In reference to your article dated February 26, 2009 captioned ‘Jagdeo: Protectionist steps major concern,’ it is a fact that protectionism is dangerous for the world economy and for small state economies in particular. Mr Jagdeo apparently called for a reconsideration of the Economic Partnership Agreement (EPA) with the European Union and stated that he was tempted to call for a moratorium of the EPA’s implementation until the financial crisis settled. This is where his comments became interesting and strange.
While protectionism by the developed world is a clear and present danger for third world economies in these frightening times, the greater danger would be to jeopardize the very limited lifeline of access to vanishing markets in developed countries available through existing agreements. A call for a reconsideration of the arrangement and even worse a moratorium is exactly the kind of opening these developed nations are seeking. They will willingly accept it and then take dramatic steps to enter into arrangements with direct competitors of Caribbean producers. Such a move in times of declining world commodity prices when Europe’s consumption of Caribbean commodities is likely to dip noticeably is a recipe ripe with disaster. What happens if in the midst of a moratorium the EU enters into trade arrangements with Latin America and Asia to provide cheaper products on grounds of necessity? Furthermore, if the EPA is frozen or rendered ineffective until the crisis is resolved, Caribbean producers may never get the same deal or may have to accept seriously diluted terms.
Further, a moratorium or request for reconsideration of the EPA would put Caribbean-produced commodities that are locked in a deflationary spiral for the foreseeable future into the peril of increased competition at exactly the wrong time when export markets are likely to shrink. The irony of it all is that the moratorium or request for reconsideration of the EPA may encourage protectionism as the EU takes the opportunity to spend liberally on expanding homegrown competing products such as beet, thereby severely reducing its demand for Caribbean products. With a stalled EPA, the Caribbean region could be left with shrinking markets and intensified competition for markets.
The truth is that some protectionism by the developed world is inevitable. In the face of sinking economic realities in their homelands, these powerful nations have spent and will continue to spend trillions to create jobs and generate growth within their own borders. That is their paramount responsibility and concern. There is no better time for wealthy nations to try to weaken trade obligations than now because they can blame it on a direct mandate from their citizenry. There is also no real recourse for poor nations if the developed world breaks its trade obligations in the middle of a global recession. Poor nations should be careful in navigating existing bilateral and multilateral agreements at this time to ensure their markets are preserved as well as possible. Tact, diplomacy and restraint are welcome atrributes of these times.
While I understand Mr Jagdeo’s concerns about the trust and good faith issues surrounding the entire negotiating machinery, the plain truth is that Guyana needs the EU more than the EU needs Guyana in these critical times. That is the fundamental truth. I sincerely hope this was rhetorical political banter playing to the earnest gallery and not an indication of Mr Jagdeo’s deep-seated convictions regarding the direction of the EPA at this critical juncture, because it simply does not convey a sound economic understanding of the repercussions and of the current times. One has to wonder whether political posturing and rhetoric had a role to play in Canada’s decision to remove Guyana from its bilateral aid programme, while still focusing on the Caribbean.