Expand Latin trade links
GEORGE ALLEYNE Wednesday, January 16 2013
Trinidad and Tobago, where this is practical, should seek to increasingly expand trading links with Latin America and move away from the old North/South and South/North arrangements which have traditionally favoured the United Kingdom and Western Europe since the days of slavery and colonialism.
The continuing emphasis by the UK and Western Europe on the importing of raw materials from Trinidad and Tobago and, incidentally, other Third World countries at relatively low prices and then re-exporting the refined products at high prices demands this. Our cocoa is an excellent example and our crude oil had been until 1973 as well.
Although Trinidad and Tobago produces the world’s finest cocoa, old trading arrangements have seen our cocoa exported to the United Kingdom at depressed prices, used to sweeten cocoa from say, Ghana, the world’s largest producer, and the refined chocolate products sold at very high profit margins.
The distinguished writer, Alvin Toffler, in his monumental work, The Third Wave, published by Bantam of New York, tells on Page 88 of how prices of raw materials from Third World countries which had been colonised or otherwise controlled, were depressed by “The Law of the First Price”, a tactic employed where there had been no known previous record of trade for a raw material or primary agricultural product, the price set applied indefinitely to future transactions.
The first major challenge to “The Law of the First Price” would come in 1973 when the Organisation of Petroleum Exporting Countries, fed up with the massive profits made at the refining end on Mid-East and Venezuelan crude oil by North American, United Kingdom and Western European oil companies operating in their lands began to tax their crude oil exports as though they were being sold at approximately US$9 a barrel, instead of the then US$2.80 a barrel.
Trinidad and Tobago, in recognising the emergence of Latin American markets should arrange to refine its non-energy products for export in much the same way that it refines a not insubstantial portion of its crude oil and natural gas. While this will mean the involvement of foreign capital, inasmuch as all of the money required for investment is not available here, Government should, nonetheless, limit foreign shareholding to 49 percent.
Admittedly, such investment may be difficult to attract, initially, as the ongoing international financial crisis, with its horrific impact on commodity prices and markets has resulted in a reluctance by the domestic private sector to either expand existing businesses or to invest in new projects. Nonetheless, Government needs to act with dispatch in stimulating growth as this would mean with the inevitable end of the global economic downturn an increase in State revenue, private sector income and employment.
Meanwhile, it is not enough simply to belong to a Latin American and Caribbean grouping, instead full advantage should be taken of the growth and revenue potential of expanded trade with Latin America and the Caribbean. We have seen the benefits which accrued when seven Latin American nations, Brazil, Argentina, Chile, Uruguay, Paraguay, Mexico and Peru established the Latin American Free Trade Association (LAFTA) when they signed the Treaty of Montevideo in February of 1960.
The Caribbean Free Trade Association (Carifta) would come in 1968 and the Caribbean Community of Nations (Caricom) five years later. The Region erred, however, when it failed to initiate steps to establish links with LAFTA in the 1960s or at least by 1973. Trade liberalisation between member states of LAFTA, which has today seen the emergence of Brazil as a super economic power and the overall strengthening of the economies of LAFTA countries, has achieved more for the Montevideo Group than has Caricom for the Region.
The Region’s weakness lay not simply in feet dragging on creating a Single Market and Economy, but its insistence on looking to the 1975 Convention of Lome and the successor Convention of Cotonou as a principal means of economic development. The real beneficiaries of Lome were the UK and Western Europe, when they virtually forced the Region, the UK through the earlier Commonwealth Sugar Agreement to sell, principally, raw materials to its former colonial masters. The raw materials, mainly sugar, were refined and sold back to the region and elsewhere at obscenely high prices.
We have to move away from British paternalism and the old North/South process to a larger and lasting South/ South trading arrangement. The markets of Latin America, particularly by the emphasis placed by Treaty of Montevideo members on reciprocal concessions and the limitless extending of favourable conditions granted the most favoured nation, should prove far more rewarding to us than those of Trinidad and Tobago’s and the Region’s one-time Imperialist masters.