Deepening Collaboration between Latin America and the Caribbean for Economic
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- Delilah Nichols
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1 Remarks to the 44th Annual General Meeting and Conference Caribbean Association of Banks November 15-18, 2017, Renaissance Santo Domingo Jaragua Hotel & Casino Dominican Republic "Breaking New Ground." Topic: Deepening Collaboration between Latin America and the Caribbean for Economic Growth & Development (a focus on Manufacturing) As we consider our topic; Deepening Collaboration between Latin America and the Caribbean for Economic Growth and Development It needs to be acknowledged that there have been several formal and informal efforts to enhance trade between LATAM and CARICOM. These include several Free Trade agreements and MOUs. There is also the CARIFORUM-EU EPA, CARIFORUM being CARICOM plus the DR. And there is evidence that free trade agreements can result in increased economic growth. However, the ascendency of very strong nationalist views around the world in the past few years is impacting the stability of trade arrangements, and may result in 1
2 economic decline. What has been known from at least the 1970 s is that smaller nation states, even with widely varying economies and views, have to act together wisely to ensure their voices and positions are heard and respected by the larger nations, the WTO and multilateral agencies. So, we find ourselves, the nations and businesses of the Caribbean and Latin America, in a very challenging period. The USA is a very significant trading partner for both goods and services for most of us, but they are facing major domestic issues and at the same time becoming unfocussed on external trade and support. BREXIT, Catalonia, Austria and other factors are destabilizing the EU, another of our major trading partners. Conversely, trade between our nations is relatively low, with very few exceptions. For us in LATAM and CARICOM, this rise of nationalism has increased the risk to our businesses and economies. In business, if you face the loss or potential loss of a large supplier or customer, you aggressively go after new sources or new customers. And good businesses always see every crisis as an opportunity for positive change. 2
3 So, I ask, could this the best possible time for us to do what is necessary to finally drive substantially higher trade between us, so as to offset the potential loss of trade to the USA and the EU? Yet this opportunity is no easy thing to achieve. Remember, despite several trade agreements, actual trade in goods and services between us has not grown as hoped. Why? There have been many initiatives and extensive research to answer why trade between us LATAM and Caribbean nations has not grown as initially anticipated. Some of the hindrances to trade growth are: A number of often highly sophisticated non-tariff barriers (NTBs) that significantly add to costs and time to market The existence of a number of supply-side constraints; Absence of convenient, competitively priced and frequent shipping and air routes Absence of trade finance, receivables insurance I can confirm that GraceKennedy has had to deal with some or all of these hindrances as we have pursued market opportunities, both within CARICOM and 3
4 LATAM. Each nation has generally acted to protect their people and domestic providers. This is compounded by the cultural differences between all of our countries, and even within regions of our countries. To overcome these hurdles, individual CARICOM manufacturers, such as GraceKennedy, have had to make substantial investments to enter each new LATAM market. This is a classic high barrier to market entry, which only a few businesses have been able to afford. It is not all bad news. Let me highlight a few of the businesses that I am aware of that have succeeded. JP Foods, headquartered in Jamaica, has a thriving banana and plantain chip plant here in the DR, supplying several CARICOM nations. They also manufacture for the DR look in your bar fridge tonight! JMMB has now been in the DR for 10 years. Unicomer of El Salvador has owned Courts Furniture in many CARICOM countries for at least 10 years. The Pepsi Plant in Jamaica is owned by a Guatemalan firm. The XEROX distribution businesses across LATAM and CARICOM are mostly owned by Mussons of Jamaica. There are 4
5 several other examples of cross-border ownership and partnerships, and this is a good model for trade growth at scale. However, it needs to be made much easier to simply trade in both goods and services. A large first step is to move towards eliminating the non-tariff barriers, by developing trust relationships between all of the national competent authorities and regulators, which register, validate and regulate products and services, and getting all certification bodies and testing labs accredited. This will allow for a tested once, accepted everywhere future, a reduction in technical barriers to trade, and thus easier flows of goods and services. A second step is to move from Free to Fair Trade agreements between all of the nations of LATAM and the Caribbean, which will better address the disparities in size, maturity and the political and social realities of our economies. 5
6 If we are to meaningfully move towards Deepening Collaboration between Latin America and the Caribbean for Economic Growth and Development; then at the very least we need to complete these two steps. Finally, we are joined by geography, blessed with the tremendous strengths of our peoples and cultures, and we have a wide range of often complementary economic assets. We are now presented with a crisis to drive real change for good. We must hasten that dialogue. In a world such as ours where a change in policy is only a twitter storm away we had better band together and let it be all for one and one for all instead of every country for itself
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