply. It is important to examine these goals and to see how T&T has fared. Here are the objectives:
- Reduction and eventual eradication of poverty. (Under the PNM Government, poverty has worsened.)
- Promotion of regional economic integration and cooperation. (Caricom still cannot decide on a CSME.)
- Strengthening of the region’s integration in the world economy. (No evidence of this.)
- Improvement of the region’s capacities in terms of trade policies and trade-related issues. (This has not taken place under the PNM.)
- Establishment and implementation of an effective, predictable and transparent regulatory framework for investment in the region. (No headway has been made).
- Improvement of the role of the private sector. (TTMA and the national and regional Chambers have been pleading for more involvement in relevant policy-making).
- Reinforcement of the relations between the parties on the basis of solidarity and mutual respect. (There is no evidence of more meaningful diplomatic relations between the parties).
- What is the Government doing to ensure a reversal of the trade deficit with the EU and to lead to get the best from the Cariforum-UK EPA?
- At a time when the Trinidad and Tobago economy is at one of its lowest-performing levels – as a result of declining energy production, weak commodity prices, Covid-19 and other key factors – it is a no-brainer that the Government should seek to leverage the most out of the duty-free access into the UK.
- To give a boost to this country’s exporters and potential exporters, financial stimulus should be provided to niche manufacturers so they could fully benefit from the duty-free status.
- SMEs should be granted incentives in order to enter the export market. The Minister has touted the long-standing trading relations with the UK, but has not announced a pathway to reap significant and sustainable financial benefits from this new EPA.
- In fact, with the impending increases in water and electricity rates, property tax etc, domestic cost of production is likely to increase, affecting the competitiveness of our products. Due to escalating crime , Higher charges for security, transportation and other services would also affect production costs.
- What layer of protection is the Government giving to local exporters and potential exporters?
- Is the Government cooperating with the Manufacturers Association to create a more conducive environment for entrepreneurship and innovation?
- The TTMA has been requesting certain trade facilitation measures in order to double exports to TT $7 billion by 2025.
- The Government must review all applicable trade policies.
- The Government must also speed up its digitisation process, including the effective implementation of e-commerce windows.
- Innovation, an efficient and trained workforce and the cooperation of the labour sector, modern technology, updated intellectual property matters, marketing thrusts, competitive labelling and packaging are all required if T&T is to gain from his EPA. And the Government must provide purposeful leadership!
- In some cases, manufacturers and prospective exporters are not fully aware of the benefits of the Cariforum-EU EPA.
- An education campaign must be undertaken for both the EU and UK agreements. Some exporters have opted for nearby markets.
- But they may be passing up opportunities in the large European market. In addition, Cariforum countries should collaborate with each other in defining common goals.
- They should pool resources in tackling the structural challenges, and in improving the business environment.
- On that score, strengthening the Caribbean Single Market and Economy would assist regional countries with respect to the EU and UK EPAs.
- Even though the energy sector remains T&T’s economy mainstay, the Government is dilly-dallying while production declines and export markets dwindle.
- The slow privatisation process for Petrotrin has become a national scandal. It is time that a viable business model be created and implemented for this potential money spinner.
- The Government must also execute measures to attract up-stream and downstream energy investors and to revive Point Lisas plants.
- It is clear that the piecemeal policies and incentives have not achieved their intended purpose.
- What is the natural gas pricing formula for the new Niquan-GTL plant at Pointe-a-Pierre, and could it be applied to gas-based commodity manufacturers?
- The Government must become proactive and innovative! In his most recent budget address, the Finance Minister said the Government is committed to improving the investment climate in the energy sector. What exactly has been done and what are the results?
- There is another urgent energy export issue: The British Prime Minister Boris Johnson told the 2020 Climate Change Conference that his Government would move to end taxpayer support for fossil fuel projects overseas.
- This could mean an eventual rollback on investments in T&T by British energy companies.
- If so, this will hit T&T where it hurts, leading to reduced taxes, a greater foreign exchange crisis, lower employment and setbacks for the downstream and services sector.
- The Government has not announced a response to that British policy. This also brings into focus whether T&T is meeting its carbon emissions goals, according to the Paris Climate Accord.
- Trade in services to Europe is mainly in tourism, which was declining even before Covid-19. There was a 1.9 per cent decline in arrivals of Europeans to Cariforum countries in 2019, compared to the previous year. According to the T&T Immigration Division, the number of European visitors to T&T fell from 64,877 in 2014 to 51,788 in 2019.
- About 30,000 British nationals visit T&T each year. But the British authorities have been warning about the state of crime in this country.
- The most recent travel advisory, issued on January 8, 2020 – just before the Covid-19 outbreak – paints a dire picture of security in this country.
- The report stated: “There are high levels of violent crime in Trinidad, including murder, particularly in the capital city, Port of Spain. Terrorists are likely to try to carry out attacks in Trinidad and Tobago. Attacks could be indiscriminate, including in crowded spaces and places visited by foreigners.”
- The UK authorities have also expressed concerns about public health in this country.
- The 2020 advisory stated: “There is a risk of mosquito-borne illnesses in Trinidad and Tobago.
- UK health authorities have classified Trinidad and Tobago as having a risk of Zika virus transmission.” The T&T Government has not advised the British authorities that Zika is not longer an urgent health danger in this country.
- This is another example of the Government’s trade mark sloppiness.
- There is marginal trade with EU countries in cultural services, such as musicians, fashion models, designers etc.
- There is a reason for this low trade in services – some providers face difficulties with respect to visas, language, certification and other issues.
- Is the Government seeking to resolve these problems through services and cultural protocols with the UK and also the EU?
- What is the T&T High Commissioner to London doing to repair this problem? \
- The new EPA offers an opportunity for our cultural ambassadors to peddle their wares in Britain, a country with which T&T has deep historic ties. What is the Government doing to guarantee a level playing field and greater opportunities for locals?
- The EPA with the EU creates provisions for easier investments in Cariforum States.
- Still, Trinidad and Tobago has not been able to attract any investments from the EU (or any other part of the world) over the past five years.
- The same is likely to result from the EPA with the UK. That is largely because T&T ranks poorly on Ease of Doing Business indices.
- The PNM Government has made T&T extremely unattractive to investors. Is the Government finally making strides in improving its current standing from 105 of 190 countries, as the Minister of Finance had pledged in his most recent Budget address?
- Official British documents on trade highlight T&T as 105th in the world. This would not be appealing to prospective investors, who, in a liberalised world, have the opportunity to take their investment dollars virtually anywhere.
- The Kamla Persad-Bissessar Administration had made T&T one of the most competitive and attractive investment destinations, and our country reaped the financial rewards for that good work.
- This new EPA gives the Government the opportunity to reset the investment dial.
- Are there any new and measurable trade advantages for Cariforum countries – and T&T, in particular – of a United Kingdom delinked from the EU?
- In 2019, Cariforum exports to the UK were 11 per cent of all exports and 9 per cent of total EU imports.
- Cariforum’s exports to the UK were worth 478 million euros. T&T and other Cariforum countries must carefully study and report on whether a post-Brexit UK offers any peculiar trade opportunities that were not enjoyed with the EU EPA. That relevant trade information must be made available to all domestic stakeholders and throughout the region.
- Under both EPAs, Cariforum countries are to fully phase out duties to EU countries by 2033. This means that European goods and services would become much more competitive in the region.
- They may well flood our markets and squeeze out local products.
- What is the Government’s roadmap to 2033? What specific measures are being taken by T&T to give our local products an identifiable edge and to prepare for an avalanche of such goods and services?
- 2033 is just a dozen years away: There should be a working manual with time-bound goals and objectives.
- While this EPA allows for the removal of tariffs, there is a critical issue with respect to non-tariff barriers that is not being dealt with by the Government.
- Inefficiencies at the port and at Customs are the major non-tariff humbugs. A study by the International Financial Centre has confirmed these obstacles.
- Matters such as onerous documentation, the arbitrary behaviour of certain personnel, and the overlap of various administrative organisations and windows are also impediments to trade.
- The Kamla Persad-Bissessar had made significant gains in reducing these bottlenecks. The Government must build on that through legislative review and reforms, use of TTBizlink system, new scanners at the major ports, and other effective measures.
- The Government must implement the IFC recommendation of a strengthening of inspection and certification processes at key government agencies.
- St. Lucia, a Cariforum member, has taken concrete measures to prepare maritime and other sustainable industries in light of the collapse of tourism because of Covid-19, and to attract international investors.
- Worker skills are being upgraded for free. This is an example of a small island state evolving its economy because of the current economic imperatives.
- In T&T, the PNM Government has still not taken any steps to diversify the economy, to attract investors and to boost exports in order to take full advantage of the UK and EU EPA.
- The foreign exchange crisis, along with the forex black market, is a huge blow to the manufacturing sector and would increasingly render our products internationally uncompetitive.
- This crisis could make the EPA meaningless to current manufacturers and aspirant exporters. Again, there have been no measures to confront this worsening emergency.
- Special emphasis must be placed on cultivating markets for food, paper, beverages, minerals and spirits, for which there are sizable markets in the UK and the rest of Europe.
- In all of this, questions must be asked about ExportTT, which is the taxpayer-owned agency designed to facilitate and grow local exports.
- ExportTT says its mandate is “to focus on building internationally competitive brands, improving the business environment, and harnessing the differentiating factors that set Trinidad and Tobago exports apart in the global market place.”
- Lovely language! But the Minister must account to the nation on what specific and measurable trade benefits ExportTT has brought.
- This must be quantified for the country. The population must also be told of the agency’s strategic plan, how it plans to work with TTMA and how it aims to get the best results from the Economic Partnership Agreement with the UK.
- Trinidad and Tobago remains blacklisted by the European Union for non-compliance with respect to taxation and other financial regulations.
- How would this impact the EPA with the UK? What is the Government doing to have this blacklisting removed?
- Barbados has undertaken the relevant measures and has been removed as a blacklisted country. The PNM administration has made T&T an embarrassment to other Cariforum countries.
- The Government must utilise this EPA not as an end in itself, but as an opportunity to refocus on exports, by assisting both the public and private sectors and by removing critical logjams.
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