International Trade Centre stands ready to help Caribbean with trade-led growth, job creation

20160419Arancha GonzálezBy Arancha González

 

Ministers and senior officials from around the Caribbean are gathering in Guyana this week for the annual meeting of the CARICOM Council on Trade and Economic Development (COTED). A constant on their agenda is the move towards a comprehensive regional single market. This is as it should be for the Caribbean’s small economies. Regional integration is not a policy option. It is an economic survival guide for the region. Reducing barriers to trade, investment, and labour flows across the Caribbean can help achieve economies of scale unachievable within relatively small domestic markets. When fully implemented, the Caribbean Single Market Economy will drive the region’s economic, environmental, and social resilience, by bolstering macroeconomic stability, enabling more infrastructure investment, and expanding professional opportunities for all.

To be sure, regional integration is just one part of the recipe for growth and development. Governments across the Caribbean will still need to build skills and human capital, to deliver public services efficiently and effectively, and to create an enabling environment for entrepreneurs to thrive and grow. They will need to ensure that women and young people in particular enjoy full access to education and employment opportunities and contribute to the regional economy. Commitments to freedom of movement across the region have to be seen in practice and facilitate closer integration.

Both nationally and at the region-wide level, increasing private sector productivity and international competitiveness, especially for small- and medium-sized enterprises (SMEs), must be a central priority. Not because they are ends in themselves, but because they are essential for generating inclusive growth. Connecting to regional and global trade can help drive productivity growth and the creation of better jobs.

But breaking in to foreign markets – even regional ones – requires companies to achieve a certain level of competitiveness in supplying quality goods and services to supply chains. It is particularly important for SMEs to become more competitive, because smaller firms account for the vast majority of jobs in the Caribbean. More productive SMEs mean better jobs for more people, especially for the women and youth who tend to be disproportionately employed in smaller companies, often in the informal sector.

While deeper economic integration will help Caribbean companies develop scale, and make the region a more attractive destination for value chain-linked investment, there is a need to dig deeper at the national level to better understand the constraints. Surveys and research carried out by the International Trade Centre (ITC) suggest that Caribbean exports run into non-tariff barriers like complex regulatory requirements or selectively zealous shipment inspections in other CARICOM members. And our analysis on trade facilitation finds that a significant share of the problems originate at home, not abroad: getting official certificates of origin can be unnecessarily expensive and time-consuming, or onerous customs processes sap business competitiveness by making imported inputs costlier. Ensuring more consistent inclusion of business voices in policymaking processes can help governments to better understand the real barriers to trade and investment.

Simplifying trade-related rules and procedures would increase trade across the Caribbean and bolster companies’ export prospects further afield. The World Trade Organization’s agreement on trade facilitation promises to help cut trading costs – so long as governments ratify and implement it. The Caribbean has set an example for other regions on both fronts: Trinidad and Tobago, Belize, Guyana, Grenada, Saint Lucia, and Jamaica have already given legislative approval to the agreement. And ITC is working with several Caribbean governments to implement it.

As the region’s governments work to identify and remove bottlenecks preventing SMEs from becoming more competitive in international markets, the services sector merits particular attention – and not just for tourism. For CARICOM’s educated, English-speaking populations, services like business process outsourcing offer great potential to drive growth and job creation. For an app developer in Barbados, being on an island doesn’t matter: creativity and a good internet connection are what count.

More traditional sectors also offer considerable potential for value-addition and increased incomes, especially for poor farming communities. Guyana’s El Dorado rum is not just world famous: it is a perfect example of how skilled processing, high quality, and careful branding can vastly increase the return on sugar.

In contrast, Guyanese coconut producers have struggled to benefit from booming global demand, because of low yields, pests and plant diseases, poor farming practices, and insufficient access to finance. Local value addition remains constrained: some coconut oil and water producers operate under capacity because they can’t purchase enough nuts locally, and many SME processors are not certified to meet international health and safety standards.

Across the Caribbean, companies’ ability to target the most lucrative niches of the global coconut market is limited by weak packaging infrastructure, product development research and branding. ITC is working with the Caribbean Agricultural Research and Development Institute (CARDI) and stakeholders from across the regional coconut industry – farmers, processors, exporters, government agencies, and support institutions such as business associations – to identify and counter these challenges to the sector’s competitiveness. In Guyana, a coconut sector platform has been established with representatives from each stage of the value chain to develop a nation-wide strategy for the sector’s development, covering everything from training for farmers through to market analysis and linking producers to foreign buyers. I will be looking forward to launching this European Union-funded project in the margins of the upcoming COTED.

The Caribbean stands at the threshold of great geopolitical and economic change, from the rapprochement between Washington and Cuba to the expanded Panama Canal and potential for a new canal through Nicaragua. From harmonised standards and lower trade costs to agricultural value addition, there is much that officials can do – working together in Georgetown this week, and after they go home – to drive trade-led growth and job creation. The International Trade Centre stands ready to support them.

 Arancha González is the Executive Director of the International Trade Centre, a joint agency of the United Nations and the World Trade Organization. Follow her in Twitter: @aranchaglezlaya

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