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EDITORIAL - Jamaica Must Determine Its CARICOM Future
Published: Tuesday | April 30, 2013
Jamaica must sort out the kind of relationship, if any, it wants to have with the Caribbean Community (CARICOM) and get on with it. For Kingston's ambivalence about its place in the regional project helps no one, not least itself.
That uncertainty was highlighted in the Budget Debate again last week by the finance minister, Dr Peter Phillips, and has opposition counterpart, Audley Shaw, with remarks about Jamaica's trade deficit with the Community.
Both were concerned. But the perspective - and, therefore, their implied solutions - from which they addressed the issue was markedly different.
Mr Shaw is clearly in line with vocal members of the island's private sector who want a "timeout" from Jamaica's single-market obligation to the Community. The "timeout" lobby argues that the move will help Jamaica overcome its fiscal crisis and provide a fillip to the country's limping manufacturing sector.
Dr Phillips wants evidence of other countries' breaches of the rules, which, he implied, the Government would have addressed by the CARICOM institutions that arbitrate disputes.
Said Dr Phillips: "To the extent that breaches are confirmed, we stand ready to collaborate with the private sector."
Jamaica's primary problem with CARICOM, a 15-member trade and cooperation group, is the near US$1-billion deficit on visible trade it runs with the Community. The bulk of that deficit is with Trinidad and Tobago, from which Jamaica imports oil and manufactured products and against which there is much Jamaican anger.
Conventional wisdom in Jamaica is that Trinidad and Tobago plays unfairly by providing energy subsidies to its manufacturers who, in turn, are accused of cheating on the rules for products to be deemed of CARICOM origin, thereby qualifying for duty-free entry into other member states.
While there has, up to now, been no formal challenge against alleged product cheats, or of Port-of-Spain's domestic policy on energy, there are increasingly loud calls for Jamaica to invoke Article 43 of the CARICOM treaty, which allows members with "serious balance of payments and external financial difficulties or, threat thereof, ... to adopt or maintain restrictions to address such difficulties".
quantitative restrictions on imports
Such restrictions, allowable, in the first instance, for up to 18 months, can include quantitative restriction on imports and, conceivably, the imposition of tariffs on the imports from CARICOM states. The latter measure, private-sector lobbyists estimate, would have earned Jamaica an estimated J$17 billion in duties from its CARICOM imports in 2011, helping to narrow a fiscal deficit which was nearly eight per cent of GDP.
The suggestion is that Jamaica be allowed to maintain its Article 43 restrictions for up to four years while it concludes the economic reform agreement it recently concluded with the International Monetary Fund. What is unclear is whether CARICOM would be expected, during that period, to afford Jamaica duty-free status for its products.
Or, perhaps Jamaica may think it in its best interest to formally withdraw from the Single Market and Economy aspects of CARICOM and reapply to be, like The Bahamas, part of the functional cooperation arrangements, allowing those states interested in deeper economic integration to do so, without distractions.
That is the debate Jamaica must have - quickly - and finalise, fully understanding that whatever it decides will be no substitute for rational domestic policies and fiscal discipline.
Published: Tuesday | April 30, 2013
Jamaica must sort out the kind of relationship, if any, it wants to have with the Caribbean Community (CARICOM) and get on with it. For Kingston's ambivalence about its place in the regional project helps no one, not least itself.
That uncertainty was highlighted in the Budget Debate again last week by the finance minister, Dr Peter Phillips, and has opposition counterpart, Audley Shaw, with remarks about Jamaica's trade deficit with the Community.
Both were concerned. But the perspective - and, therefore, their implied solutions - from which they addressed the issue was markedly different.
Mr Shaw is clearly in line with vocal members of the island's private sector who want a "timeout" from Jamaica's single-market obligation to the Community. The "timeout" lobby argues that the move will help Jamaica overcome its fiscal crisis and provide a fillip to the country's limping manufacturing sector.
Dr Phillips wants evidence of other countries' breaches of the rules, which, he implied, the Government would have addressed by the CARICOM institutions that arbitrate disputes.
Said Dr Phillips: "To the extent that breaches are confirmed, we stand ready to collaborate with the private sector."
Jamaica's primary problem with CARICOM, a 15-member trade and cooperation group, is the near US$1-billion deficit on visible trade it runs with the Community. The bulk of that deficit is with Trinidad and Tobago, from which Jamaica imports oil and manufactured products and against which there is much Jamaican anger.
Conventional wisdom in Jamaica is that Trinidad and Tobago plays unfairly by providing energy subsidies to its manufacturers who, in turn, are accused of cheating on the rules for products to be deemed of CARICOM origin, thereby qualifying for duty-free entry into other member states.
While there has, up to now, been no formal challenge against alleged product cheats, or of Port-of-Spain's domestic policy on energy, there are increasingly loud calls for Jamaica to invoke Article 43 of the CARICOM treaty, which allows members with "serious balance of payments and external financial difficulties or, threat thereof, ... to adopt or maintain restrictions to address such difficulties".
quantitative restrictions on imports
Such restrictions, allowable, in the first instance, for up to 18 months, can include quantitative restriction on imports and, conceivably, the imposition of tariffs on the imports from CARICOM states. The latter measure, private-sector lobbyists estimate, would have earned Jamaica an estimated J$17 billion in duties from its CARICOM imports in 2011, helping to narrow a fiscal deficit which was nearly eight per cent of GDP.
The suggestion is that Jamaica be allowed to maintain its Article 43 restrictions for up to four years while it concludes the economic reform agreement it recently concluded with the International Monetary Fund. What is unclear is whether CARICOM would be expected, during that period, to afford Jamaica duty-free status for its products.
Or, perhaps Jamaica may think it in its best interest to formally withdraw from the Single Market and Economy aspects of CARICOM and reapply to be, like The Bahamas, part of the functional cooperation arrangements, allowing those states interested in deeper economic integration to do so, without distractions.
That is the debate Jamaica must have - quickly - and finalise, fully understanding that whatever it decides will be no substitute for rational domestic policies and fiscal discipline.
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