1 CARICOM-DOMINICAN REPUBLIC TRADE RELATIONS: CHALLENGES & OPPORTUNITIES 6 th Meeting of the CARICOM-Dominican Republic Business Forum 30 March 2011 Kingston, Jamaica By Dr. David E. Lewis – Manchester Trade Ltd.

2 1.BACKGROUND OF CARICOM-DR TRADE RELATIONS 2.CARICOM-DR TRADE TO-DATE: REVIEW AND ANALYSIS 3.CARICOM-DR TRADE AND INVESTMENT FLOWS AND SECTORS 4.EXPANDING TRADE AND INVESTMENT FLOWS: OPPORTUNITIES AND CHALLENGES 5.DEEPENING/EXPANDING CARICOM-DR FTA: SOME RECOMMENDATIONS

BACKGROUND OF CARICOM-DR TRADE RELATIONS st STUDY BY BERNARDO VEGA, CARLOS DESPRADEL, AND MIGUEL CEARA-HATTON 1980S DISCUSSIONS OF ADVANCING DR-CARICOM TRADE RELATIONS: DR ENTRY TO CARICOM?, DR ENTRY TO LOME-ACP? OUTGROWTH OF CBI PARTNERSHIP WITH US SINCE 1984 PRESSURES FROM SPAIN-FRANCE RE: MATURATION OF EU-ACP RELATIONS AND OF LOME CONVENTION; HAITI INCLUSION FACTOR

4 LACKING ANY EFFECTIVE REAL ECONOMY INTEGRATION 1989 DR ENTRY TO ACP-ACP CONVENTION 1991 CARIFORUM 1990S DECLINE OF CBI-FTZ MODEL IN CARICOM AND GROWTH OF DR CBI-FTZ-FTA MODEL 1990S-2000S: CLOSER DR-CENTRAL AMERICA INTEGRATION AND TRADE COLLABORATION VIS-A- VIS US MARKET, NAFTA PARITY, AND FTA-US

CARICOM-DR FTA NEGOTIATIONS 1998 CARICOM-DR FTA CONCLUSION AND SIGNING PARALLEL DEVELOPMENTS DR-CENTRAL AMERICA FOR FTA WITH US CAFTADR NEGOTIATIONS, ENTRY INTO FORCE AND IMPLEMENTATION PARALLEL INCLUSION OF DR INTO VARIOUS CENTRAL AMERICAN INTEGRATION ARRANGEMENTS: SICA, SIECA, BCIE-CABEI

6 DR IN : MAJOR FOCUS ON US-CBI AND THEN CAFTADR TRADE OPPORTUNIES IN MANUFACTURING EXPORTS AND NEW GROWTH OF SERVICES CARICOM IN : INITAL INTEREST IN DR AS CBI-US MARKET DWINDLED. E.G. REPUBLIC BANK, S.M. JALEEL, RUMS, NEAL & MASSY DR IN 2000-PRESENT: DOMESTIC AGRO AND MANUFACTURING/INDUSTRY INTERESTS IN CARICOM MARKETS

7 CARICOM IN 2000-PRESENT: CSME FOCUS, TRINIDAD-COSTA RICA FTA, CANADA-FTA? 2 DECADES OF RELATIVE MINIMAL INTEREST ACROSS MARKETS, BUT LACKING DRIVING FORCES BEYOND FORMAL FTA AND GOVERNMENT RULES AND REGULATIONS (BUSINESS COUNCIL, JOINT MINISTERIAL COUNCIL, CARIFORUM) EU-EPA DIFFERENCES AND DIFFERENTIATION BETWEEN DR AND CARICOM

8 IN ESSENCE THESE ARE COMPETITIVE NOT COMPLEMENTARY STRUCTURES OF PRODUCTION AND MARKETS, BEST SUITED FOR JOINT VENTURES AND INTEGRATION OF SUPPLY-CHAINS THAN FOR FTA E.G. CENTRAL AMERICA EXPERIENCE FOCUSED ON SME AND CUSTOMS UNION AS OPPOSED TO A FTA. FTA FOCUS CAME AFTER FOR CAFTADR-US

(DECEMBER) CARICOM-DR FTA ENTRY INTO FORCE RECIPROCITY WITH CARICOM MDCs (BARBADOS, GUYANA, JAMAICA, SURINAME, T&T) NON-RECIPROCITY WITH THE LDCs (BELIZE + OECS ) UNTIL 2005 ASYMMETRICAL APPLICATION OF THE RECIPROCITY PRINCIPLE CARICOM LDCs ARE NOT REQUIRED TO RECIPROCATE TREATMENT

ENGAGEMENT-DISENGAGEMENT AS DR MOVES CLOSER TO CENTRAL AMERICA-US AND CARICOM SEEKS TO ADVANCE ON CSME EFFORTS GROWING TRADE OVER TIME DESPITE RELATIVELY LIMITED POLICY AND REGULATORY- RULES PROGRESS 2005 DECISION BY CARICOM–DR JOINT COUNCIL TO ESTABLISH NEGOTIATING GROUPS ON IPR AND SERVICES WITH A VIEW TO IMPLEMENTING THE BUILT-IN AGENDA COMPONENT OF THE FTA 2006 CARICOM-DR BUSINESS FORUM

11 FURTHER DEVELOPMENT OF NEGOTIATIONS HAS BEEN DEFERRED AND OVERTAKEN BY US- CAFTARD (2006) AND PENDING COMPLETION OF CARICOM-CANADA TRADE AND DEVELOPMENT AGREEMENT (FTA) EPA CONCLUSION (2008) AND UNEVEN ENTRY INTO FORCE ( ) RAISES CHALLENGES AND OPPORTUNITES IN TERMS OF PHASING AND SYNCHRONIZING REAL TRADE WITH TRADE REGULATIONS AND RULES

12 YET TRADE HAS GROWN AND DIVERSIFIED, PROVING THAT REAL BUSINESS INTERESTS EXIST CHALLENGE AS TO HOW TO ENSURE THE TRADE REGULATIONS FRAMEWORK OF FTA SERVE TO PROMOTE AND SUSTAIN TRADE GROWTH AND NOT LIMIT AND RESTRICT? WITHOUT FTA BEING PERFECTED AND MODERNIZED, HOW TO ADVANCE TRADE? TFMS – TRADE FACILITATION MEASURES

CARICOM-DR TRADE TO-DATE: REVIEW AND ANALYSIS CARICOM-DR TRADE IN PAST DECADE HAS GROWN AND HAS BEEN DYNAMIC BUT UNSTEADY DR EXPORTS TO CARICOM HAVE GONE FROM US$35M IN 2001 TO $110M IN 2009; 3X GROWTH CARICOM EXPORTS TO DR HAVE GROWN FROM $90M IN 2001 TO $510M IN 2009; 5X GROWTH DR EXPORTS ARE SPREAD OVER TRINIDAD & TOBAGO, JAMAICA, ANTIGUA & BARBUDA, BARBADOS AND GUYANA

14 CARICOM EXPORTS TO DR ARE DOMINATED APPROX. 97% BY TRINIDAD & TOBAGO AND JAMAICA, WITH PETROLEUM PRODUCTS AND FUELS, IRON, STEEL, AND PAPER PRODUCTS ACCOUNTING FOR CLOSE TO 95% OF TOTAL EXPORTS GRENADA, MONTSERRAT, ST KITTS-NEVIS, ST LUCIA AND SURINAME HAVE HAD DECLINING OR NO EXPORTS OVER THE PAST 3-5 YEARS

15 LACK OF CARICOM EXPORT DIVERSIFICATION HAS BEEN A REFLECTION OF DOMESTIC PRODUCTION STRUCTURES DR EXPORTS TO CARICOM ARE MORE DIVERSIFIED AND EXPANDING; TOP PRODUCTS BEING IRON-STEEL, FERTILIZERS, SALT, EARTH, STONE, CEMENT, LIME, AND PLASTICS, COVERING ALL CARICOM MARKETS BOTH MARKETS HAVE REFLECTED GROWING TRADE DIVERSIFICATION TRENDS, INCLUDING

16 NEW TRADE RELATIONS WITH CENTRAL AND SOUTH AMERICAN MARKETS, IN ADDITION TO TRADITIONAL US MARKET EU-EPA IMPLEMENTATION HAS ALSO SERVED TO STIMULATE EXPORT GROWTH, ALTHOUGH IT HAS PROVEN TO BE UNEVEN ACROSS CARICOM AND MORE DIVERSIFIED IN PRODUCT RANGE FOR DR THAN CARICOM

17 DR-CARICOM TRADE YEARDR X CARICOM US$ CARICOM X DR US$ BALANCE US$ ,518,129314,690, ,172, ,453,719261,097, ,353, ,525,136373,032, ,507, ,127,524398,532, ,405, ,017,411510,896, ,879, (JAN- JUNE) 61,709,924516,647, ,113,977

TRADE COMPARISON WAS US$35M DR EXPORTS TO CARICOM VS. US$90M CARICOM EXPORTS TO DR DISAGGREGATED FOR THE HIGH CONCENTRATION OF CARICOM (T&T) OIL & FUEL EXPORTS TO THE DR, THE TRADE BALANCE AND PERFOMANCE PICTURE LOOKS MUCH MORE BALANCED IN TERMS OF VOLUME AND COMPOSITION

19 IT DOES, HOWEVER, HIGHLIGHT THE MAJOR DIFFERENTIATION IN PRODUCT DIVERSIFICATION AND EXPORT DIVERSITY BETWEEN DR AND CARICOM EXPORTS, RESPECTIVELY EXCEPT FOR 2010, WITHOUT OIL & FUEL, DR AND CARICOM EXPORT VOLUMES ARE MORE SIMILAR AND REFLECTIVE OF THE FACT THAT BOTH MARKETS COMPETE HEAD-TO-HEAD IN EXPORTS AND VARIOUS PRODUCT CATEGORIES

20 DR-CARICOM TRADE YEARDR X CARICOM US$CARICOM X DR US$ (FUEL-OIL/REST) BALANCE US$ (WITHOUT FUEL-OIL) ,518,129314,690,494 (274M/40M) -277,172,364 DR (-2.5M DR) ,453,719261,097,692 (207M/54M)) -237,353,383 DR (-7.5M DR) ,525,136373,032,198 (290M/83M)) -295,507,061 DR (-4.5M DR) ,127,524398,532,567 (314M/83M) -261,405,042 DR (-54M CARICOM) ,017,411510,896,686 (329M/181M) -400,879,274 DR (-71M DR) 2010 (JAN- JUNE) 61,709,924516,647,239 (186M/330M) -454,113,977 DR (-268M DR)

21 DR EXPORTS, HOWEVER, REMAIN MUCH MORE DIVERSIFIED THAN CARICOM EXPORTS, REFLECTIVE OF LARGER, MORE CONCENTRATED, AND MORE DIVERSIFIED ECONOMY, IN GENERAL DR AND CARICOM ECONOMIES HAVE EXPANDED INTO SERVICES (MISSING TRADE DATA) BUT FOR CARICOM IT IS MUCH MORE CONCENTRATED AND HAS REPLACED MANUFACTURING FOR EXPORT BASE OVER THE PAST 20 YEARS

22 THE ABSENCE OF BILATERAL SERVICES TRADE DATA DOES NOT ALLOW BUT FOR THIS MERCHANDISE TRADE ANALYSIS, ALTHOUGH CLEARLY BOTH DR AND CARICOM GOVERNMENTS AND FIRMS HAVE BEEN EXPRESSING STRONG INTERESTS IN EXPANDING THE SCOPE OF THE FTA FOR INCLUSION OF TRADE IN SERVICES WE WILL DISCUSS THIS IN GREATER DETAIL FURTHER ON

CARICOM-DR TRADE & INVESTMENT FLOWS AND SECTORS AGRICULTURE AND INDUSTRIAL GOODS REMAIN THE DOMINANT SECTORS OF DR-CARICOM TRADE AND TO-DATE REMAIN THE PRINCIPAL AREAS OF INTEREST BY BOTH GOVERNMENTS AND PRODUCERS/EXPORTERS IN THESE MARKETS THE WORKING GROUPS HAVE FOCUSED GREAT ATTENTION ON THESE SECTORS AND PRODUCTS AS THEY ARE NATURAL AREAS FOR EXPORT GROWTH FOR BOTH MARKETS

24 DR EXPORTS TO CARICOM HAVE BEEN DOMINATED BY IRON-STEEL, FERTILIZERS, CHEMICALS, SALT, EARTH, STONE, CEMENT, LIME, PLASTICS, CONTRUCTION MATERIALS, SOAPS AND LUBRICANTS, FURNITURE, PRE-FABRICATED STRUCTURES AND BUILDINGS, CERAMIC PRODUCTS, YARNS AND NON-WOVEN TEXTILES, VEGETABLES, FRUITS, PROCESSED FOODS, ANIMAL-VEGETABLE FATS & OILS, CEREALS, FLOURS, AND DAIRY PRODUCTS AND PREPARATIONS, AMONG OTHERS

25 CARICOM EXPORTS TO THE DR HAVE BEEN DOMINATED BY PETROLEUM PRODUCTS, FUELS, OILS, SALT, SULPHUR, STONE, LIME, CEMENT, CHEMICAL PRODUCTS, PHARMACEUTICALS, FURNITURE, PRE-FABRICATED STRUCTURES AND BUILDINGS, LIGHTING, CEREALS, BEVERAGES, SUGAR/CONFECTIONERY, PROCESSED FOODS, ALCOHOL SPIRITS, WOOD, PAPER, ANIMAL-VEG FATS & OILS, AMONG OTHERS

26 WE HAVE LIMITED KNOWLEDGE OR EXPERIENCE OF THE SERVICES TRADE SECTORS ALTHOUGH WE KNOW ANECDOTALLY AND FROM BUSINESS VENTURES OF VARIOUS PRIORITY AREAS, INTER ALIA: CONSTRUCTION, AGRO AND ENVIRONMENTAL, ENGINEERING & ARCHITECTURE, MEDIA & A/V, EDUCATION, LAW, ACCOUNTING, FASHION, ENTERTAINMENT, ENERGY, AMONG OTHERS. TOURISM AND FINANCIAL SERVICES ARE STRONGHOLD SECTORS IN BOTH DR AND

27 CARICOM AND ONE EXPECTS THERE TO BE MANY OPPORTUNITIES FOR HORIZONTAL BUSINESS COLLABORATION, INVESTMENT AND TRADE IN THESE SECTORS WHICH ARE REGIONALLY AND GLOBALLY COMPETITIVE, YET THIS HAS NOT BEEN THE CASE TO-DATE LIKEWISE RE: THE GROWING ICT AND BPO/CALL CENTER SECTORS. ECONOMIES OF SCALE ACROSS CARICOM AND WITH DR COULD OFFER

28 BUSINESS OPPORTUNITIES FOR JOINT VENTURES AND STRATEGIC ALLIANCES AMONGST FIRMS IN THESE SECTORS PORT/SHIPPING AND LOGISTICS SERVICES ARE ALSO COMPETITIVE ACROSS CARICOM AND IN DR AND WOULD OFFER OPPORTUNITIES FOR DEVELOPING COMPETITIVE ECONOMIES OF SCALE AND RATIONALIZATION OF SERVICES AND COSTS WITHIN THE CARIBBEAN AND BEYOND

29 THESE ARE ALL AREAS WHICH COULD BENEFIT NOT JUST FROM THE TRADE-EXPORT IMMEDIATE TRANSACTION FOCUS BUT FROM MORE MEDIUM- AND LONG-TERM STRATEGIES FOR COMPETITIVE MARKET DEVELOPMENT WITHIN CARIBBEAN AND BEYOND INTO OTHER DEMAND MARKETS ALREADY THE DR AND JAMAICA ARE MAJOR RECIPIENTS OF US$BILLIONS IN FDI IN MANY OF THESE SERVICES SECTORS AND INVESTMENT CAN LEAD THE WAY FOR EXPORT TRADE

30 YET FDI INCREASE HAS NOT NECESSARILY TRANSLATED INTO EXPORT GROWTH. IN MANY INSTANCES IT IS IN SERVICES SECTORS FOR WHICH WE LACK TRADE DATA, BUT ALSO HAS TENDED TO FOCUS ON INVESTMENT FOR ACCESS AND SALES IN GROWING DOMESTIC MARKETS WITH INCREASED CONSUMER DEMAND.

31 JAMAICA TOURISM FIRMS HAVE VENTURED INTO CUBA AND BRAZIL BUT NOT TO DR; DR TOURISM FIRMS ARE IN CENTRAL AMERICA, BUT NOT IN CARICOM…SAME CASE FOR AIR TRAVEL? WHILE THE ICT SECTOR IS FOREIGN-DOMINATED ITS MARKETS ARE NOT NATIONAL-RESTRICTED, YET WE DO NOT SEE MAIN PLAYERS FROM DR OR CARICOM LOOKING AT THE OTHER MARKET, ALTHOUGH THEY DO LOOK AT HAITI?

32 DR, JAMAICA, BAHAMAS ARE ALL KEY PORTS AND SHIPPING LOGISTICS CENTERS AND YET NO CROSS-BORDER OR HORIZONTAL BUSINESS LINKAGES HAVE DEVELOPED? SAME HOLDS FOR FINANCIAL SERVICES, WHERE PROBABLY NATIONAL REGULATIONS RESTRICT THE EASE OF CROSS-MARKET OPERATION BUT SHOULD NOT BE THE CASE FOR ENERGY SERVICES WHERE ENTIRE REGION IS INVOLVED IN ADVANCING RENEWABLES AND CLEAN ENERGY,

33 AND ALREADY JAMAICA AND TRINIDAD ARE KEY ETHANOL PRODUCERS AND EXPORTERS AND COULD EASILY BECOME STRATEGIC PARTNERS FOR SUCH OPERATIONS IN THE DR; SAME FOR INITIATIVES IN SOLAR, WIND, AND OTHER RENEWABLES… BOTTOM LINE IS THAT PROMOTION OF TRADE- EXPORTS NEEDS TO HAVE SOME LINKAGE TO THE INVESTMENT SUPPLY CHAIN AND NOT ONLY TO THE PRODUCTION SUPPLY CHAIN

34 THIS IS CRITICAL FOR SERVICES TRADE BUT IS BECOMING MORE RELEVANT FOR TRADITIONAL GOODS/MERCHANDISE TRADE WHERE TRADITIONAL ONE-MARKET SUPPLY CHAINS FOR PRODUCTION AND EXPORT ARE NO LONGER THE NORM… AN EFFECTIVE STRATEGY TO ADVANCE AND DEEPEN TRADE NEEDS TO GO BEYOND A FTA AND INTO OTHER ELEMENTS OF THE SUPPLY CHAIN

35 CASE IN POINT THE 2009 LEON JIMENES $30M MAJORITY SHARE INVESTMENT INTO BREWERIES IN ANTIGUA, DOMINICA AND ST VINCENT, AND NOW IN 2011 INVESTING IN A CANNING AND WASTE WATER TREATMENT PLANT IN ST VINCENT AND ALSO BREWING PRESIDENTE BEER LOCALLY

EXPANDING TRADE & INVESTMENT FLOWS: OPPORTUNITIES & CHALLENGES JOINT COUNCIL AND THE BUSINESS COUNCIL WILL FOCUS THEIR WORK ON THE VARIOUS REGULATORY AND TRADE RULES ASPECTS OF EXPANDING AND IMPROVING THE SCOPE AND FUNCTIONING OF THE FTA, IMPLEMENTATION ISSUES, AND THE ROLE OF GOVERNMENTS AND BUSINESS WORKING TOGETHER ON THIS AGENDA SOME OF THESE ISSUES ARE: ADDING SERVICES TO THE FTA, INCLUSION OF HAITI AND BAHAMAS, DR FTA ACCESS TO LDC MARKETS FOR CERTAIN PRODUCTS, UPDATES-AMENDMENTS TO THE

37 SENSITIVE LIST OF EXCLUDED PRODUCTS (AND MATTER OF NEGATIVE VS. POSITIVE LIST APPROACH), LAW 173 IN DR AND ISSUE OF DISTRIBUTION AGENT REQUIREMENTS, BUSINESS WORK PERMIT ISSUES AS WELL AS MUTUAL RECOGNITION AGREEMENT (MRA) RE: PROFESSIONALS LIKEWISE, MANY DUTY-FREE ITEMS AND OTHERS REQUIRE TARIFF ADJUSTMENTS AND REDUCTIONS IN LIGHT OF THE AGE OF THE FTA, WHICH REQUIRES NORMAL UPGRADING

38 NEED TO MAKE THE FTA REFLECTIVE OF THE NEW ECONOMIC STRUCTURES OF DR AND CARICOM, SECTORS, AND POTENTIAL TRADE OPPORTUNITIES, E.G. SERVICES, MANUFACTURING AND AGRO JOINT VENTURES, ETC. FTA PARTNERS NEED TO ASSESS AND EVALUATE THE PERFORMANCE TO-DATE (DE JURE AND DE FACTO) IN ORDER TO IDENTIFY THE SPECIFIC ISSUES AND NEEDS FOR IMPROVEMENT

NON-RECIPROCITY ISSUE FOR LDCs? HOW RELEVANT ARE THESE RULES AND REGULATIONS OF 10+ YEARS AGO TO THE CURRENT ECONOMIC-TRADE REALITIES OF FTA PARTNERS, DR AND CARICOM? WHAT IS RELEVANCE AND IMPLICATIONS OF EPA IMPLEMENTATION FOR DR-CARICOM FTA FUNCTIONING? WHICH ONE SUPERCEDES THE OTHER IN REAL ECONOMY OF TRADE AND ECONOMIC INTEGRATION?

40 AT THE BUSINESS LEVEL AND FOR TRADE FACILITATION WHAT IS REQUIRED IS A SYSTEMATIC MARKET ASSESSMENT OF CURRENT NEEDS/OBSTACLES TO TRADE: WHAT SECTORS, PRODUCTS, COMPANIES ARE ACTUALLY TRADING? WHERE? HOW? WHAT ARE THE SECTORS OF ECONOMIC GROWTH IN EACH MARKET? ARE THESE ALSO THE SECTORS OF TRADE GROWTH? DO THEY CORRELATE TO INVESTMENT SECTORS?

41 DRS JAD, ADOEXPO AND ISPRI/DICOEX HAVE STARTED WITH 2010/2011 MISSIONS TO CARICOM MARKETS TO ASSESS THESE QUESTIONS AND BETTER INFORM POLICY- MAKERS AND BUSINESS-TRADE STAKEHOLDERS AS TO THE NEW ECONOMIC- TRADE REALITIES IN THE MARKETS AND IMPLICATIONS FOR THE FTA. SUCH A JOINT PPP EFFORT IS COMMENDABLE AS IT SEEKS TO PROVIDE A HOLISTIC STAKEHOLDER APPROACH TO THE MATTER, MUCH IN-LINE WITH NEW GENERATION FTAS OF THE 21 ST CENTURY

42 THIS NOW REQUIRES A SIMILAR EFFORT FROM THE CARICOM SIDE IN ORDER TO ADEQUATELY ASSESS MARKET NEEDS AND INTERESTS FROM THE PERSPECTIVE OF CARICOM PRODUCERS- TRADERS AND POLICY-MAKERS, AND FOCUSING ON SECTOR- AND PRODUCT- SPECIFIC INITIATIVES AND EFFORTS THESE INPUTS CAN INFORM THE 2011 JOINT COUNCIL MEETING WHILE ALSO DEVELOPING A PROACTIVE PRIVATE SECTOR TRADE AGENDA CENTERED ON BUSINESS OUTREACH AND MESSAGING BETWEEN DR AND CARICOM MARKETS.

POLICY & BUSINESS RECOMMENDATIONS: DEEPEN/EXPAND FTA AND ITS SCOPE FTAS FUNCTION WELL AND ARE EFFECTIVE AND SUCCESSFUL AS TRADE-EXPORT PROMOTION INSTRUMENTS BECAUSE BOTH THE REGULATORY- POLICY FRAMEWORKS WHICH RULE THEM ARE RELEVANT AND THE BUSINESS ACTORS OF TRADE (INVESTORS, PRODUCERS, TRADERS) FIND THEM USEFUL, RELIABLE, AND CONDUCIVE TO BUSINESS AND TRADE IF THE RULES AND REGULATIONS OF FTAS ARE NOT CONDUCIVE TO BUSINESS AND TRADE THEN

44 THE FTA BECOMES IRRELEVANT TO THE ACTORS OF TRADE AND THEY ADVANCE ON BUSINESS AND TRADE ON THEIR OWN AS PER NEEDS AND REALITIES OF THE REAL ECONOMY DR-CARICOM TRADE IS GROWING EXPONENTIALLY DESPITE A NON-FUNCTIONAL FTA, SEVERE BARRIERS TO TRADE, REGULATORY AND FUNCTIONAL OBSTACLES TO TRADE AND INVESTMENT, NEGATIVE LISTS OF PRODUCTS AND MANY TARIFF AND NON- TARIFF RESTRICTIONS TO TRADE

45 BUSINESSES ARE TRADING (AND INVESTING?) IN SPITE OF THE FTA AND ITS RESTRICTIONS; POSSIBLY EVEN IN SECTORS NOT COVERED IN THE FTA, E.G. SERVICES? TRADE IS NOT ONLY GROWING BUT EXPANDING INTO NEW SECTORS AND PRODUCT CATEGORIES, IN SOME INSTANCES PAYING DUTIES AND NOT BENEFITTING FROM FREE TRADE BUT RESPONDING TO MARKET NEEDS AND SUPPLY/DEMAND FORCES, WHICH GUIDE TRADE ACCORDINGLY DESPITE BARRIERS

46 IN LIEU OF FTAS OR FUNCTIONAL FTAS MARKET PARTNERS DEVELOP BUSINESS FACILITATION MEASURES (BFMS) AND TRADE FACILITATION MEASURES (TFMS) TO HELP SPUR TRADE AND INVESTMENT AND BUSINESS AND TO DEVELOP BEST PRACTICE BENCHMARKS DR-CARICOM TRADE INITIATIVES CAN BUILD ON SUCCESSFUL TRADE AND INVESTMENT RECORDS AND BEST PRACTICES TO IDENTIFY WHAT IS WORKING AND WHAT IS NOT WORKING

47 IN THE FTA DE JURE AND DE FACTO, THEREBY PROVIDING FOR SPECIFIC TFMS WHICH CAN BE USED AS BENCHMARKS IN THE EXERCISE OF IMPROVING AND UPGRADING THE FTA, AS PER JOINT COUNCIL AND BUSINESS COUNCIL PLANS SUCCESSFUL EXAMPLES OF THIS INCLUDE, INTER ALIA: COSTA RICA-CARICOM/TRINIDAD FTA, US-URUGUAY TIFA, US-ANDEAN ATPA PREFERENCES, AS WELL AS RECENT CHINA TRADE-INVESTMENT INITIATIVES AND AGREEMENTS ACROSS THE AMERICAS

48 UNSUCCESSFUL EXAMPLES INCLUDE MERCOSURS CUSTOMS UNION, ALADI-LAIA, PREFERENTIAL TRADE AGREEMENTS BETWEEN CARICOM AND VENEZUELA (1992) AND COLOMBIA (1994) THE CARICOM-CUBA PARTIAL SCOPE AGREEMENT OF 2000 PROBABLY FALLS SOMEWHERE IN-BETWEEN THESE

49 DR-CARICOM CAN AND SHOULD FOCUS RESOURCES AND EFFORTS NOT ONLY ON THE DE JURE IMPROVEMENT OF THE FTA BUT ALSO ON THE DE FACTO APROVECHAMIENTO AND MAXIMIZATION OF REAL TRADE AND BUSINESS FLOWS TAKING PLACE. NEED TO DISAGGREGATE THESE AT THE SECTORAL, PRODUCT AND FIRM LEVELS TO IDENTIFY THE SUCCESS STORIES OF DR- CARICOM TRADE AND USE THESE TO IMPROVE, EXPAND, AND GROW TRADE, INVESTMENT AND BUSINESS RELATIONS IN GENERAL

50 IN THE REGIONAL ENVIRONMENT OF CARICOM THIS MAY IMPLY SOME CREATIVE NATIONAL OR SUB-REGIONAL (OECS?) APPROACHES BY THE DR THAT BUILD ON THE FTA AND ON CURRENT TRADE AND INVESTMENT FLOWS BUT LOOK TO LEVERAGING THESE BEYOND AND ABOVE CURRENT LEVELS B2B INITIATIVES CAN SERVE TO SHOWCASE THE VIABILITY OF SUCH INITIATIVES AND BE USED TO OVERCOME THE REGULATORY AND PRACTICAL LIMITATIONS OF THE CURRENT FTA

51 DR-CARICOM TRADE-BUSINESS VENTURES ALREADY HAVE SUCH EXAMPLES/CASE STUDIES IN WIRSPA-ADOPRON ALCOHOL VENTURES; CHTA-ASONAHORES TOURISM COOPERATION; LEON JIMENES BREWERIES MENTIONED BEFORE, AMONG OTHERS AN INVENTORY OF TRADE-ACTIVE SECTORS, PRODUCTS, FIRMS IS NOW NEEDED IN ORDER TO BUILD THE ADVOCACY TEAM AND DR- CARICOM TRADE EVANGELISTS TO WORK WITH GOVERNMENTS IN THIS NEW PROCESS

52 LIKEWISE REGIONAL BODIES SUCH AS CEDA AND CARIFORUM, AS WELL AS RELEVANT NATIONAL ORGANIZATIONS, ALL OF WHICH SHOULD SUPPORT THIS WORK AN INTERESTING COMPARISON WOULD BE THAT OF THE COSTA RICA FTA WITH CARICOM/TRINIDAD AND ITS PERFORMANCE TO-DATE VIS-A-VIS THE DR-CARICOM FTA, PARTICULARLY SINCE BOTH COSTA AND DR ALSO ARE PART OF CAFTADR AND ARE SIMILARLY STRUCTURED EXPORT ECONOMIES

53 CARICOM-COSTA RICA TRADE IN 2006: -CARICOM X $71.3M ($51M T&T, $19M BELIZE) -COSTA RICA X $105.3M ($49M JAM, $27M T&T) DR-COSTA RICA TRADE IN 2009: -DR X $21.4M -COSTA RICA X $204M WHAT HAS MADE COSTA RICA EXPORT PERFORMANCE SO GOOD UNDER FTA?

54 LIKEWISE USEFUL MAY BE AN ASSESSMENT OF CARICOM AND DR TRADE-INVESTMENT PERFORMANCE WITH CUBA, AGAIN ANOTHER SIMILARLY STRUCTURED ECONOMY BUT WITH DIFFERENT CHALLENGES IN TERMS OF PRODUCTION AND EXPORT PERFORMANCE THE B2B COMPONENT CLEARLY ALSO REQUIRES TRADE POLICY AND STATISTICS SUPPORT AS THE DATA COMPONENT OF THESE FTA RELATIONS REMAINS VERY WEAK AND UNDER PAR

55 WITHOUT SOLID DATA ON REAL TRADE AND INVESTMENT FLOWS IT IS VERY DIFFICULT TO DESIGN, DEVELOP, AND IMPLEMENT TRADE POLICY INITIATIVES AND STRUCTURE AN FTA THAT RESPONDS TO THE REAL NEEDS OF THE ECONOMIES AND THE MARKETS IN QUESTION LACK OF ADEQUATE TRADE DATA AND MARKET INFORMATION CAN SEVERELY HAMPER THE CURRENT DR-CARICOM FTA EFFORTS, ESPECIALLY RE: SERVICES SECTOR TRADE

56 AS DR-CARICOM GOVERNMENT AND BUSINESS PARTNERS AND STAKEHOLDERS ASSESS AND EVALUATE FTA PERFORMANCE TO-DATE AND DECIDE ON THE WAY FORWARD, IT IS IMPORTANT TO GAUGE AND MEASURE THE EFFECTIVE CAUSAL RELATION BETWEEN TRADE-EXPORT PERFORMANCE AND FUNCTIONALITY OF THE FTA FLEXIBILITY IN THE STRUCTURE AND FUNCTIONING OF THE FTA IS AS IMPORTANT AS ITS REGULATORY FIRMNESS AS TRADE LAW

57 EFFECTIVENESS IN FACILITATING TRADE- INVESTMENT FLOWS, AND IN MOBILIZING THE INTEREST OF FIRMS AS STAKEHOLDERS, CAN BE MORE IMPORTANT THAN THE ACTUAL LEGAL-JURIDICAL MANDATE OF THE FTA AFTER ALL, A FTA IS NOT A LICENSE TO PACKAGE AND SHIP WITH NO CONTROLS OR RESTRICTIONS! RATHER IT IS A MECHANISM FOR THE ADVANCEMENT OF MORE OPEN, YET MANAGED/ADMINISTERED, TRADE BETWEEN PARTNERS.

58 TO HAVE MORE MANAGED AND MORE EFFECTIVE ADMINISTRATION OF TRADE, WITHOUT MORE OPENESS OF TRADE, DEFEATS THE PURPOSE OF A FTA THE CHALLENGE NOW IS TO CREATE THAT BALANCE AND TO MAKE THE FTA MORE RELEVANT TO REAL MARKET NEEDS, RESULTING IN EFFECTIVE TRADE GROWTH BETWEEN THE DR AND CARICOM PARTNERS

59 MUCHAS GRACIAS! Dr. David E. Lewis Manchester Trade Ltd. Washington, DC