Can the ‘’Trade Point” truly deliver economic change?
Facilitator of Trade
Nearly 17 years after the Trade Point programme was launched, Guyana expects to have its first trade point centre in December 2009. Seen as a source of important trade and trade-related information, the trade point being established in Guyana is expected to serve as a facilitator of trade between the drivers of its economy, small businesses, and the rest of the world. That the administration has finally found the will to energize small businesses is commendable. The only regret is that it has taken so long to recognize that Guyana, in its current state of development, is a place that thrives on the ingenuity and efforts of its small business owners. For them and the country as a whole, the trade point initiative is a very useful one that contains powerful tools with the potential for expanding foreign trade and stimulating domestic production.
The precursor to the current global Trade Point system, to which Guyana will attach itself, emerged in 1992 when the United Nations Conference on Trade and Development (UNCTAD) launched its trade point programme in support of small and medium-sized enterprises. The initiative by UNCTAD sought to take advantage of the communication . power of the Internet, a tool that was gaining global prominence at the time. That inventiveness will now be employed 17 years later by Guyana in a coherent manner to give voice to the unheard and shed light on the unknown. As the saying goes, better late than never.
With the power of the Internet, trade knows no boundary. No industry that is serious about its future is shut out of the opportunity of participating in the global exchange of goods and services. This means that new industries in Guyana have a chance of competing and old industries have a chance of revitalizing themselves in the global arena.
The trade point programme has progressed and ownership shifted in 2000 to the World Trade Point Federation (WTPF), an international non-governmental organization created under the laws of Switzerland. However, its core functions have not changed despite the evolution in ownership. It remains a network of trade points whose purpose is to help the small and medium-sized entities in the sponsoring country to gain access to international markets or suppliers using electronic commerce. The centrepiece of the initiative is the Global Trade Point Network (GTPnet). This network serves as the hub to which the individual trade points of countries are attached. It represents a one-stop location where small businesses could get all the information required to conduct foreign trade.
The trade point network has removed a number of barriers to trade between small-scale buyers and sellers. Its most visible benefit is the avoidance of the traditional newspaper or magazine as the only legitimate place for advertising. For a small business, the cost of advertising in such media was prohibitive and many small producers remained unseen or unheard of. The reach of the advertisements depended on where the magazines were sold and on the popularity of the magazines. Access to potential markets, through newspapers and magazines, was also limited by language.
Those barriers are a thing of the past since the trade point to be set up by Guyana will now remove those impediments to global trade for its small-scale operators. Large businesses will no longer have the information advantage that print and visual media gave them before the democratization of trade via the Internet. This means that small manufacturers and agricultural producers can present information about products that they have to sell. Persons operating in the distributive trade such as wholesalers and retailers also have the chance of finding products of interest to their customers.
Producers of goods and services who are looking for raw materials or other production inputs can easily find them without having to leave the comfort of their homes or offices.
Geography, language, time-differences and the traditional 8-hour working day are no longer a hindrance.
To be useful, the trade points of each country would have to contain information about individual companies or sellers doing business in that country. Potential exporters and importers in Guyana become identifiable and can tap into the hub and identify trading opportunities through the Electronic Trading Opportunity (ETO) system. They can complete export formalities and meet international trade related requirements on the spot.
Foreign buyers too would feel comfortable doing business with Guyanese exporters since the latter’s appearance on the network would assume that Guyanese officials cleared them for participation. Thus, the arrangement relies on the integrity of the administration and the entity running the country’s trade point.
The trade point programme has also attracted the attention of developed countries and those countries described as emerging economies. Trade points exist in Germany, Italy, Russia, Brazil, Egypt and Jamaica to mention some existing users of the service. There are rival private sector sites that provide their users with similar benefits. This is the reality that Guyana has to acknowledge. The trade point will not remove the competition.
If anything, the competition is likely to intensify.
Yet, there is no clear evidence of how trade points have spurred international trade, even though anecdotes exist about trade deals that were consummated through trade points.
Additionally, there is no indication of how patterns of trade have been altered since the introduction of the trade point program. The bulk of the international trade continues to take place between developing and developed countries. After 17 years, it appears that the usefulness of trade points as change agents of trade is still unfolding. The value of the service was likely to expand as more developing countries gain Internet access and small-scale operators in those countries become familiar with the Internet as a legitimate medium of business communication.
For now, the significant benefit of the trade point is the visibility that it gives to buyers and sellers. Indeed, trade points may facilitate access to markets and bring to light, for small entrepreneurs, information about markets that may otherwise remain unknown.
However, trade points do not make production happen. They make little contribution to efficiency of production and to the scale of production. Trade points do not control the shipping schedules of ships or flight schedules of airlines that service Guyana. Trade points do not control the erratic electricity supply in the country. Trade points do not determine who gets credit from the financial institutions.
These are chronic problems that the Guyanese entrepreneur faces on a daily basis as they try to produce and sell their goods. In other words, trade points cannot make production happen. Contracts still have to be honored. Goods have to be of high quality and meet the advertised specifications. They have to be in the correct quantity. That is the responsibility of the entrepreneur.
But the entrepreneur needs help from the parties controlling the rules of the game. Entrepreneurs have to depend on those persons responsible for creating an enabling environment in Guyana. Producers need reliable all-weather roads. Producers need a reliable supply of electricity. Producers need dependable drainage and irrigation systems.
Producers need a safe operating environment. Producers need access to financing. If the imminent trade point is to be of any use to small business operators in Guyana, the administration needs to show greater awareness of the challenges confronting the private sector. It has to be much more aggressive in resolving the real production constraints that Guyanese small businesses face. Otherwise, the trade point will not be able to help deliver the needed economic change.