PORT OF SPAIN, Trinidad, Nov 16, Trinidad and Tobago Finance Minister Colm Imbert, says trade is and will continue to be a vital tool to the survival of Caribbean economies, as the Venezuela-based Corporacion Andina de Fomento (CAF) Development Bank of Latin America released its Flagship Economy and Development Report (RED 2021) here on Tuesday.
CAF is a development bank owned by 19 countries, including 17 in Latin America and the Caribbean, Spain, and Portugal, as well as 13 private banks in the region
It promotes a sustainable development model and the integration of the Latin American and Caribbean (LAC) region through credit operations, non-reimbursable resources, and support in the technical and financial structuring of projects in the public and private sectors of Latin America.
Imbert told the ceremony that coincided with the launch of the CAF Regional Office for the Caribbean that trade plays several key roles in a country’s economic activity.
“It diversifies and broadens access to global goods and services, accelerates the dissemination of knowledge, and allows countries to build resilience and capacity to deal with external shocks and to speed up their economic recovery following such shocks,” he told the event attended by CAF executive president, Sergio Diaz-Granados.
“Caribbean countries are characteristically small, and thus more vulnerable to external shocks and, in several cases, have undiversified economic structures. As such, it is virtually impossible for us to produce and provide all of the goods and services we need, as well as acquire all the financial resources necessary to sustain our economies solely through the local sale of goods and services.”
Imbert said that as a result, trade is and will continue to be a vital tool to the survival of Caribbean economies and it is this premise that guides the building of trade relations in the Caribbean Community and Common Market (CARICOM).
He said through the awareness of the need to diversify the income portfolio of Caribbean economies, CARICOM has negotiated several reciprocal trade agreements in which Caribbean countries have access to markets and goods from other countries at preferential rates and through the removal of several trade barriers.
Imbert said CARICOM currently has free trade agreements with the Dominican Republic and Costa Rica and a trade, economic and technical cooperation agreement with Colombia.
“Through these various agreements, CARICOM countries, such as Trinidad and Tobago, can benefit from tariff reductions and the elimination of non-tariff barriers, including duty-free access on specific products, or phased reduction of duties on selected goods, and elimination at the border of all taxes on goods imported or exported.
“Further, trade with other economies expands our access to knowledge. The scale at which this knowledge is transferred currently, though, is arguable,” Imbert said, noting that at a micro level, when consumers import products from producers and innovators across the globe, there is a direct transfer of foreign product knowledge.
“Several Caribbean countries are however small-island, developing states whose citizenry cannot afford to purchase imported goods on a large scale. As such, there remains an inequality in the access to and transfer of this knowledge about foreign products.”
Imbert said that even Trinidad and Tobago, though considered a high-income developing country by the World Bank Group, has only been able to benefit from knowledge and technology transfer at a moderate pace within the current trade environment.
“Similarly, trade facilitation can assist in our preparation for shocks and can speed up our economic recovery following such shocks. Through trade, developing countries are able to access expert intelligence from professionals across various fields to assist in awareness of our vulnerabilities, development of methods to protect against these vulnerabilities and recover from negative impacts exacerbated by these vulnerabilities while facilitating access to international markets.”
Imbert said that the COVID-19 pandemic is a perfect example of the need for greater trade facilitation.
He said throughout 2020 and 2021, as COVID-19 attacked the world, Trinidad and Tobago experienced low trade performance, noting that in 2020, the year in which COVID-19 was declared a pandemic, the value of Trinidad and Tobago’s exports significantly declined, moving from US$7.1 billion in 2019 to US$5.5 billion in 2020.
Imbert said that this trend, however, was completely reversed in 2022, with exports projected to exceed US$9.4 billion or over 70 percent, since the advent of COVID-19, as a result of the demand created by the conjoined effect of the global economic recovery and the Ukraine war.
But the Finance Minister acknowledged that as a result of lockdowns and public health restrictions during 2020 and 2021, “our earning potential was severely weakened, as we were unable to engage in significant and meaningful economic activity during this period, largely due to the global disruption in supply chains along with a collapse in global oil and gas prices.
“This not only highlights our interconnectivity and how shocks impact us but further alerts to the susceptibilities of Caribbean countries and our dependence on foreign countries,” Imbert said.
But he said the results from trade agreements have been modest, as highlighted in the RED 2021 report, noting that, for example, over the period 2017 to 2021, Trinidad and Tobago’s trade balance with the Dominican Republic decreased by 44 percent, moving from US$71.8 million in 2017 to
US$40 million in 2021.
Similarly, the country’s trade balance with Costa Rica, over the same period, maintained a negative trade balance with exports increasing marginally by 1.8 percent from approximately US$10.1 million in 2017 to US$10.2 million in 2021,” Imbert said, noting that these are the two countries with which CARICOM has free trade agreements.
He said that it is in this light that increasing trade facilitation is critical to the region, quoting the World Trade Organization (WTO) as saying that trade facilitation refers to the simplification, modernization, and harmonization of export and import processes.
“This is an important undertaking as it allows both governments and business communities to benefit in the sale and purchase of goods and services across various markets,” Imbert added.
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