A Trade Strategy for Guyana

Craig VanGrasstekWashington Trade Reports

Part I

Introduction

Mainstreaming trade policy into the development strategy

Trade policy is merely one aspect of a broader national undertaking that will require a sustained and coordinated national effort to reduce poverty through economic opportunity.

Globalisation sets the context in which this strategy is to be pursued, presenting risks and opportunities.

Risks and opportunities of globalisation

Globalisation is an inevitable trend The main opportunities are in the

reciprocal removal of trade barriers The main risks are in the loss of

preferential market access Guyana has little time to position

itself to make the most of the opportunities and deal with the risks

The short, medium, and long terms

Short term (2003-2004): Preparation & conduct of negotiations

Medium term (2005-2008): Absorbing the changes of 2005

Long term (After 2008): Implementation and exploitation of trade and investment opportunities

2005 is the key year

Regional: Completion of the Caribbean Single Market and Economy

Hemispheric: Ratification of the Free Trade Area of the Americas agreements

Global: Conclusion of the Doha Round of World Trade Organisation negotiations

Sectoral: Final phase-out of the apparel quotas

Globalisation means an expanded definition of trade policy’s scope

“Trade” no longer means just the movement of goods across borders and border measures such as tariffs: Services (not the “invisible” or

“untraded” sector any more) Ideas (intellectual property rights) Capital (investment measures) People (movement of natural

persons)

All ministries have responsibilities in trade policy

A few illustrative examples: Finance: Trade-related taxes account for about

40% of revenue, so liberalisation must be budgeted Tourism, Industry and Commerce: Promotion of

tourism, administration of export-processing zones Agriculture (& NGMC): Exports of traditional & non-

traditional agriculture Transportation: Shipping costs pose a greater

barrier to Guyana’s exports than do tariffs

Cost of Importing Goods From Selected Countries and Regions into U.S., 2002

Mexico

Canada

European Union

World

Venezuela

Central America

Suriname

Jamaica (w/o bauxite)

Brazil

Jamaica (all products)

China

Guyana (w/o bauxite)

Guyana (all products)

0% 2% 4% 6% 8% 10% 12%

Import Tariffs

Shipping Costs

Globalisation means shifting from preferences to reciprocity

Guyana must be prepared for the transition from one-way to two-way bargaining

For tariffs, the margins of preference are being diminished by negotiations

Apparel quotas are being phased out by 2005

Sugar quotas face both dispute-settlement and a negotiated phase-out

The value of preferences is often over-estimated

Changes in U.S. Imports of Non-Oil, Non-Apparel Goods, 1992-2002

Canada

Mexico

CBI Countries

Andean Preferences

GSP Countries

Japan

European Union

China

Rest of world

World

0% 100% 200% 300% 400% 500%

Preferential

Non-Preferential

Average (125.8%)

Changes in U.S. Imports of Apparel, 1992-2002

Mexico

Canada

CBI Countries

India

China

Philippines

Hong Kong

Korea

Taiwan

World

0% 100% 200% 300% 400% 500% 600%

Preferential

Non-Preferential

Average (105.7%)

Strategy: More than a set of tactical instructions

Tactical directions for specific negotiations have a limited shelf life

The strategy establishes general principles for the conduct of policy

Each negotiation or other initiative needs to be seen in the broader context

Follow-up to the strategy

WTO’s Trade Policy Review FTAA Capacity-Building Strategy

(Hemispheric Cooperation Programme) Improved coordination with the donor

community Increased presence in Geneva Enhancing the resources of MOFTIC Promoting closer collaboration

between ministries and with civil society

Part II

The Strategy

Structure of the strategy

Section I: Principles and objectives -- What Guyana should seek in its trade policy Section II: Principles and

resources -- What Guyana needs in order to attain these objectives

Mapping Guyana’s Existing Rights and Obligations

Guyana has made commitments to its trading partners (and vice versa) in CARICOM, the WTO, and other fora. The country must ensure both that its own trade laws and agreements, as well as those of its partners, are devised and executed in accordance with these commitments.

Principle I.A

Guyana’s commitments

Commitments made in the WTO The Trade Policy Review CARICOM commitments Bilateral, regional, and

hemispheric agreements

Prioritisation of Future Objectives

MOFTIC’s investigative, coordinating, and negotiating resources should be allocated according to a hierarchy of objectives, with sectoral objectives in the lead.

Principle I.B

Primary Issues: Market Access

In addition to tariffs (preferential and non-preferential), these include non-tariff barriers imposed for any reason, as well as intellectual property rights and barriers to trade in services. Guyana’s own tariffs and services commitments should be addressed in this same context.

Secondary Issues: Legal defense of Guyana’s trade interests

These include trade disputes (either as complainant or defendant), defense against actions taken under trade-remedy laws (i.e., antidumping duties, countervailing duties, and safeguards), and trade-related issues such as intellectual property rights and investment.

Tertiary Issues

Matters that do not bear a reasonably close relationship to the primary issues, involve a greater investment in capacity-building than may be justified, or that are best left in the hands of regional Caribbean institutions. These include such matters as the governance of international organisations and trade-related investment measures.

Preferential Access to Foreign Markets

Guyana should make the most of existing preferential arrangements, seeking their continuation for as long as possible and even their expansion, but policymakers must be prepared for their gradual diminution in value and eventual disappearance altogether.

Principle I.C

Key issues in preferences

Sugar and rice Special and differential

treatment in the WTO and FTAA Parity with least-developed

countries for HIPC countries

Reciprocal Access to Foreign Markets

While negotiators should seek whenever possible to include principles of S&D treatment in these agreements, they must also be prepared to make specific requests for tariff commitments on products of interest to Guyana’s exporters, and to make reciprocal commitments for reductions in the country’s own tariff barriers.

Principle I.D

Key issues in reciprocal negotiations

Using bound rates as the base rates in negotiations

The meaning of “substantially all” in the context of GATT Article XXIV

A Voice for Trade in Related National Policy Debates

MOFTIC has a key role in promoting the principles of competitiveness and compliance.

Principle I.E

Defense of Guyana’s Interests

MOFTIC must be prepared to defend the country’s trade interests in regional and multilateral bodies

Principle I.F

Key issues for the defense of Guyana’s interests

Dispute-settlement mechanisms in the WTO and elsewhere

Antidumping law

Empirical Preparation

The most immediate need for MOFTIC is to enhance its analytical capacities in advance of trade negotiations.

Principle II.A

Key issues in empirical preparation

Identification of sectoral-based negotiating objectives (primary issues)

Identification of rules-based negotiating objectives (secondary and tertiary issues)

Internal Cooperation, Coordination, and Colaboration

Coordination between ministries, and between the government and the private sector, is essential at all stages of trade policymaking.

Principle II.B

Key issues in internal coordination

Inter-ministerial coordination at the Cabinet and working levels

Consultation with the private sector

External Coordination

Negotiations with other countries involve not only the exchange of commitments, but also the establishment of coalitions in larger negotiations. MOFTIC must work closely with like-minded countries in general and its CARICOM partners in particular.

Principle II.C

Enhancement of MOFTIC Resources

The financial, physical, and human resources available to MOFTIC must be increased to a level commensurate with the ministry’s responsibilities.

Principle II.D

Key issues in MOFTIC’s resources

Enhanced representation in Geneva Increase in MOFTIC staff size Improvement in MOFTIC staff capacities Improvement in MOFTIC information

technology Establishment of a trade reference library Improving MOFTIC’s dissemination of

information Improvement in the trade data system Better coordination with the donor community