Trinidad & Jamaica - The Harsh Facts!

[Historian]

Thinking about that “little matter” of a Trinidadian entity purchasing Air Jamaica got me thinking a bit about the likely Jamaican reactions to yet another piece of our pie being owned by the Trinis. There is no question in my mind that our national airline could very well be more efficiently managed by Trinidadian business interests. However, there is also the matter of our national pride in the face of a seemingly growing Trinidad hegemony (for want of a better word).

Trinidad sits atop one of the largest natural gas reserves in the world, and this country is perhaps the most resource-rich CARICOM country. That, in part, is an explanation for Trinidad’s prominent economic position in the region. But that only tells a part of the story, as I am convinced that, despite the recent massive failure of Clico, Trinidadian businessmen nevertheless have a proven track record of efficiency.

But what has the economic relationship between both countries been like in recent times? Below is a synopsis of relevant things as we ponder this question:

Trinidad & Tobago decision-makers angered many Jamaicans by reneging on a promise to provide Jamaica with liquefied natural gas (LNG). This LNG was a vital component of Jamaica’s plans to expand the infrastructure for its bauxite production. In fact, the availability of LNG from Trinidad would have lowered Alcoa’s cost of production at its Clarendon alumina refinery and as a result of the cogeneration of electricity, some of the LNG would have passed through Jamaica’s electricity grid, lowering the cost of production in the wider economy.

Prior to that, there was the takeover of Jamaica’s Caribbean Cement Company. The Trinidad Cement Limited (TCL) acquired a 43.5% stake in Jamaica’s Caribbean Cement Company Ltd. The acquisition by TCL of controlling interest in the Caribbean Cement Company in Jamaica in March 1999 was far reaching, and today makes TCL the only cement manufacturer in the English-speaking Caribbean.

Today, the TCL Group is made up of eight operating companies in Trinidad (four), Barbados, Guyana, Jamaica, and Anguilla.

The financial conglomerate Royal Bank of Trinidad & Tobago (RBTT) entered the Jamaican market when it bought Union Bank (which in turn had been formed from the merger of four failed banks of the late 1990s: Eagle Merchant Bank, Workers bank, Island Victoria and Citizens Bank).

The Carreras Group closed its cigarette manufacturing operations in Jamaica around late 2005, transferring this to Trinidad. Jamaica thereby moved from a manufacturing to a distribution-only operation.

Before this, the highly profitable Jamaica Biscuit Company (owned then, I think, by the Carreras Group) was sold in 1999 to Caribbean Brands, a Trinidad biscuit company.

Guardian Holdings Ltd. (GHL), a Trinidad-owned insurance company, entered the Jamaican market in 1999. The following year GHL bought Royal & Sun Alliance Insurance (Jamaica) Ltd and changed the name to West Indies Alliance Insurance Company Ltd.
.
Sometime around 2008 Trinidad moved to form a political union between itself and Grenada, St Vincent and St Lucia, with Prime Minister Patrick Manning calling the existing CARICOM process “too slow.” Jamaica, Belize and Suriname have refused to join any such union. PM Manning has stated that the 2012 Trinidad general election will be used as a “referendum” for his initiative to establish political union with the eastern Caribbean and other CARICOM states by 2013.

There is more that time does not permit me to include, but I hope that the facts presented above will lead to a lively discussion on this forum.

[HL]

I think a line from one of Ziggy Marley song (Kozmic) goes: 'intellect takes advantage of the simple mind....'

[Willi]

Trinida was inshambles in the late 1980s to early 1990s. Jam Mutual used to OWN Guardian Life. Indeed, I still own Guardian shares from about 1990, when I managed to get some when JM was buying like crazy! Jam was actually doing better than TnT in the very early 1990s. Oil prices back then were depresssed for years.

TnT industry retooled and came back strong, while Jam formed the fool. There is not too much difference between both countries, except that we had a Govt that messed up for 15 years out of 18, plain and simple.

They do have 1 big advantage though...with the massive industrial base from Petro/Asphalt, they have the engineering resources to spin off to other enterprises in food processing, for example. As Oil prices improved, TNT had cash to diversify.

[Historian]

A Regional Hegemony?

Trinida was inshambles in the late 1980s to early 1990s. Jam Mutual used to OWN Guardian Life. Indeed, I still own Guardian shares from about 1990, when I managed to get some when JM was buying like crazy! Jam was actually doing better than TnT in the very early 1990s. Oil prices back then were depresssed for years.

TnT industry retooled and came back strong, while Jam formed the fool. There is not too much difference between both countries, except that we had a Govt that messed up for 15 years out of 18, plain and simple.

Good post, Willi. Unfortunately, you neglected to point out here the connection here between regional oil resources and the apparent current attempts at a regional hegemony. To be specific, we see it in South America under the single-minded dictator Hugo Chavez, and we are probably seeing a glimmering of this under Trinidad’s benevolent Prime Minister Patrick Manning.

What am I referring to by my statement above?

The allusion is simple. Prime Minister Manning’s hastily assembled five-day (I’m going by memory here, so forgive me if my five-day statement is incorrect) whirlwind visit to several CARICOM states to sell the idea of a new, intra-CARICOM grouping (which Trinidad, Grenada, St Vincent and St Lucia seem to be really interested in) has to be the start of something new! New, as in “new” leadership in the region?

In the meantime, Jamaica contemplates an inevitable resort to that much-talked-about United Nations lending body, the International Monetary Fund (IMF).

[Don1]

Trinidad deconstructed

Thinking about that “little matter” of a Trinidadian entity purchasing Air Jamaica got me thinking a bit about the likely Jamaican reactions to yet another piece of our pie being owned by the Trinis. There is no question in my mind that our national airline could very well be more efficiently managed by Trinidadian business interests. However, there is also the matter of our national pride in the face of a seemingly growing Trinidad hegemony (for want of a better word).

Trinidad sits atop one of the largest natural gas reserves in the world, and this country is perhaps the most resource-rich CARICOM country. That, in part, is an explanation for Trinidad’s prominent economic position in the region. But that only tells a part of the story, as I am convinced that, despite the recent massive failure of Clico, Trinidadian businessmen nevertheless have a proven track record of efficiency.

But what has the economic relationship between both countries been like in recent times? Below is a synopsis of relevant things as we ponder this question:

Trinidad & Tobago decision-makers angered many Jamaicans by reneging on a promise to provide Jamaica with liquefied natural gas (LNG). This LNG was a vital component of Jamaica’s plans to expand the infrastructure for its bauxite production. In fact, the availability of LNG from Trinidad would have lowered Alcoa’s cost of production at its Clarendon alumina refinery and as a result of the cogeneration of electricity, some of the LNG would have passed through Jamaica’s electricity grid, lowering the cost of production in the wider economy.

Prior to that, there was the takeover of Jamaica’s Caribbean Cement Company. The Trinidad Cement Limited (TCL) acquired a 43.5% stake in Jamaica’s Caribbean Cement Company Ltd. The acquisition by TCL of controlling interest in the Caribbean Cement Company in Jamaica in March 1999 was far reaching, and today makes TCL the only cement manufacturer in the English-speaking Caribbean.

Today, the TCL Group is made up of eight operating companies in Trinidad (four), Barbados, Guyana, Jamaica, and Anguilla.

The financial conglomerate Royal Bank of Trinidad & Tobago (RBTT) entered the Jamaican market when it bought Union Bank (which in turn had been formed from the merger of four failed banks of the late 1990s: Eagle Merchant Bank, Workers bank, Island Victoria and Citizens Bank).

The Carreras Group closed its cigarette manufacturing operations in Jamaica around late 2005, transferring this to Trinidad. Jamaica thereby moved from a manufacturing to a distribution-only operation.

Before this, the highly profitable Jamaica Biscuit Company (owned then, I think, by the Carreras Group) was sold in 1999 to Caribbean Brands, a Trinidad biscuit company.

Guardian Holdings Ltd. (GHL), a Trinidad-owned insurance company, entered the Jamaican market in 1999. The following year GHL bought Royal & Sun Alliance Insurance (Jamaica) Ltd and changed the name to West Indies Alliance Insurance Company Ltd.
.
Sometime around 2008 Trinidad moved to form a political union between itself and Grenada, St Vincent and St Lucia, with Prime Minister Patrick Manning calling the existing CARICOM process “too slow.” Jamaica, Belize and Suriname have refused to join any such union. PM Manning has stated that the 2012 Trinidad general election will be used as a “referendum” for his initiative to establish political union with the eastern Caribbean and other CARICOM states by 2013.

There is more that time does not permit me to include, but I hope that the facts presented above will lead to a lively discussion on this forum.

The so called efficiency of Trinidadian businesses you reference is illusory. Their business or economic performance is not based on any special skill of their businesspeople or any extraordinary developmental policy.
Trinidad can outcompete any Caribbean nation but outside the region they are not especially competitive and have not been able to build a brand identity or significant market penetration outside the energy sector.

Trinidad's relative success is almost entirely due to an accident of geology ... not any demonstrated "efficiency"

As you point out, Trinidad has the good fortune of sitting on very significant energy reserves especially gas .. it's the leading exporter of LNG to the United States and therefore a strategic partner of that country.
Without energy resources Trinidad would be a basket case... or rather... like Jamaica.

The presence of very accessible energy reserves has led to:

1. Massive FDI over the past 20 years to develop their LNG trains... providing huge multipliers throughout their economy

2. This FDI and sky high oil prices in recent years in turn has led to massive buildup in FX reserves, a stable currency, construction boom and 7-9% economic growth

3. The very low energy costs and the low cost of capital (because money is available and inexpensive) available to their businessmen has sheltered them from economic reality... they live a petroleum fueled bubble.... a fantasy insulated from the reality energy poor countries must face.

Trinidadians picked up the carcasses of Jamaican firms felled in our mismanaged liberalization. Both our stupid, greedy businessmen and an inattentive and bewildered government conspired to create that nightmare.

With easy access to cheap money the Trinis bought our assets for a song (assets stripped of debt) and these entities were easily turned around.
This is not due to "Trinidadian efficiency".
This development was due to access to cheap capital due to their petro largesse.. period.

Trinidad has proved to be a poor economic partner (or development model) for Jamaica. They are interested in extracting Jamaican wealth (yes all our capitalists are) BUT have next to nothing to offer in terms of capital or technology transfer, superior operational practices or reciprocal market access.... this is a zero sum game in their favor.

In the instant case of Air Jamaica, Trinidadian ownership of that asset provides very low value added.... they have no significant natural market for Air Jamaica to exploit nor any significant linkage to such a market. Technology? No. Capital? Don't look for that. Best practices? Dem nuh inna dat.

Jamaica needs to look elsewhere for development partners. Trinidad is not the answer.

[Peter R]

Don... I was going to make point number 3... the cost of electricity and fuel in T&T is heavily subsidized so when manufacturers pay one tenth what the Jamaican counterpart pays for electricity, and less than half the rate of gasoline in JA it is no surprise that they do have a big advantage over the Jamaican counterpart for manufacturing costs.

ANd Historian, RBTT was bought by Royal Bank of Canada.

[Historian]

Interesting Reading

The so called efficiency of Trinidadian businesses you reference is illusory. Their business or economic performance is not based on any special skill of their businesspeople or any extraordinary developmental policy.
Trinidad can outcompete any Caribbean nation but outside the region they are not especially competitive and have not been able to build a brand identity or significant market penetration outside the energy sector.

Trinidad's relative success is almost entirely due to an accident of geology ... not any demonstrated "efficiency"

Jamaica needs to look elsewhere for development partners. Trinidad is not the answer.

The following column is a bit lengthy, but provides insightful reading.

Taken from the column below: "It is clear that natural gas and oil used in Trinidad for energy production is priced at less than the world-market prices, which non-oil-producing CARICOM countries, like Jamaica, have to pay. As a result, Trinidad's producers pay only three US cents per kWh for electricity while Jamaican producers have been stuck with electricity bills at rates as high as 25 cents per kWh (JPS inefficiency not withstanding). Such subsidies give Trinidad's producers an insurmountable advantage and are incompatible with the fundamental principles of fair trade within a common market."
CARICOM: killing us softly

Published: Sunday | June 7, 2009

Claude Clarke, Contributor



Clarke

The rhetoric in CARICOM has been alluring and beguiling. It has aroused the 'better angels of our nature' and evoked idealistic images of unity and cooperation. It has reminded us of our common heritage and joined us in hopes of achieving our common aspirations. Government after government in Jamaica have unquestioningly joined the quest for the Holy Grail of Caribbean integration. But, for Jamaica, this pursuit has, so far, been extremely costly, and frustratingly elusive.

In The Sunday Gleaner of August 10 last year, in an article titled "Jamaica's Costly Affair with CARICOM", I invited a re-examination of Jamaica's experience in CARICOM, and proposed that action be taken to correct the persistent and increasingly disadvantaged position in which Jamaica has found itself. I emphasised the fact that our government's revenue and our overall economy have suffered enormously in our trade with the region. The situation has worsened since then, and our trade deficit with CARICOM now stands at US$1.6 billion, and exceeds our total exports to the region 40-fold.

In the early 1960s, my young mind was greatly perplexed by the news that the then government had banned imports from Japan on the grounds that that country imported nothing from us. At the time, I could not help believing the decision was at best imprudent; a case of cutting off our nose to spite our face. After all, Japan had become an industrial superpower and was perhaps the world's best source of competitively priced, high-quality industrial goods needed for our own development and the satisfaction of our consumers' needs.
essential strategies of trade policy


But what my youthful naïvete did not grasp at the time was that, notwithstanding the obvious downside of the action, reciprocity and balanced trade were, and still are, essential strategies of trade policy. After all, the ultimate purpose of trade policy is the promotion and development of a country's productive capacity. Regrettably, in more recent times, Jamaica's trade policies have seen a diametric departure from these fundamental and incontrovertible principles; and the consequences have been disastrous.

Our present overall trade deficit is almost half of our gross domestic product and represents over three times the value of our exports. We have a negative trade balance with just about every country with which we trade. Within CARICOM - our membership, which was expected to provide a protected trade environment in which we could compete and grow our exports - imports have dwarfed exports by staggering proportions.

With 50 per cent of the population of CARICOM, Jamaica ought to have had a natural advantage and should have been able to dominate trade within the group. Instead, we have become the dumping ground of every country in the region. Just about every member state enjoys a trade surplus with Jamaica.

Recent difficulties encountered by some Jamaican companies in entering certain CARICOM markets have rightfully attracted outrage and prompted strong responses from our Government and the private sector. But while our Government's actions will no doubt result in the resolution of the present impasse, Jamaica's problems with CARICOM are much deeper and more entrenched than can be solved with a piecemeal approach. The permanent solution Jamaica needs has to go to the heart of the problem which affects our competitiveness in the region.

There is no doubt that the anti-production economic policies of past governments, which left Jamaica the most uncompetitive economy in the region, have been major contributors to our present hopeless trading position. However, equally damaging to Jamaica's competitiveness in the region has been the extraordinary imbalance in the substantial government subsidies given to producers in certain countries, which are not available to Jamaica's producers.

CARICOM is a free-trade market within which all producers should be on an equal footing where government assistance is concerned. It is, therefore, quite amazing that Jamaican governments have sat by for so many years and allowed the Trinidadian government, in particular, to use subsidies and other devices to put its producers on a superior competitive footing to ours. It is clear that natural gas and oil used in Trinidad for energy production is priced at less than the world-market prices, which non-oil-producing CARICOM countries, like Jamaica, have to pay. As a result, Trinidad's producers pay only three US cents per kWh for electricity while Jamaican producers have been stuck with electricity bills at rates as high as 25 cents per kWh (JPS inefficiency not withstanding).

Such subsidies give Trinidad's producers an insurmountable advantage and are incompatible with the fundamental principles of fair trade within a common market. It is surprising that Trinidad, in its obvious quest for CARICOM domination, has not recognised that its own enlightened self-interest would be better served by being more judicious in its use of energy as a weapon of trade in the region. One cannot but wonder, however, whether Trinidad was not encouraged in its actions by the apparent complicity of our own Government which had, at the same time, been sending the Jamaican economy into uncompetitiveness with misguided macro-economic policies.

Trinidad's producers now completely dominate Jamaica's market, while Jamaican producers have minimal presence in theirs. This one-way trade cannot be sustained and should no longer be tolerated by the Jamaican Government. Apart from anything else, it is depriving the Jamaican Treasury of desperately needed revenue; perhaps as much as J$20 billion of Customs duties foregone last year. How can it be rational for our Government to ask us to sacrifice revenues we desperately need for our schools, our hospitals and our security forces so as to allow subsidised Trinidadian goods to drive Jamaican goods produced in Jamaican farms and factories by Jamaican workers, out of the Jamaican market?

How many Jamaican manufacturers have been driven into the ground by Trinidadian products benefiting from three cents per kWh electricity and duty-free entry into the Jamaican market? How many workers and farmers who now stare hopelessly into the black hole of unemployment are aware of the fact that their distress is substantially the result of unfair trade practised by some of our CARICOM trading partners?

There is a good reason The Bahamas does not participate in the trade aspect of CARICOM: it cannot justify surrendering the revenue needed to provide social services to its people if it cannot gain commensurately from exports of goods to the region. What is more, the logic of protective-tariff barriers suggests that more foreign exchange is spent for CARICOM imports than would be needed to pay for similar goods imported from extra-regional sources. This is even truer in Jamaica's case, as the additional cost of imports from CARICOM could run into tens of millions of US dollars and is likely paid for with debt, adding to our burgeoning debt stock and exacerbating our debilitating debt-servicing burden.

expanding the domestic and export market

The position from which every country's trade policy should start is the objective of expanding the domestic- and export-market opportunities for its productive assets: its workers, factories and farms. No trade policy, not even CARICOM, should be accepted if it cannot be demonstrated that it will result in the achievement of this objective.


Trinidad and Tobago was accused recently of using non-tariff barriers to block the importation of patties from Jamaica. There have also been difficulties getting Red Stripe beer into the Belizean marketing.


Because the outrageous trade imbalance with CARICOM so obviously undermines and destroys the economic and social well-being of the Jamaican people, there would have to be some powerful countervailing benefit to justify it. On the other hand, it would be in the interest of any country that has a significant trade surplus with Jamaica to create opportunities for reciprocity to ensure the continuation of the benefit it enjoys.

Trinidad, which is by far the greatest beneficiary of CARICOM trade, was provided a real opportunity to reciprocate when Jamaica requested LNG supplies at its domestic price. Trinidad initially agreed, but after a long period of broken promises and unfulfilled expectations, declined the request and Jamaica's hopes for low-cost energy were dashed.
Unfortunately, Jamaica contributed as much as Trinidad to the failed outcome by employing a most ill-advised negotiating strategy. We sought to use Jamaican alumina as a bargaining chip, as Trinidad needed alumina for its planned aluminium smelter. But it should have been clear that Trinidad never saw Jamaica as a necessary source of alumina and never felt pressured to secure Jamaica as its source. Additionally, because our request for LNG was linked to the Jamalco alumina plant expansion, the Trinidadian government was far more concerned with anticipated opposition from its own electorate, which would not have taken kindly to their government giving subsidised natural gas to a multi-national company, Alcoa, which is the majority owner of the Jamalco plant. What is surprising is that the Jamaican Government did not recognise that it had a far better and more powerful bargaining chip: the enormous market Jamaica represents to Trinidad's producers under the protective cover of CARICOM.

Competitively priced energy is essential to Jamaica's economic future and our Government should have taken a much stronger stand to force Trinidad to honour its original commitment to supply our LNG on the same basis as it supplies it to its own producers. Given the circumstances of Trinidad-Jamaica trade, this should now be a non-negotiable condition for Trinidad's exports to continue to receive duty-free CARICOM treatment from Jamaica. Trinidad's exports to Jamaica exceeded US$1.5 billion in 2008 and were exceeded only by its exports to the United States.



For many years, nearly all our CARICOM partners have watched their trade surplus with Jamaica rise and the prosperity of their people grow. Many, like Trinidad, now boast per capita incomes several times greater than ours, with every indication that the gap will continue to widen. CARICOM has been killing Jamaica softly, while we have slept quietly. It is now time for us to wake up and defend ourselves. It is time to say enough. Jamaicans must now demand that our Government begin to protect us from the abuse our economy has suffered within CARICOM; and wake up and fight.
Claude Clarke is a former trade minister and manufacturer. Feedback may be sent to columns@gleanerjm.com.

[Don1]

The following column is a bit lengthy, but provides insightful reading.

Taken from the column below: "It is clear that natural gas and oil used in Trinidad for energy production is priced at less than the world-market prices, which non-oil-producing CARICOM countries, like Jamaica, have to pay. As a result, Trinidad's producers pay only three US cents per kWh for electricity while Jamaican producers have been stuck with electricity bills at rates as high as 25 cents per kWh (JPS inefficiency not withstanding). Such subsidies give Trinidad's producers an insurmountable advantage and are incompatible with the fundamental principles of fair trade within a common market."
CARICOM: killing us softly

Published: Sunday | June 7, 2009

Claude Clarke, Contributor



Clarke

The rhetoric in CARICOM has been alluring and beguiling. It has aroused the 'better angels of our nature' and evoked idealistic images of unity and cooperation. It has reminded us of our common heritage and joined us in hopes of achieving our common aspirations. Government after government in Jamaica have unquestioningly joined the quest for the Holy Grail of Caribbean integration. But, for Jamaica, this pursuit has, so far, been extremely costly, and frustratingly elusive.

In The Sunday Gleaner of August 10 last year, in an article titled "Jamaica's Costly Affair with CARICOM", I invited a re-examination of Jamaica's experience in CARICOM, and proposed that action be taken to correct the persistent and increasingly disadvantaged position in which Jamaica has found itself. I emphasised the fact that our government's revenue and our overall economy have suffered enormously in our trade with the region. The situation has worsened since then, and our trade deficit with CARICOM now stands at US$1.6 billion, and exceeds our total exports to the region 40-fold.

In the early 1960s, my young mind was greatly perplexed by the news that the then government had banned imports from Japan on the grounds that that country imported nothing from us. At the time, I could not help believing the decision was at best imprudent; a case of cutting off our nose to spite our face. After all, Japan had become an industrial superpower and was perhaps the world's best source of competitively priced, high-quality industrial goods needed for our own development and the satisfaction of our consumers' needs.
essential strategies of trade policy


But what my youthful naïvete did not grasp at the time was that, notwithstanding the obvious downside of the action, reciprocity and balanced trade were, and still are, essential strategies of trade policy. After all, the ultimate purpose of trade policy is the promotion and development of a country's productive capacity. Regrettably, in more recent times, Jamaica's trade policies have seen a diametric departure from these fundamental and incontrovertible principles; and the consequences have been disastrous.

Our present overall trade deficit is almost half of our gross domestic product and represents over three times the value of our exports. We have a negative trade balance with just about every country with which we trade. Within CARICOM - our membership, which was expected to provide a protected trade environment in which we could compete and grow our exports - imports have dwarfed exports by staggering proportions.

With 50 per cent of the population of CARICOM, Jamaica ought to have had a natural advantage and should have been able to dominate trade within the group. Instead, we have become the dumping ground of every country in the region. Just about every member state enjoys a trade surplus with Jamaica.

Recent difficulties encountered by some Jamaican companies in entering certain CARICOM markets have rightfully attracted outrage and prompted strong responses from our Government and the private sector. But while our Government's actions will no doubt result in the resolution of the present impasse, Jamaica's problems with CARICOM are much deeper and more entrenched than can be solved with a piecemeal approach. The permanent solution Jamaica needs has to go to the heart of the problem which affects our competitiveness in the region.

There is no doubt that the anti-production economic policies of past governments, which left Jamaica the most uncompetitive economy in the region, have been major contributors to our present hopeless trading position. However, equally damaging to Jamaica's competitiveness in the region has been the extraordinary imbalance in the substantial government subsidies given to producers in certain countries, which are not available to Jamaica's producers.

CARICOM is a free-trade market within which all producers should be on an equal footing where government assistance is concerned. It is, therefore, quite amazing that Jamaican governments have sat by for so many years and allowed the Trinidadian government, in particular, to use subsidies and other devices to put its producers on a superior competitive footing to ours. It is clear that natural gas and oil used in Trinidad for energy production is priced at less than the world-market prices, which non-oil-producing CARICOM countries, like Jamaica, have to pay. As a result, Trinidad's producers pay only three US cents per kWh for electricity while Jamaican producers have been stuck with electricity bills at rates as high as 25 cents per kWh (JPS inefficiency not withstanding).

Such subsidies give Trinidad's producers an insurmountable advantage and are incompatible with the fundamental principles of fair trade within a common market. It is surprising that Trinidad, in its obvious quest for CARICOM domination, has not recognised that its own enlightened self-interest would be better served by being more judicious in its use of energy as a weapon of trade in the region. One cannot but wonder, however, whether Trinidad was not encouraged in its actions by the apparent complicity of our own Government which had, at the same time, been sending the Jamaican economy into uncompetitiveness with misguided macro-economic policies.

Trinidad's producers now completely dominate Jamaica's market, while Jamaican producers have minimal presence in theirs. This one-way trade cannot be sustained and should no longer be tolerated by the Jamaican Government. Apart from anything else, it is depriving the Jamaican Treasury of desperately needed revenue; perhaps as much as J$20 billion of Customs duties foregone last year. How can it be rational for our Government to ask us to sacrifice revenues we desperately need for our schools, our hospitals and our security forces so as to allow subsidised Trinidadian goods to drive Jamaican goods produced in Jamaican farms and factories by Jamaican workers, out of the Jamaican market?

How many Jamaican manufacturers have been driven into the ground by Trinidadian products benefiting from three cents per kWh electricity and duty-free entry into the Jamaican market? How many workers and farmers who now stare hopelessly into the black hole of unemployment are aware of the fact that their distress is substantially the result of unfair trade practised by some of our CARICOM trading partners?

There is a good reason The Bahamas does not participate in the trade aspect of CARICOM: it cannot justify surrendering the revenue needed to provide social services to its people if it cannot gain commensurately from exports of goods to the region. What is more, the logic of protective-tariff barriers suggests that more foreign exchange is spent for CARICOM imports than would be needed to pay for similar goods imported from extra-regional sources. This is even truer in Jamaica's case, as the additional cost of imports from CARICOM could run into tens of millions of US dollars and is likely paid for with debt, adding to our burgeoning debt stock and exacerbating our debilitating debt-servicing burden.

expanding the domestic and export market

The position from which every country's trade policy should start is the objective of expanding the domestic- and export-market opportunities for its productive assets: its workers, factories and farms. No trade policy, not even CARICOM, should be accepted if it cannot be demonstrated that it will result in the achievement of this objective.


Trinidad and Tobago was accused recently of using non-tariff barriers to block the importation of patties from Jamaica. There have also been difficulties getting Red Stripe beer into the Belizean marketing.


Because the outrageous trade imbalance with CARICOM so obviously undermines and destroys the economic and social well-being of the Jamaican people, there would have to be some powerful countervailing benefit to justify it. On the other hand, it would be in the interest of any country that has a significant trade surplus with Jamaica to create opportunities for reciprocity to ensure the continuation of the benefit it enjoys.

Trinidad, which is by far the greatest beneficiary of CARICOM trade, was provided a real opportunity to reciprocate when Jamaica requested LNG supplies at its domestic price. Trinidad initially agreed, but after a long period of broken promises and unfulfilled expectations, declined the request and Jamaica's hopes for low-cost energy were dashed.
Unfortunately, Jamaica contributed as much as Trinidad to the failed outcome by employing a most ill-advised negotiating strategy. We sought to use Jamaican alumina as a bargaining chip, as Trinidad needed alumina for its planned aluminium smelter. But it should have been clear that Trinidad never saw Jamaica as a necessary source of alumina and never felt pressured to secure Jamaica as its source. Additionally, because our request for LNG was linked to the Jamalco alumina plant expansion, the Trinidadian government was far more concerned with anticipated opposition from its own electorate, which would not have taken kindly to their government giving subsidised natural gas to a multi-national company, Alcoa, which is the majority owner of the Jamalco plant. What is surprising is that the Jamaican Government did not recognise that it had a far better and more powerful bargaining chip: the enormous market Jamaica represents to Trinidad's producers under the protective cover of CARICOM.

Competitively priced energy is essential to Jamaica's economic future and our Government should have taken a much stronger stand to force Trinidad to honour its original commitment to supply our LNG on the same basis as it supplies it to its own producers. Given the circumstances of Trinidad-Jamaica trade, this should now be a non-negotiable condition for Trinidad's exports to continue to receive duty-free CARICOM treatment from Jamaica. Trinidad's exports to Jamaica exceeded US$1.5 billion in 2008 and were exceeded only by its exports to the United States.



For many years, nearly all our CARICOM partners have watched their trade surplus with Jamaica rise and the prosperity of their people grow. Many, like Trinidad, now boast per capita incomes several times greater than ours, with every indication that the gap will continue to widen. CARICOM has been killing Jamaica softly, while we have slept quietly. It is now time for us to wake up and defend ourselves. It is time to say enough. Jamaicans must now demand that our Government begin to protect us from the abuse our economy has suffered within CARICOM; and wake up and fight.
Claude Clarke is a former trade minister and manufacturer. Feedback may be sent to columns@gleanerjm.com.

Agree 110% with Clarke.

Why successive governments (primarily PNP led) have allowed this ridiculous state of affairs to persist.... ie Jamaica being virtually raped by smaller neighbors... is beyond me.

Time to change course.

[Historian]

Agree

Agree 110% with Clarke.

Yep, it's an excellent article from a man who is in a position to know the facts! This should be essential reading for all Jamaicans.

Why successive governments (primarily PNP led) have allowed this ridiculous state of affairs to persist.... ie Jamaica being virtually raped by smaller neighbors... is beyond me.

Time to change course.

I've asked myself a similar question a thousand times!

[Assasin]

he who feels it knows it. Claude was the man who turn around Higate Chocolate and made profit for a while. He was minister in the PNP for commerce only a pity they because fed up with his straight talk.

As we all agree he is right on this one. Jamaica became not only a free trading partner for everybody but a dumping ground for everything.

[Don1]

Trinida was inshambles in the late 1980s to early 1990s. Jam Mutual used to OWN Guardian Life. Indeed, I still own Guardian shares from about 1990, when I managed to get some when JM was buying like crazy! Jam was actually doing better than TnT in the very early 1990s. Oil prices back then were depresssed for years.

TnT industry retooled and came back strong, while Jam formed the fool. There is not too much difference between both countries, except that we had a Govt that messed up for 15 years out of 18, plain and simple.

They do have 1 big advantage though...with the massive industrial base from Petro/Asphalt, they have the engineering resources to spin off to other enterprises in food processing, for example. As Oil prices improved, TNT had cash to diversify.

Separate and apart from poor policies from the GOJ... Jamaican entrepreneurs were downright dumb and foolishly greedy in the early 1990s:

1. Overleveraging.. using high priced debt to finance dubious acquisitions... also using long term debt (real estate) to finance short term investments.... Dumb!

2. Incestutous connected party transctions.. combining banking operations with trading or industrial concerns... then lending other people's money to entities under the same umbrella.... Dumb!

3. Poor risk underwriting... lending based on personal relationships.... also getting into businesses they had no core competence in... Dumb!

4. Excessive currency speculation... betting against the Jamaican dollar in arbitrage situations. Destructive!


A really explosive cocktail of circumstances.
The 1990s meltdown was a disaster waiting to happen.... poor governance and a dumb private sector.

[Baddaz]

historian, i was about to address your post with a perspective that bears relevance and consideration... i continued to read through the posts and saw where don1 and peterr made most of my points, even more eloquent than i could have offered...

all i can say its a damn shame that bruce golding is allowing all this raping of jamaica by these smaller nations to continue...

the only thing trinidad has over jamaica is the fortune of geology and its associated benefits... nothing else...

[Muadib]

Heh, heh...

More of the slip shows with every post...

Jamaican Entrepenuers suddenly got dumb and foolishly greedy in the early
90's.. they were wise and frugal prior and and since.. which explains OLINT, Cashplus etc, etc...

LOL !!

[Muadib]

Bruce Golding ???

LOL !! WHOEEEE !!

Poor Bruce...

[Lucky4life]

and the oil