By Monica Ladd, ContributorJAMAICA IS currently participating in a series of trade negotiations which is likely to profoundly affect Jamaican businesses.
The trade negotiations with the widest scope are under the umbrella of the World Trade Organisation (WTO), with 145 member countries participating. All Caribbean Community (CARICOM) member countries, except the Bahamas, are members of the WTO. The current round of negotiations, seeking to liberalise trade in goods and services, is scheduled for final agreement and implementation by January 2005.
FREE TRADE AREA
The Free Trade Area of the Americas (FTAA) is a parallel hemispheric set of trade talks among 34 countries in North, Central and South America and the Caribbean. The FTAA proposes to create a hemispheric free trade area by December 2005.
CARICOM's Caribbean Single Market and Economy (CSME) is an agreement between 12 CARICOM countries. It is designed to ensure the free movement of goods, services, capital and certain persons, and the right of establishment, namely, the right of any person from one CSME country to do business in another. CSME countries have also agreed to harmonise their laws and to adopt common external policies with countries outside the region.
There are several guiding principles to which all participants in the above trade negotiations must adhere. These include the principle of 'Most Favoured Nation' (MFN) treatment, which means that, except for regional free trade areas and treaty agreements, any one country must grant all other countries in the trade talks the most favoured treatment offered to any other country. In other words, Jamaica cannot offer preferential access to products from, say, Chile (with which Jamaica does not have a trade treaty) without having to offer it to every other WTO country. Some exceptions to the MFN principle are allowed, but these are limited and allowed for up to 10 years only.
Other principles which guide these negotiations include:
A commitment to transparency of law and regulation so that, for example, government officials should exercise their discretion consistently and in accordance with published criteria.
A promise of procedural fairness (including avenues for review of governmental administrative decisions).
The acceptability of measures taken in the interests of health and safety, or public welfare (for example, to maintain the safety, soundness, integrity.
Financial responsibility of financial institutions).
The trade negotiations cover virtually the full spectrum of goods and services (although there are notable areas, such as international air transport, which are excluded, at least for the present).
Countries can make 'commitments' in sectors of their choosing. A commitment typically represents the existing state of regulation or law, and it represents a base from which negotiations should advance. Once a commitment is made, it is effectively impossible to make that regime more restrictive. Jamaica has made a first round of commitments. Negotiations take place by way of 'requests' for commitments or specific further liberalisation measures and 'offers' for specific further liberalisation measures.
A number of countries have directed sector-specific requests to Jamaica for liberalisation of particular provisions of law and policy. For example, in certain financial services, Jamaica has been asked to make commitments to freely allow Internet-supplied services. Jamaica has also been asked to improve the transparency surrounding licensing and other regulatory decisions, to eliminate areas of the law which openly treat foreign companies differently from local companies, and to make work permits easier to obtain.
SERIES OF OFFERS
In the services negotiations, Jamaica and the Caribbean Regional Negotiating Machinery (RNM) are working on a series of offers to be made. However, Jamaica and the RNM have, in the services sector, not prepared any requests directed at other countries for liberalisation measures by them. Unless work is done in crafting requests quickly, the opportunity will be lost.
In the course of preparing commitments and offers, the Ministry of Foreign Affairs has embarked on preliminary consultations with various sector groups, but it has in fact been able to do little, given severe resource constraints.
In practice, therefore, it is up to the private sector, on a sector-by-sector basis, together with other 'stakeholders' (particularly regulatory authorities governing that sector), to advise the Ministry as to what the Jamaican negotiating position should be. This ought to entail various steps:
An analysis of the present regulatory regime relating to a particular sector.
A determination of whether Jamaica should agree that the present regime represents an acceptable base negotiating position.
A review of the suitability of 'requests' made.
Crafting of 'offers' in response to 'requests' received.
A review of the legal and regulatory regimes of our major trading partners to determine what 'requests' for liberalisation Jamaica should make to those countries.
Assistance in 'promoting' the Jamaican position to CARICOM.
Assisting the negotiators, by providing information and statistics to support their arguments, costing and prioritising the requests and offers, and providing on-going advice as the negotiations develop.
FAIRLY OPEN MARKET
In many service sectors, Jamaica is a fairly open market already. It may be that in many service sectors, Jamaica will have little to lose by making commitments (which essentially represent an agreement not to make the existing regime more restrictive) and acceding to many of the requests. At the same time, there are some sectors, particularly in agriculture and manufacturing, for which the requests now being considered by Jamaica represent serious threats to their viability.
For the next year or two, Jamaica has a unique opportunity to request other countries to allow us greater access to their markets.
The development of commitments, offers, and requests represents potentially huge threats or opportunities to each sector of the Jamaican economy. With their future at stake, businesses need to become aggressively involved in the process.
Monica Ladd can be contacted at monica.ladd@jfg.com.jm.
