“Brutal” talks and the US-Caribbean relationship

Much media coverage was given to the signing on May 28 in Trinidad of a Trade and Investment Framework Agreement (TIFA) by US Vice President Joseph Biden and current Chairman of the 15-nation Caribbean Community, Haiti’s President Michel Martelly.{{more}}

But the TIFA must not be mistaken for what it is not. Although its name sounds grand, it is more a declaration of ambitions and desires than a concrete agreement with predictable outcomes and deliveries.

Further, it has been in negotiation for several years; it is not a timely gift to the region in light of the present economic and other difficulties being experienced by many of the Caribbean countries.

If the TIFA is to become meaningful, Caribbean states will have to pursue it energetically and vigorously. It is in their interest to do so.

As background, it should be understood that a TIFA was originally signed by the US and CARICOM in 1991 – 22 years ago. Over that period, it went into dormancy until in October 2006, the two sides agreed to work towards its revision to reflect global advances and to take account of regional developments, in particular, the implementation of the CARICOM Single Market and Economy (CSME), launched in January 2006.

It has taken more than six years for the negotiations to be concluded – not least because CARICOM countries have themselves slowed down perfecting the Single Market that they gave as a reason for revising the TIFA. There is always the danger that, unless the new TIFA is pursued by Caribbean countries with seriousness, workable proposals, and a high level of integration, it too will fade into dormancy.

The United States market is far too important to the countries of the Caribbean for vigorous initiatives not to be taken under the TIFA, so as to turn its promises to fulfillment and its potential into real outcomes. Despite the fact that US economic growth declined steadily for a number of years until recent months, the US is the major export market for the majority of CARICOM countries, in both goods and services.

The economies of many Caribbean countries have benefitted from the unilateral preferences granted by the US under its two programmes – the Caribbean Basin Economic Recovery Act (CBERA) and the Caribbean Basin Trade Partnership Act (CBTPA). These instruments provide non-reciprocal duty-free market access for nearly all goods from beneficiary countries within CARICOM. A few vital commodities are not included, but now might be the time to argue for them, not on a basis of national production, but on a scheme of pan-Caribbean production, rooted in the integration of the factors of production under the Caribbean Single Market.

Whether the latter most desirable development takes place or not, the point is that the US remains the biggest market for the goods and services of the majority of CARICOM countries. For example, of Trinidad and Tobago’s exports in 2010, estimated at US$12.06 billion f.o.b., the US was the number one market, taking a share of 43.7 per cent. Similarly, in respect of Jamaica’s exports in 2010, estimated at US$1.487 billion f.o.b., the US was again the top market, accounting for a share of 37 per cent. In Guyana’s case, of its total estimated exports of US$814 million f.o.b., the US was second to Canada by less than 1 per cent, at 28.6 per cent.

The preferences given unilaterally by the US to the 15-nation CARICOM countries under CBERA and the CPTBA have been questioned at the World Trade Organisation (WTO) and to the credit of the US, it fought to secure a waiver to allow the preferences to continue until 2014. It is doubtful that the WTO would extend the waiver in the future. This is all the more reason why the CARICOM countries should engage the US to explore new possibilities for trade, aid and investment.

What is required is a renewed US involvement in the region that goes beyond drug trafficking and money laundering, important as these are.

The United States-CARICOM Council on Trade and Investment, which oversees the TIFA, is supposed to meet before year-end. CARICOM countries should be pressing for that meeting, but they should also have in place concrete and realistic proposals for enhancing aid for trade, and US investment in critically-needed infrastructural projects, as well as health and education schemes. There should also be serious proposals to curb US finger-pointing at the Caribbean financial services sector, as well as US extra-territoriality schemes such as the Fair and Accurate Credit Transactions Act. These latter matters should be replaced by mutually-beneficial arrangements that are cooperative.

The Caribbean also has to appreciate that it is of less significance as a market to the US than the countries of Central America and many in Latin America. Over the last two decades, trade between the US and Central America, for instance, has grown, while trade between the US and CARICOM countries has been flat. US exports to the CARICOM region in 2012 were valued at $11.7 billion. But it has grown by six per cent since 2011 and it does represent jobs and revenues to US companies and the US economy. Nonetheless, it is not huge.

If CARICOM countries are to secure the attention of the US on development and investment issues, the US has to see a region ready to deepen its economic integration, improve its capacity for doing business and attracting investment.

As he left the Caribbean, Vice President Biden said he was aware that the Caribbean countries face unique challenges and added that the U.S. administration’s goal is “not simply growth, but it’s growth that reaches everybody.”

Caribbean governments should now hold him to his word, but they too must show themselves ready to do the work and undertake the reforms that would command the US government’s attention.

According to the Prime Minister of Trinidad and Tobago Kamla Persaud-Bissessar, who hosted the US-CARICOM meeting on May 28, the talks with Biden were sometimes “brutal”. Fortunately, they could be. It is doubtful that there will be any such “brutal” talks with the Caribbean’s next visitor – President Xi of China.

(The writer is a Visiting Fellow at London University and former Caribbean diplomat)

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