There is obviously a requirement by the Government to fund a study to analyse the potential impact of the fall-out of the withdrawal of the GSP and the end of the CBTPA in 2010. This is especially so in the context of the need to ensure an increase in the speed with which the T&T economy is diversified.
Quite predictably, this country’s opposition parties have chosen to criticise the Government for Monday’s announcement from Washington DC that the US had decided to graduate T&T from the Generalised System of Preferences (GSP) without taking the time to study the issue.
The proclamation, signed by US President George Bush, becomes effective in 18 months—on January 1, 2010.
The GSP is a programme of global and regional trade preferences—particularly duty-free access— granted by the US Government to countries that are in need of a helping hand in exporting goods to the US market.
By law, the US Government is required to graduate countries which are deemed by the World Bank to be high-income countries.
The logic of the US law should be obvious to all: countries whose national incomes go past a certain threshold may not be in need of the kind of helping hand provided by the GSP by virtue of their relative prosperity compared with other countries.
The fact that, at the end of 2007, T&T had a per capita Gross Domestic Product of US$16,105, along with virtually no unemployment and US$8 billion in foreign reserves, should be cause for celebration even among the country’s opposition.
What’s more it is estimated that the decision by the US to graduate T&T will have minuscule impact on this country’s exports to what is still the largest economy in the world.
Last year, T&T exported goods valued at US$8.8 billion to the US and a statement issued by the US Embassy estimates that of that amount only US$5.1 million, or less than one-tenth of one per cent, entered the US under the GSP programme.
The fact is that most of T&T’s exports of petroleum products—including LNG, methanol, ammonia, and urea—enter the US duty free either because the normal import tariff rate is zero, or because they are covered by the Caribbean Basin Trade Partnership Act (CBTPA), which was recently extended by two years to 2010.
Opposition Leader Basdeo Panday issued a statement yesterday that the “termination of special treatment under the GSP will have serious and far-reaching consequences for the domestic economy.”
Meanwhile, the Congress of the People, which has no representational status, said the decision “will have a tremendous impact on local exporters and almost certainly result in a loss of jobs.”
The COP went on to criticise what the party described as the Government’s lack of a clear foreign or trade policy, adding that “our ship of state is at sea in the international arena without either a captain or rudder.”
It would seem that both of these statements need to be seen in the context of the likelihood that less than one per cent of this country’s exports will be affected by the measure.
This is not to say that the Government is in the clear on the issue. Given the fact that this country has diplomatic representation in Washington DC, it seems strange that the announcement should have been made there without it even being hinted at in Port-of-Spain.
It should go without saying that one of the purposes of employing diplomatic representatives in foreign countries is to ensure that the sending government is not placed in the position that the Patrick Manning administration seems to be in.
The more worrying issue is that the CBTPA ends in 18 months.
There is obviously a requirement by the Government to fund a study to analyse the potential impact of the fall-out of the withdrawal of the GSP and the end of the CBTPA in 2010. This is especially so in the context of the need to ensure an increase in the speed with which the T&T economy is diversified.
It would not be conducive to strong bilateral relations between the US and T&T if the establishment of new industries in this country were hampered by high tariff barriers to the American market.
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